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

FAIR LABOR STANDARDS ACT OF 1937

Joint Hearings

before the

Committee on Education and Labor, United States Senate

and the

Committee on Labor, House of Representatives

Seventy-Fifth Congress

First Session

on

S. 2475 and H.R. 7200

Bills to provide for the establishment of Fair Labor Standards in Employments in and affecting interstate commerce and for other purposes

Part 1

June 2 to June 5, 1937

Printed for the use of the Committee on

Education and Labor

United States Senate, and the

Committee on Labor, House of Representatives

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASINGTON: 1937

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[PAGE ii]

COMMITTEE ON EDUCATION AND LABOR

UNITED STATES SENATE

HUGO L. BLACK, Alabama, Chairman

ROYAL S. COPELAND, New York

DAVID I. WALSH, Massachusetts

ELBERT D. THOMAS, Utah

JAMES E. MURRAY, Montana

VIC DONAHEY, Ohio

RUSH D. HOLT, West Virginia

CLAUDE PEPPER, Florida

ALLEN I. ELLENDER, Louisiana

JOSH LEE, Oklahoma

WILLIAM E. BORAH, Idaho

ROBERT M. LA FOLLETTE, JR., Wisconsin

JAMES J. DAVIS, Pennsylvania

KENNETH E. HAIGLER, Clerk

COMMITTEE ON LABOR

HOUSE OF REPRESENTATIVES

WILLIAM P. CONNERY, JR., Chairman, Massachusetts

MARY T. NORTON, New Jersey

ROBERT RAMSPECK, Georgia

GLENN GRISWOLD, Indiana

KENT E. KELLER, Illinois

MATTHEW A. DUNN, Pennsylvania

REUBEN T. WOOD, Missouri

JENNINGS RANDOLPH, West Virginia

JOHN LESINSKI, Michigan

JAMES H. GILDEA, Pennsylvania

EDWARD W. CURLEY, New York

ALBERT THOMAS, Texas

JOSEPH A. DIXON, Ohio

WILLIAM J. FITZGERALD, Connecticut

WILLIAM F. ALLEN, Delaware

GEORGE S. SCHNEIDER, Wisconsin

SANTIAGO IGLESIAS, Puerto Rico

RICHARD J. WELCH, California

FRED A. HARTLEY, JR., New Jersey

W. P. LAMBERTSON, Kansas

CLYDE H. SMITIH, Maine

ARTHUR B. JENKS, New Hampshire

MARY B. CRONIN, Cler.:

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[PAGE iii]

CONTENTS

Statement of

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[PAGE 997]

MONDAY, JUNE 21, 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 857, Senate Office Building, Senator Hugo L. Black presiding.

Present: Senators Hugo L. Black (chairman), Allen J. Ellender, Robert M. La Follette, Jr., and James J. Davis; and Representatives Robert Ramspeck, Glenn Griswold, Matthew A. Dunn, Reuben T. Wood, James H. Gildea, George J. Schneider, William P. Lambertson, Arthur B. Jenks, Clyde H. Smith, William J. Fitzgerald, and Albert Thomas.

The Chairman. Mr. John B. Scott. Before we proceed with Mr. Scott I will state for the record that the committee agreed, at the last meeting that we had concerning the hearings, that we would have witnesses last Thursday up to last Friday and that then we would close the hearings. We had witnesses summoned for Thursday and Friday, but on account of suffering the tragic loss of our colleague, Mr. Connery, those hearings were postponed until today and tomorrow. So, under the agreement that the committee had, the hearings will be closed tomorrow. That will permit to come before the committee every witness who has requested to testify up to this time. We have today 10 witnesses. Tomorrow we have seven witnesses on the list, but there are several others who have asked to be heard, and, in order to carry out the understanding of the committee, I have asked them also to come tomorrow.

I am making this statement at this time so we will understand that we are carrying out the agreement made by the committee, except that we have substituted today and tomorrow for Thursday and Friday of last week.

Representative Thomas. Mr. Chairman, before you proceed, I would like to make a statement. Our colleague, Congressman Dixon, of Cincinnati, is ill. Mr. John H. Clippinger, the president of the Gerrard Co., of Cincinnati, is scheduled to appear this morning. The Congressman wishes me to state to Mr. Clippinger that he is very, very sorry that he cannot be here this morning on account of illness. I think the committee is sorry to hear of that.

The Chairman. Yes; we very much regret hearing of Mr. Dixon’s illness.

This is Mr. John B. Scott of the Anthracite Institute.

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STATEMENT OF JOHN B. SCOTT, ANTHRACITE INSTITUTE

The Chairman. Mr. Scott, you were requested to appear before the committee. We will be glad to hear you.

Mr. Scott. Mr. Chairman and gentlemen, the Anthracite Institute, a trade association, representing substantially all of the anthracite producers in the United States, desires to record its opposition to the favorable consideration by your honorable committees of S. 2475 and H. R. 7200, and the proposed Fair Labor Standards Act of 1937.

We are advised that the measure as it is now written is subject to serious constitutional objections. It seeks to control labor conditions in business purely local and intrastate in character, where the goods thus produced come into competition with goods shipped across State lines. Such an application of the commerce clause of the Constitution, used as a basis for this legislation, would in effect obliterate State lines and local self-government and thus destroy the fundamental separation of powers between the Federal Government and the States, which separation is the very basis of the Federal union.

Moreover, the measure in many of its aspects presents an unparalleled picture of delegation of undefined legislative power by the Congress to an administrative board. Such delegation has many times been condemned by the Supreme Court of the United States.

It has been established by recent decisions of that Court that the States have reasonable control of minimum wages. Per contra, it is equally clear that in no recent decision of the Supreme Court is support given to the doctrine that, under the guise of regulating commerce, Congress may control hours and wages.

The proposed Fair Labor Standards Act represents an application of unsound economic principles. The measure will afford foreign competitors an opportunity for trade invasion. It will cause rising costs and therefore curtail the purchasing power of the great majority of the American people. The proposed bill seeks to establish a maximum above which hours of work may not rise and a minimum below which wages may not fall, notwithstanding that in certain industries, at certain times and under exigencies of the most compelling nature some reasonable, although perhaps temporary, adjustment may be necessary for the public good.

The proposed act is unsound from the point, of view of the public policy of the United States, particularly the policy dealing with industrial relations. By its terms it is intended to supplement the National Labor Relations Act, but in so doing it would in effect divide the administration of that act and seriously modify the beneficial effects sought to he derived from that statute. No justification can be found for conflicting administration of measures in the vital field of labor relations.

In this connection we desire to propose that, if your honorable committees are disposed to act favorably upon this measure, the act. as finally drawn up should provide reasonable social standards and controls of labor combinations operating in the field of commerce. The public must be protected against the constant interruption of commerce without just cause, whatever the source of such interruption. Tyranny and coercion, whatever their origin, should be condemned.

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We urge your honorable committees to disapprove these bills.

The Chairman. Thank you, Mr. Scott.

If there is no objection on the part of the committee, I am going to substitute for the next witness, who is Mr. Alldredge, of the Tennessee Valley Authority, the third witness, Mr. Horace Herr, and after that we will call Mr. Alldredge. We will hear Mr. Horace Herr, of the National League of Wholesale Fresh Fruit and Vegetable Distributors.

STATEMENT OF HORACE HERR, NATIONAL LEAGUE OF WHOLESALE FRESH FRUIT AND VEGETABLE DISTRIBUTORS

Mr. Herr. Mr. Chairman and members of the committee: This statement has been authorized by the advisory board of the National League of Wholesale Fresh Fruit and Vegetable Distributors, a nonprofit, incorporated trade association with a membership of more than 500 wholesale distributors of fresh fruits and fresh vegetables. The membership is drawn principally from east of the Mississippi River. Included in it are growers, shippers, brokers, commission merchants, and f. o. b. buyers, and jobbers.

Since H. R. 7200 and S. 2475 were introduced in the Congress on May 24, there has not been time to take a referendum which would disclose the sentiments of the membership toward this specific legislative proposal. However, under the constitution and bylaws of the organization, it is the responsibility of the advisory board to “handle all matters of emergency and the general affairs of the National League not otherwise provided for, at all times except when the National League is in annual or special meeting.” It is obvious, therefore, that while this statement has the approval of the advisory board, the views expressed may not be shared by all members of the organization.

Wages and the hours for employment have been under discussion for many years and were before this industry for action in connection with a code established under the National Industrial Recovery Act in 1933 and 1934. Several legislative proposals before the Congress during the last 4 years have promoted widespread discussion in all industries. The basic issue involved was prominent in the last national election. The attitudes within this industry, therefore. are known to the advisory board, even though it does not have an expression from its membership on the specific program now under consideration. On the basis of this general knowledge, these representations are made.

The principles of a minimum legal wage and maximum hours for the legal workweek are accepted as desirable.

The approach to the problem, through regulation of interstate commerce, is accepted as logical, although there is room for doubt on that score of practicability.

The necessity for elasticity in the application of minimum wages and maximum hours, to conditions which show marked variation among the several industries is obvious to those who deal with the realities of a complicated industrial system. The real problem is to preserve as much uniformity as is possible without impairing the ability of the industry to employ workers and to produce goods at a price that will promote their maximum movement into consumption.

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The preservation of maximum uniformity, in the application of this program, or, to state it another way, the preservation of minimum variation from the program, involves such a multitude of details that the Congress could not possibly write into a law provisions which would anticipate and deal with each and every situation. The establishment of an agency, such as the proposed labor standards board, therefore, is accepted as a practicable method for meeting this situation.

In no spirit of hostility to the basic features of this bill, but with a desire to be helpful to those who must make the final decisions on these questions, and with a sense of obligation to do what can be done to protect the members of this association from business hazards which, without intent to do so, the Congress might impose on them by this type of legislation, some of the formidable difficulties in applying this program to the fresh fruit and vegetable distributive industry are here presented.

This organization is not “urging” the passage of this bill. The possibilities of attaining the desirable objectives, without confusion that would more than offset the anticipated benefits, are by no means certain. If it is the considered judgment of the Congress, responsible to the people for the preservation of orderly Government under the Federal Constitution, that the time has come when the general welfare requires an experiment in this field, we shall make a forthright effort to cooperate, asking only a continuing respect for the traditional principle of maximum liberty of action consistent with national security.

In 1934, in connection with code negotiations under the National Industrial Recovery Act, a survey indicated that approximately 60 percent of the annual carlot movement of fresh fruits and fresh vegetables was handled, in some capacity, by the members of this association. The average annual movement of these commodities for the 8 years 1928-35, inclusive, was 857,794 carloads by rail and boat. Only fragmentary data on movement by motor truck are available. These suggest that about one-third of the total volume of commercial fruits and vegetables move to market by motor truck. This makes an annual movement of at least 1,000,000 carloads a year.

Figures in the United States census of 1930 and the census of American business for 1933 and 1935, as published by the United States Department of Commerce, present the following statistical picture of the wholesale fresh fruit and vegetable distributive industry:

Number of establishments: 1929, 11,194; 1933, 9,083; 1935, 9,642.

Net sales at wholesale: 1929, $3,252,975,000; 1933, $1,733,284,000; 1935 $2 008 503 000

Total expenses: 1929, $260,538,461; 1933, $174,646,000; 1985, $181,- 884,000.

Number of employees: 1929, 92.799; 1933, 68,103; 1935,74,810.

Salaries and wages: 1929, $123,627,601; 1933, $79,032,000; 1935, $87,146,000.

Due to differences in classifications, the figures for 1929 are not entirely comparable with those for 1933 and 1985. They are indicative rather than conclusive. Obviously they do not include all establishments handling fresh fruits and fresh vegetables in interstate commerce. Under the Perishable Agricultural Commodities

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Act, enacted at the request of this industry in 1930, those engaged in wholesale distribution of these commodities, in interstate commerce, are required to take out a license from the United States Department of Agriculture. As of June 30, 1933, there were 14,347 licensees, 15,697 in 1935 and on June 1, 1937, there were 17,932 licensees under this act. This suggests that the Department of Commerce figures are not inclusive enough to give a complete picture. They are inclusive enough to give a reliable index. On the basis of the present number of licensees under the Perishable Agricultural Commodities Act, it is safe to say that more than 100.000 persons are employed in this industry with total annual wages of approximately $150,000,000,

When it comes to rates of returns on the distributor’s investment, there is no inclusive data and very little that is acceptably authoritative. The Federal Trade Commission, in a statement released June 10, 1937, summarizing findings based on recent investigation of the fresh fruit and vegetable industry, stated:

Rates of return for wholesale distributors were lower than the other two groups (chain-store distributors and canners and packers) during the 7-year period (1028-35), during which the returns for 94 wholesale distributing companies averaged 4.64 percent. Returns were highest in 1929 with 9.12 percent, and lowest in 1932 with a loss of 1.7 percent. In 1983 the returns recovered to 4.05 percent, followed by an increase to 7.65 percent in 1934, but in 1985 they declined to 4.98 percent (These figures are returns on “investment.”)

A survey made within this organization for 1932 showed that 25 firms with total net sales of $16,550,998.55 had a deficit of 1.3 percent of the total net sales. In other words, the gross margin between the cost of goods and the sale price was $1,170,750.12 and operating expenses were $1,386,441.35. The labor item in total expenses was $919,898.54 or approximately 78 percent of the gross margin between cost of goods and net sales revenue.

The research and statistical division of Dun and Bradstreet in 1935 issued the results of an analysis of the 1933 operating averages of 39 wholesale fruit and vegetable concerns with total net sales of $25,150,609. Of these, 24 firms, with net sales of $18,264,972, showed a gross profit of 15.30 percent and a net profit of 1.85 percent. On the other hand, 15 firms, having total net sales of $6,885,637, showed a gross profit of 15.16 percent and a net loss of 1.67 percent.

In the highly competitive terminal markets east of the Mississippi River, commission merchants handle at least 50 percent of the volume of these commodities, as agents for the growers or shippers. The commission rate is more often below 10 percent than it is above. On consigned business the commission fate is the gross margin out of which must be paid expenses, return on investment, and profit, if any.

These facts suggest that this is a narrow-margin industry and those operating in it are, quite naturally, alarmed when any proposal is made to increase their operating costs. The question of how to meet the increase cannot be taken lightly. Perishable commodities do not lend themselves to arbitrary prices. There was no price-fixing in the N. R. A. code for this industry. N. R. A. was willing but the industry would not have it, knowing it would not work. The consumer and his buying power are the determining price factor, peculiarly so because always he has a choice of substitutes for the commodity which he believes to be selling at too high a price.

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Logically, this industry might expect to benefit through increase in both volume and price, to some unpredictable degree, if the fixing of a minimum wage and reduction of hours throughout all industries increased purchasing power. It is difficult, however, to be reconciled to a certain and substantial increase in expense by contemplating an uncertain increase in volume and price.

As it takes on major importance in this industry, the first reference is made to section 6 (a), page 17 of S. 2475, lines 3 to 12, inclusive. The exemption of employers on the basis of the number of employees they might have would set up intolerable competitive conditions in this industry. The suggestion made by the Secretary of Labor in her testimony before this committee, that this provision for exemption on the basis of the number of employees be eliminated, is concurred in. If a minimum wage and the maximum hours for the workweek are to be set for this industry, they should apply to all employers regardless of the number oi employees. This is a highly competitive industry and contrary to popular notions, it is an industry operating on very narrow margins. In every market, the price level reacts almost immediately to a low price sale, even though it may be under the general level by but a cent or two. The consequences of the competitive situation resulting from exemptions as now provided in this provision, inevitably would tend to decrease the returns to the grower. In this industry, as a rule, the low wages and the longest workweek are found in the operations of the small establishments. The experience of this industry justifies the conclusion that this type of exemption is not a sound policy, and, if applied, would promote decidedly unfair competition. As far as this industry is concerned, once a minimum wage has been fixed with due considerations for the characteristics of the industry, payment of the wage should be the obligation of every employer.

In section 2 (a), in connection with the definition of “employee”, in paragraph 7, lines 3 to 11, page 4, the question is raised as to whether the Board should decide where the line should be drawn between agricultural labor and labor within the scope of the act, or Congress should draw the line? Is it the congressional intent that this program shall be as inclusive as possible, or that its application should be restricted so as to impose none of its obligations upon employers engaged in activities directly affecting agriculture or inseparably intertwined with agriculture in the marketing processes? It may be that wherever the line is drawn, some injustices may result both to the employees, on the exemption side of the line, and to the employers, on the inclusion side of the line, the injustices to the latter resulting from the labor-cost differential. This question is of some importance in this industry, where the commodities move in their natural state, where certain handling operations are dictated by the highly perishable character of the commodities, and where actual ownership, to a substantial extent, remains with the producer until the commodities are bought by the retail outlet; when the cost of grading, packing, loading for shipment, storage, and other marketing expense is charged back to the grower. There is involved in this question, the cooperative packing plants and marketing associations and the movement of commodities, such as apples, into and out of storage. In the Social Security Act, agricultural labor is exempt and the definition of agricultural labor rests with the Commissioner of

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Internal Revenue. There has been considerable pressure to liberalize the definition. In the fruit and vegetable code, as approved by both N. R. A. and the Agricultural Adjustment Administration, the line was drawn at the point where the commodity was on board the transportation facility, the code language being as follows:

The Industry as defined shall not include the production nor preparation, assembling, or loading at point of production of commodities for shipment.

It would seem that fixing the limit on agricultural activities in a program of this kind, so directly relates to the national policy for agriculture, that the Congress, rather than the Labor Standards Board, should draft the formula for the dividing line. The Congress, at least, should say whether the doubt is to be resolved in favor of the workers or in favor of the farmers.

Paragraph 10 of section 2 defines the term “oppressive wage”, and it is proposed to state, in the definition, the amount per hour which shall be the minimum wage, the Labor Standards Board having authority to vary from the stated minimum under certain conditions. The minimum wage imposed on this industry by the N. R. A. code ranged from 25 cents an hour in towns of less than 25,000 population in the South, to 331/3 cents an hour in cities with 500,000 or more population in the North. A survey by N. R. A., covering the workweek of June 15, 1933, indicated about 20 percent of employees in this industry were paid $15 or less per week. A survey made within the membership of this organization about the same time, indicated about 6 percent of the employees were paid less than $16 per week. The figures for the membership of this organization would not be representative of the entire industry as these members are the older, experienced firms, probably able to attract the more efficient labor with wages somewhat higher than the general level. There is a limit to how high the efficient distributor can go in increasing wages and an important factor in that limitation is the competition he must meet from the low-wage distributor.

A study made in 1933 by Dr. John R. Arnold, Division of Economic Research and Planning in N. R. A., indicated that 2,172 employees out of a total of 9,922, in this industry, during the week that included June 15, had weekly earnings of less than $15. Keep in mind that June is a very active season in which this industry employs more than usual temporary or occasional labor. The figures are based on what the employee actually earned during 1 week and do not necessarily indicate the wage per hour which he may have been paid. To increase the earnings of these 2,172 employees to $16 a week on the basis of a 40-hour workweek, would mean an increase of about 28 percent on 20 percent of the total labor force involved in the study. This figures out as an increase of 2.77 percent in the total labor cost for the 9,922 employees involved in the survey. This is figured on a 40-hour-week basis, but these 9,922 workers actually were not. on a 40-hour basis. The majority of the full-time employees were working 48 hours to as many as 70 hours.

This brings us to the definition of “oppressive workweek”, section 2 (a), paragraph (11) and the other provisions of the bill dealing with the proposed standard of hours.

This is, necessarily, a long-hour industry, especially in the summer. The long hours apply to the employers as well as to the

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employees. These commodities must be harvested, shipped, sold, and consumed when they are ripe. Nature controls the ripening factor. Beginning with Florida products in the winter, the growing and marketing season moves north and west. Each growing section brings a rush movement. At one season the rush is on Florida vegetables, at another Georgia peaches or watermelons. The peak movements follow one upon the other, often overlapping. Finally comes the heavy local production in all the Northern States. The products must be marketed when they are ready. The wholesale distributor has no choice but to take care of the supplies when they arrive, and, with large truck movement, they now arrive every hour of the day and night. Long hours cannot be avoided. If the Congress decides that this industry, intimately connected with agriculture, should be included in such a program as is contemplated in this bill, then some place there must be authority to modify the program to meet the difficult and unyielding conditions which the industry faces—conditions which exist not by choice but by necessity. The industry is under constant pressure to decrease the cost of distribution. Decreasing the cost of distribution is, of course, impossible if Federal laws continue to increase those costs. This industry is willing to go along on this program to the extent that it can absorb the increase and continue solvent. Its experience is that it cannot possibly maintain its solvency on a minimum wage of 40 cents an hour if the workweek were reduced to 40 hours, or 44 hours or even 48 hours, applicable to all its employees.

Keep in mind the fact that this is a “hand labor” industry in which the possibilities for mechanization are decidedly limited.

To write into this bill a positive limitation of the Labor Standards Board’s discretion to vary hours to meet conditions as found in the several industries would be dangerous. A safer procedure would be to specify the number of hours which the Congress finds is a desirable objective, leaving it to the Board to promote adherence as closely as is consistent with the characteristics and conditions of the industry involved.

In connection with section 23 (a) and (b) (p. 40, line 21, and p. 41 to line 14), we are impelled to point out that no group has a monopoly on the abuse of power. Given the power, farmers, industrialists, workers, and even governments abuse it. We venture to suggest that the general tone of some of the provisions in this bill is not conciliatory or likely to encourage employees and employers in seeking better understanding of their respective problems. The time surely must come when organized labor must accept more responsibility for its acts than it now carries. Two suggestions are offered to this committee for consideration.

If and when the Labor Standards Board, by order establishes a minimum wage and maximum workweek and an industry is meeting the conditions as to these and other labor practices, is it unreasonable to ask that a labor organization, active in that industry, will refrain from strike for a definitely specified time during which time negotiations are in progress? In other words, why not give this Labor Standards Board authority publicly to condemn a strike when called before negotiations had been under way a specified period, say, for example, 90 days? All the conditions and penalties imposed by this bill are imposed upon employers. The bill proposes

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to take away certain rights which employers, as citizens, heretofore have had. Since all the certain benefits accrue to labor, if these benefits are as substantial as they are represented, it would seem reasonable to expect labor to make at least a gesture of concession in the interest of industrial peace.

The other suggestion is that this labor standards board might be given authority and the responsibility of publicly condemning a labor agreement negotiated by one group of employers and a labor organization, when the effect of that agreement was to victimize or penalize a third group which had little if any voice in the negotiations or agreement.

The Federal Trade Commission, in its investigation under a congressional resolution, found conditions which it discusses in its report sent to Congress by June 10. The following is quoted from a statement issued by the Commission on that date:

The report shows that monopolistic and racketeering practices in the carting of fruits and vegetables exist in several of the larger terminal markets, particularly in New York, Philadelphia, and Chicago. In New York and Chicago, the truckers, with the assistance of teamsters’ union, have obtained a monopoly of the commercial hauling of fruits and vegetables from the principal terminals by excluding all trucks not members of the truckers’ associations or whose drivers do not belong to the local union. Measures in this direction also have been taken recently by the truckers’ association in the union local In Philadelphia. In some of these markets, particularly in Cleveland and Chicago, agents of the union have by threats and intimidation forced outside trucks bringing produce from producing areas into the market to pay for the privilege of unloading.

This subject was discussed in detail in a previous report of the Federal Trade Commission on its investigation of the potato industry. The details cover some 56 typewritten pages of a report now available in the office of the Senate Committee on Agriculture and Forestry. If the responsible leaders of organized labor are indifferent to or powerless to deal with racketeering groups which worm their way into union organization, then they should approve and support some provision for the public condemnation of the so-called labor agreements which take on the characteristics of rackets.

It may be, that after considering the difficulties which this program would encounter in the fresh fruit and vegetable industry, the committee will see some merit in the suggestion that a special provision is desirable for this industry, leaving the question of minimum wage and maximum hours to be determined by investigation and hearing, and placing the administrative authority for this industry with the U. S. Department of Agriculture from which the members of this industry now hold their Federal licenses.

The Chairman. Thank you very much. Mr. H. F. Waidner, Jr., of Henderson, Linthicum and Co.

STATEMENT OF H. F. WAIDNER, JR., HENDERSON, LINTHICUM and CO.

Mr. Waidner. Mr. Chairman and members of the committee: Mr. Horace Herr, who is the secretary of our association, has presented a formal brief on our stand in reference to this proposed bill before Congress.

The Chairman. What association is that?

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Mr. Waidner. The National League of Whole Fresh Fruit and Vegetable Distributors. I wish to appear before you as a practical commission merchant, in other words, one of these fellows who handles farm commodities on a consignment basis. My business is in Baltimore, Md. I conduct a business there where 90 percent of the fresh fruit and vegetables that we receive from points of origin are handled by us on a commission basis.

Now, theoretically, the charge for commissions in handling these commodities is 10 percent, but it very, very seldom works out that way. I believe that any of you gentlemen who are familiar with the general write-up in profits in the wholesale business will realize that even 10 percent margin is a small margin to work on, but while we are theoretically supposed to charge 10 percent commission most of the time we are obliged to charge only 7 percent commission, and our average commission rate runs between 7 and 8 percent.

We are opposed to this bill which is proposed in Congress for the simple reason that it is going to add more cost to our business and will, therefore, be a further detriment to our being able to conduct our business with any thought of making a profit.

Representative Ramspeck. Is that 10 percent gross or net?

Mr. Waidner. Ten percent gross; yes, sir.

Representative Ramspeck. You have to take all of your operating expenses out of the 10 percent?

Mr. Waidner. Everything comes out of the 10 percent, but, as I say, that is the theoretical amount of commission that we are supposed to charge. Actually, when you give rebates to agents, when you give concessions to shippers whose produce you want to keep lined up it boils down, in a great many cases, to 7 percent commission. As I say, in 2 or 3 years’ work our average commission over the years has been 7 to 8 percent.

Representative Dunn. How many people do you employ?

Mr. Waidner. I employ 17, which is my misfortune, because under this act, as I understand it, the employer who employs less than a certain number of people will be exempted from this thing, just the way it is under the Social Security. Am I right in that?

The Chairman. The committee has not passed on that.

Representative Dunn. How many hours a day do your employees work?

Mr. Waidner. That depends upon the season.

Representative Dunn. I mean during your busy season.

Mr. Waidner. During the busy season they work between 10 and 11 hours, very seldom over 11 hours.

Representative Dunn. Seven days a week or 6 days a week?

Mr. Waidner. Six days, but on Saturday, of course, we have what is supposed to he a half day holiday and we usually get out between 1 and 2 o’clock in the afternoon.

Senator Ellender. How much do you pay your labor?

Mr. Waidner. Beg pardon?

Senator Ellender. How much do you pay your labor?

Mr. Waidner. The store labor averages between $16 and $20 a week. The people who have the trucks, who back in and unload them, pile the produce on the sidewalk or in the warehouse where it is displayed for sale, they average between $18 and $20. The

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drivers in Baltimore, as far as Baltimore is concerned, we pay $20 to $22 a week.

Representative Ramspeck. I do not want to interfere with your statement, but I hope you will give the committee, at some point, a practical statement of how you operate, what the difficulty might be to your particular operation under this bill.

Mr. Waidner. Yes.

Senator Ellender. In connection with Congressman Ramspeck’s question will you also tell us when your most busy season is and now long it lasts as a rule?

Mr. Waidner. We are always busy. In other words, the thing I would like to bring most forcefully to the attention of this committee is the fact that we are constantly riding along on the crest of somebody’s crop time. In other words, a man in Florida, along in January, is starting on his crop of tomatoes. There is nobody that can go out in the field and say that these tomatoes are only going to grow 8 hours and after 8 hours they are going to stop growing. Those tomatoes are brought on to the market to be distributed. When the tomato-shipping season out of Florida begins is when we run into the busy season, handling Florida tomatoes, and it runs right up the coast that way. Then when the fellow who has been shipping tomatoes drops out of the picture his place is immediately taken by the man who is shipping strawberries in the northern part of Florida, and then we go up the coast of Georgia and there is a constant recurrence of the period of crop time in this industry.

If there is any dull time at all in the industry it might be perhaps in the wintertime, which is, presumably, supposed to be the dull period in the business, but now, with the tremendous increase in fresh fruits and vegetable production and consumption by the American people you find the producers in California, Texas, New Mexico, and Florida amply supplying the market with fresh fruits and vegetables, which keep us constantly busy.

Senator Ellender. During the dull period do you keep all your employees on?

Mr. Waidner. I do; yes, sir.

Representative Thomas. May I interrupt you just a minute? I do not quite understand the nature of your business. Are you a wholesaler in the sense that you buy in carload lots from various merchants or producers in various parts of the country and ship the produce into the store in Baltimore and then ship it out locally? Do you get in touch with the man in Texas who has a carload of tomatoes and you sell that carload of tomatoes for him in California and never touch it?

Mr. Waidner. No ; we do not do that business. The kind of business we do is that we have the shipper in Texas, for instance, ship to us, 9 times out of 10 on a consignment basis. In other words, they are still his tomatoes when they arrive in Baltimore. We break the cars and sell them to the buyers who want to buy them.

Representative Thomas. That is a local business?

Mr. Waidner. Exactly. If a man wants to buy 50 crates, or if a man wants to buy 1 crate, he can buy them from us. I will try to point out to you that there is no Federal or State law that can possibly regulate a farmer’s hours during his crop time.

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[PAGE 1008]

In other words, if you were going into a farmer’s packing house, or a grower’s or shipper’s packing house during the time he is marketing his crop of cantaloups and attempt to tell him today that he can only work 6 or 7 hours, his tendency would be to call in the riot squad from his local police department, because he knows that the thing that is important is to get the cantaloups, which are highly perishable, on the market as quickly as he possibly can. We follow right in the track of that same system, right from the producing system in one point of the country to another. So it is practically impossible for us to have a period when we are dull, that is, if we want to stay in business, because at the very time they stop shipping the Arizona cantaloups, for instance, we are looking for some other commodity that we can hope to increase our volume with and thereby be able to stay in business.

Another thing that we are confronted with in this particular industry is the fact that it is impossible for us to add these increased costs to the commodity that we have for sale. We deal in apples, we deal in onions and potatoes and right down the line, but actually, gentlemen, we are not dealing at all in those commodities, what we are dealing in is service. I mean that is the thing we are producing. We do not produce the commodities that we sell, but we produce the service. In other words, the man in Texas, or the man m Florida, or wherever he happens to be, wants his stuff marketed on a terminal market and trusts that particular shipment to our care. What we are supposed to do is to find buyers to buy it. It is not a question of us being able to say, “Well, now, since this new Federal law has gone into effect, or since this new local law has gone into effect, from now on we will tack on 10 or 15 cents a package or crate in order to make up the increased cost.” We absolutely cannot do that because we are dealing in perishable commodities. When the cantaloups are at our place of business and if we do not sell them today then 9 times out of 10 tomorrow we will be selling them at a lower price.

Representative Dunn. If you do not get the produce sold for the price you ask what do you do with it?

Mr. Waidner. We sell it at the price that the buyer wants to pay for it.

Representative Dunn. Suppose you do not get a buyer?

Mr. Waidner. Beg pardon?

Representative Dunn. Suppose you do not get a buyer?

Mr. Waidner. Well, of course, if we do not get a buyer we have to seek buyers. We are always seeking them, you know, but eventually, in a situation like that, the produce would be sent to the dump.

Representative Dunn. That is what I would like to find out. I was informed that before they would bring down the prices in Baltimore that they would dump carloads of fruit into the bay.

Mr. Waidner. That might be the case in some rare instances, but I think the general practice is that the majority of the people that are engaged in this line of business do not do that.

Representative Dunn. Do you know if that is a fact?

Mr. Waidner. Beg pardon?

Representative Dunn. Do you know if that is the fact?

Mr. Waidner. I would say offhand that is not a fact.

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Representative Dunn. You do not know that that has ever happened?

Mr. Waidner. No, sir; not at all.

Representative Dunn. I just want to get that information.

Representative Schneider. Who takes the loss?

Mr. Waidner. It depends on the merchandise. There are three people usually involved, the shipper, the man who, in the first instance, has his money tied up in it; then the railroad has the freight charges tied up in it, and the commission merchants, at least some of them, might have advances tied up in it. There may be any one of three people involved in a transaction of that kind, and all three may be involved.

Representative Schneider. To what extent does the original producer become involved in it?

Mr. Waidner. The original producer becomes involved in it to the extent of being responsible for the freight charges, if you can collect the freight charges from him in case any large quantity of his shipment went to the dump, or anything of that kind, but the committee need not be perturbed about anything of that kind happening in the produce business.

The Chairman. You never heard of it?

Mr. Waidner. Beg pardon?

The Chairman. You never heard of it?

Mr. Waidner. I heard of it, undoubtedly.

The Chairman. You know it has happened?

Mr. Waidner. It has happened.

The Chairman. It has happened many times when they have taken cars and dumped them in the East River in New York, has it not?

Mr. Waidner. I do not know, except maybe you read about that in the paper.

The Chairman. Did it or did it not happen?

Mr. Waidner. I do not know whether it happened actually. I only know what I read in the papers about a situation like that. I know it has never happened in the Baltimore market.

The Chairman. You have never known it to happen in Baltimore?

Mr. Waidner. I have never known of a solid carload being dumped in Baltimore.

The Chairman. Have you ever known of parts of a carload being dumped?

Mr. Waidner. Certainly, out of a carload of some particular commodity, for instance, that comes in there might be a question where the commodity was shipped too ripe, or shipped in a broken car.

The Chairman. You do not know of a carload being dumped because they did not get the price for it that they asked? That is the question that has been asked.

Mr. Waidner. That is right.

The Chairman. It has been done frequently, has it not?

Mr. Waidner. I am sure it has not been done frequently, not according to the total business done in Baltimore.

The Chairman. You have done that?

Mr. Waidner. Very seldom.

The Chairman. You say it is not done frequently in comparison to the total amount shipped?

Mr. Waidner. That is it, exactly.

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[PAGE 1010]

The Chairman. But you know many cars have been dumped, destroyed, because they could not get the price they wanted?

Mr. Waidner. I could not see how you can say there were many.

The Chairman. How many, if any, have been dumped?

Mr. Waidner. Some have been dumped.

The Chairman. We have adopted the rule not to ask questions during the general statement of the witness, but I did that because I would like to get clear on this point. You testified that you did not know of any of it being dumped, but you do now know that a lot of it has been dumped, do you not?

Mr. Waidner. I do not: no.

The Chairman. An infinitesimal proportion has been dumped?

Mr. Waidner. Yes.

The Chairman. They did not have the money to buy it with and therefore it was dumped; is that not true?

Mr. Waidner. It was not a question of whether they had the money, it was a question of where the merchandise was not in fit condition, or else the market was not good enough to the buyers.

The Chairman. What you mean by “the market was not good enough” is that you did not have persons to buy it?

Mr. Waidner. That is it, exactly.

The Chairman. Where was it dumped?

Mr. Waidner. We usually dump it on one of the city dumps when anything like that happens.

The Chairman. Go ahead.

Representative Thomas. I do not quite get your point of view. Do you have any fear that if this act goes into effect it might hurt the farmer by raising the price of his commodity to such an extent that he cannot sell it, or are you interested in this purely from your own business point of view? Are you attempting to express any sentiment in behalf of the farmer?

Mr. Waidner. Only indirectly. Of course, the farmer would undoubtedly be indirectly affected by this if by any chance we would attempt to increase our commission rate in order to make up for the increased costs.

Representative Thomas. The probabilities are, Mr. Waidner, that if anyone is adversely affected by this bill it is going to be the farmer rather than the commission man; is that not a fact?

Mr. Waidner. I agree with you; yes, sir.

Representative Thomas. As a matter of fact you gentlemen do not have anything invested in the merchandise that is shipped to you; you do not pay in advance for it, do you?

Mr. Waidner. Generally, no. I am speaking for myself in that case.

Representative Thomas. When there is a loss taken there is nobody in the world who takes the loss to any greater extent than the farmer?

Mr. Waidner. You are exactly right; yes, sir.

Representative Thomas. As a matter of fact this Congress passed a bill in 1933 called the Produce Shippers Act to remedy an ugly situation that has grown up in this business. In other words, without casting any reflection on any commission merchant, the practice had grown up to a large extent which permitted your business, under some conditions, to literally rob the farmers.

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[PAGE 1011]

In other words, it came about like this—and I am speaking from first-hand information, because I had the unfortunate duty of prosecuting some of the concerns in a situation which is exactly like I am going to detail to you: Here is an honest grower down on the Mexican border in Texas; he turns over to the local produce man 50 or 100 carloads of onions, and the produce man does not have a thin dime tied up in the 100 cars, all he has tied up is some telephone bills, perhaps, to the commission merchant down in Texas, and the farmer comes back to the commission merchant in Texas and says, “Now, I want my money.” The commission merchant in Texas says, “Those fellows up in Baltimore skinned me, they will not even pay me for this, they say the onions were rotten and they dumped them, they did not get a dime for them.” The poor farmer writes you and you say, “1 paid Mr. A in Texas.” It ends up with a whole lot of correspondence, and if the farmer tries to sue the merchant in Texas the evidence is in Baltimore and the Texas court has no jurisdiction over your folks in Baltimore; you will not come down and testify. As a matter of fact, the Federal Government had to pass a law taking unto itself jurisdiction in that situation.

The point, after that long-winded discussion, is simply this—that you folks do not have a quarter tied up in the merchandise you receive. If anybody is going to take a loss it is not going to be you boys, it is going to be the farmer. So I do not see tne point in you hollering so loudly and so long.

Mr. Waidner. The point is we have our freight charges tied up in it.

Representative Thomas. You charge that to the producer; that is the first thing you do.

Mr. Waidner. Yes; but you cannot collect.

Representative Thomas. If you cannot collect you are not liable for it either, are you? If I understand you correct, you pay your men from $18 to $22 a week, so you are not going to be affected from the standpoint of the wage. You might be affected a little bit on the hours part. Would not you be willing to help increase the purchasing power in the community in the hope that you might be able to get more customers?

Mr. Waidner. It did not work that way under the N. R. A.

Representative Fitzgerald. The man who preceded you, who represented your industry, claims that in 1933 a survey was made where 2,172 employees out or a total of 9,922 were receiving less than $15 a week and "they were working anywhere from 48 hours a week to as many as 70 hours. Do you think that $15 a week would enable that class of employees to buy strawberries when they first come out, or cantaloups, at the high prices?

Mr. Waidner. I suppose maybe the average of the wage there was perhaps taken over the industry as a whole. I cannot speak for that part of it at all. I mean the only thing I can speak about is what the general average of wages is. for instance, in Baltimore. I know more about- that, than any other particular market.

Representative Fitzgerald. The thing we have to do is help industry as a whole. Here are the figures given out by the previous gentleman, that the workweek was from 48 to 70 hours and the wages of 2.172 employees was less than $15 a week. Do you think at $15 a week a man can maintain himself in not the luxuries but

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just the necessities of life? Do you think he would be able to buy strawberries at the price you fellows get when they first come out, or perhaps the cantaloupes?

Mr. Waidneb. He perhaps could not.

Representative Wood. Mr. Thomas asked you if you did not feel that you ought to cooperate by reducing the hours of the employees and increasing the purchasing power of the masses in order to bring on better conditions and you said it did not work that way under the N. R. A. How did it work under N. R. A.? What did you mean by that?

Mr. Wacdneb. It simply meant that our cost of doing business was so much increased under the setup that we had at that time that the profits were practically nil. I am speaking again from my own standpoint. I mean I lived up to the letter of the law under the N. R. A.

Representative Wood. What change has there been since the N. R. A.?

Mr. Waidneb. The only change has been that we were able to take off the overtime. That is a tremendous factor, as far as this present bill is concerned. I do not object, and I think the majority of the people in the industry do not object to the minimum wage law, whatever wage law is set up I think will be satisfactory to the majority of the people in the industry, but the thing I am trying to bring before you gentlemen is the fact that this is an industry that will not lend itself to having any particular number of hours set on the industry for any particular workweek.

Representative Wood. What was the position of your business prior to N. R. A., in the years 1931 and 1932? Were you doing a flourishing business then?

Mr. Waidneb. I would not say it was a flourishing business.

Representative Wood. How much business were you doing as compared to now?

Mr. Waidneb. I suppose our total volume was about the same. I mean it ran along level during the N. R. A. years, the same as it did the year before.

Representative Wood. You mean to say that you did not handle any more commodities in 1933 than you aid in 1931 and 1932?

Mr. Waidneb. Perhaps if there has been any increase it has been very small, a very small increase.

Representative Wood. Then you have not reaped any benefit from the present New Deal administration, have you?

Mr. Waidneb. Absolutely not.

Representative Wood. You do not do any more business?

Mr. Waidner. Absolutely not; no, sir.

Representative Wood. What were your profits in 1932 and 1933?

Mr. Waidneb. I do not remember that offhand.

Representative Wood. Did you still make a 10 percent profit at that time?

Mr. Waidner. No ; we did not make a 10 percent profit at that time.

Representative Wood. Did you still make a 7 percent profit?

Mr. Waidner. We did not make 7 percent then.

Representative Wood. How many men did you employ in 1932, in your business?

Mr. Waidner. I do not remember that offhand.

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[PAGE 1013]

Representative Wood. You do not remember?

Mr. Waidner. It would be about the same number as I employ now.

Representative Wood. How many?

Mr. Waidner. Seventeen altogether.

Representative Wood. Seventeen?

Mr. Waidner. That includes all employees; yes, sir.

Representative Wood. Did you employ 17 in 1932?

Mr. Waidner. We perhaps did. We might have employed maybe 15.

Representative Wood. Don’t you know how many employees you employed in 1932?

Mr. Waidner. Not offhand; no, sir. It might have been somewhere in that figure.

Representative Wood. It might have been?

Mr. Waidner. Yes.

Representative Wood. How many hours did you work in 1932? What was your workweek then?

Mr. Waidner. Well, the workweek is more or less determined----

Representative Wood (interposing). What is the maximum workweek?

Mr. Waidner. I should say, speaking of my particular business, that we had a maximum workweek, as far as the produce business in Baltimore is concerned, that had constantly decreased since the time I went in business in 1924.

Representative Wood. What was the workweek in 1932?

Mr. Waidner. I would say between 10 and 11 hours a day was the average.

Representative Wood. Eleven hours was the maximum?

Mr. Waidner. Eleven hours was the maximum.

Representative Wood. What was the average hourly wage of the employees in 1932?

Mr. Waidner. I would say it was lower than it is at the present time.

Representative Wood. How much lower?

Mr. Waidner. Well, we had men working in the store there that we paid from $15 to $18 a week. Truck drivers usually get from $18 to $22.

Representative Wood. You had truck drivers working 11 hours a day for $15 to $18 a week?

Mr. Waidner. The truck drivers worked for $18 to $22 then.

Representative Wood. In 1932?

Mr. Waidner. Yes.

Representative Wood. And they worked 11 hours a day?

Mr. Waidner. They worked from 10 to 11 hours.

Representative Wood. What was the size of those trucks?

Mr. Waidner. Beg pardon.

Representative Wood. What was the size of the trucks that they operated?

Mr. Waidner. Well, they are Chevrolet trucks.

Representative Wood. How many tons?

Mr. Waidner. The official is a ton and a half.

Representative Wood. What is the maximum tonnage of the truck?

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Mr. Waidner. Well, they hold about 4 tons.

Representative Wood. Four tons?

Mr. Waidner. Yes.

Representative Wood. You give those men $15 a week for 11 hours work?

Mr. Waidner. I did not say that, sir.

Representative Wood. $15 to $22 for 11 hours’ work?

Mr. Waidner. I say the truck drivers usually got $18 to $22.

Representative Wood. What do they get now?

Mr. Waidner. Now they get around $20 to 22.

Representative Wood. $20 to $22?

Mr. Waidner. Yes, sir.

Representative Wood. No one gets any more than $22. They got $22 in 1932 and still get $22 now?

Mr. Waidner. They may have gotten $18 in 1932.

Representative Wood. Your volume of business is not more now than it was in 1932?

Mr. Waidner. It is not; no, sir.

Representative Wood. Was it any less than it was during the N. R. A.?

Mr. Waidner. The volume of business was not less, but the profits were practically wiped out during the time we had the N. R. A. in effect.

Representative Wood. What do you mean by paying the agents a commission? What do the agents do?

Mr. Waidner. They are supposed to solicit consignors of fruit and vegetables for us.

Representative Wood. Who are the agents?

Mr. Waidner. They are people who perhaps are shippers themselves, engaged in growing or shipping the commodities from the point of origin.

Representative Wood. You said “shippers.” You do not mean the railroads, do you?

Mr. Waidner. No; they are private individuals.

Representative Wood. They are engaged in just shipping on commission or getting the business for you?

Mr. Waidner. That is it exactly; yes, sir.

Representative Wood. How many of those agents have you?

Mr. Waidner. Well, it varies. In other words, we might have one or two.

Representative Wood. How many have you now?

Mr. Waidner. We have about five or six, I should say offhand.

Representative Wood. You have five or six agents?

Mr. Waidner. That is right.

Representative Wood. That covers the business in which you employ 17 people?

Mr. Waidner. That is right, but of course all that business is not gotten by these agents, you know.

Representative Wood. How much business does your firm individually get without the assistance of these agents?

Mr. Waidner. We get practically all of it. That is a change that has taken place in the business.

Representative Wood. What commission do you give the agents for getting the business for you?

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Mr. Waidner. From 2 to 3 percent.

Representative Wood. From 2 to 3 percent?

Mr. Waidner. Yes.

Representative Wood. Does that come out of the 10 percent?

Mr. Waidner. That does; yes, sir; and thereby drops our net or at least our gross commission for doing business.

Representative Wood. What is the largest commission concern in Baltimore similar to your business?

Mr. Waidner. I should say that there perhaps are two others, Zimmerman Bros, and Stevens Bros.

Representative Wood. How many people do they employ?

Mr. Waidner. I guess they employ about the same number that we do.

Representative Wood. There are no other larger firms in Baltimore, are there?

Mr. Waidner. I think not. I think you will find, in point of volume of business that is done there, that we are within the first five.

Representative Wood. About what is your volume of business annually?

Mr. Waidner. About a half million dollars.

Representative Wood. About a half million dollars?

Mr. Waidner. Yes, sir.

The Chairman. All right, go ahead, Mr. Waidner.

Mr. Waidner. I would like to correct an erroneous impression, perhaps, that you have about the way the commodities are handled. I mean when these commodities come in, you know; I mean we are seeking the market, there is no doubt about that. I mean perhaps your statement there gives the impression that the commission man in general is an inefficient somebody who just stands around, who will not go out to get a customer for the stuff that he will have to, more or less, send to the dump. I mean the competition in this business is such that those people who are able to survive and do an honest business are those who are really efficient.

Representative Thomas. You are right. I have had plenty of experience with them.

Mr. Waidner. In other words, the P. A. C. Act would have a tendency to keep us lined up if nothing else would. We ourselves have been in business since 1885 and we are still doing it.

Representative Wood. You said your profits were practically wiped out during the N. R. A.?

Mr. Waidner. Yes, sir.

Representative Wood. How did that come about? It was not because of your paying more wages, was it?

Mr. Waidner. Certainly it was. That was the whole crux of the situation.

Representative Wood. You paid a few dollars a week more to these employees. Before the N. R. A. you paid $15 to $22, and after the N. R. A. you paid $20 to $22.

Mr. Waidner. If I said $15 to $22 it was wrong, because it should have been from $16 to $22, because they set the minimum in Baltimore at $16. There was nobody paid less than $16.

Representative Wood. How many did they pay $22?

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Mr. Waidner. I do not know that offhand.

Representative Wood. You do not know?

Mr. Waidner. No.

Representative Wood. Do you know anything about the pay roll?

Mr. Waidner. I think I do. I sign the pay-roll checks.

Representative Wood. Do you have a special man to keep track of the 17?

Mr. Waidner. The business is not large enough for that; no, sir.

Representative Wood. What is your position in the firm? Are you the president?

Mr. Waidner. The proprietor; yes, sir.

Representative Wood. You are the proprietor?

Mr. Waidner. Yes, sir.

Representative Wood. You do not know how many men you pay $17 a week?

Mr. Waidner. I can give it to you roughly. I should say there may have been two that we had at that time.

Representative Wood. How many did you pay $22 last week? You had a pay roll last week, did you not?

Mr. Waidner. You mean you want me to give you the present pay roll?

Representative Wood. How many did you pay $22 a week last week, or the week before?

Mr. Waidner. We have only one truck driver that we pay $22 a week.

Representative Wood. Whom else did you pay $22 a week?

Mr. Waidner. We did not pay the other store help $22.

Representative Wood. You paid one man $22?

Mr. Waidner. That is it, exactly; yes

Representative Wood. What did you pay the rest of them?

Mr. Waidner. One man we pay $20 and the others we pay $18.

Representative Wood. $18?

Mr. Waidner. Yes.

Representative Wood. One you pay $22, one you pay $20, and the rest $18?

Mr. Waidner. Yes.

Representative Wood. And you paid $16 before N. R. A.

Mr. Waidner. No; after N. R. A. we paid $16. In other words, during the depression, the way the thing worked during the depression, in order to maintain a semblance of a business and try to keep in the business what we did was perhaps—I never paid less than $15 even during the depression.

Representative Wood. I thought you said you had as much business in 1932 as you had in 1933.

Mr. Waidner. I did; yes, sir.

Representative Wood. What was the reason for shifting these men around by juggling the work?

Mr. Waidner. I do not understand you when you say ‘‘juggling the work.”

Representative Wood. You did not stagger the work at any time, did you?

Mr. Waidner. You mean during the N. R. A.?

Representative Wood. Did you stagger the employment in 1932?

Mr. Waidner. During the N. R. A.?

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Representative Wood. Before the N. R. A.

Mr. Waidner. No.

Representative Wood. Did you during N. R. A.?

Mr. Waidner. No; I did not during N. R. A.

Representative Wood. Did you ever stagger your employees?

Mr. Waidner. No.

Representative Wood. You said that there was some arrangement of keeping your employees. What was the reason for it?

Mr. Waidner. During the N. R. A. they set the hour limit and we lifted it up to the hour limit. What we did instead of going ahead and laying off experienced men after they worked 8 hours, or whatever the number of hours was during the week, we paid them time and a half for overtime. In other words, the business is such that you cannot just pick a man out of thin air and tell him to go ahead and do his work. You have got to have some experienced help to do that for you, and of course it takes time to bring the experienced man in.

Representative Wood. According to your testimony you said you paid $16 to $22 a week before N. R. A.

Mr. Waidner. No, sir. I think before the N. R. A. I never paid less than $15 a week.

Representative Wood. $15 to $22?

Mr. Waidner. $15 to $20,1 should say; yes, sir.

Representative Wood. To $20?

Mr. Waidner. Yes.

Representative Wood. Now, you just said you paid 13 employees $18 a week.

Mr. Waidner. No; the 17 that I employ includes the office help, and also the salesman, I mean the porters that are really affected by this. There are seven men who are in the laboring class.

Representative Wood. In regard to the wage-rate adjustment, you had to pay a few dollars more under the 40 hours a week to all those 17? Is that what caused you to not make any profit in 1933?

Mr. Waidner. It was not that; no, sir.

Representative Wood. What was it?

Mr. Waidner. It was the fact of paying time and a half for overtime when we had to work the men 10 and 11 hours a day, and sometimes 12 hours a day.

Representative Wood. You just said you shifted them around to Work 40 hours a week.

Mr. Waidner. No; I did not say that at all. I told you I complied with the hours set under N. R. A., but rather than let the experienced men go off after they worked 8 hours and put on inexperienced men who did not know how to do the work we kept the experienced men on and paid them time and a half.

Representative Wood. What was the gross increase in wages of the 17 employees?

Mr. Waidner. It was not less than 50 percent. As a matter of fact, it was perhaps more than that. We were paying them time and a half for overtime, you see.

Representative Wood. How do you figure that 50 percent increase?

Mr. Waidner. It would be a 50-percent increase. I mean if we paid them for straight time that would be an increase there, and

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of course with time and a half that would be another 50 percent- added.

Representative Wood. You did not pay any attention to the 40 hours a week, you just worked the men right along 10 and 11 hours a day?

Mr. Waidner. I would not say 10 and 11 hours.

Representative Wood. Did you work any of those 17 employees 40 hours a week during the N. R. A.?

Mr. Waidner. We did not have a 40-hour week established in the fresh fruit and vegetable industry. I think the number of hour's was 50 hours set in our industry.

Representative Wood. That was the code?

Mr. Waidner. Yes; that was the code.

Representative Wood. How many did you work over 50 hours a week?

Mr. Waidner. The majority of them worked over 50 hours a week.

Representative Wood. Then you did not pay any overtime, did you?

Mr. Waidner. Absolutely we paid overtime. I paid the overtime for the time they worked over the 50 hours.

Representative Wood. You just said you did not work over 50 hours a week under the N. R. A. You mean you paid them overtime over the 50 hours?

Mr. Waidner. I say I lived up to the code to work then men 50 hours a week on straight time, but rather than lay them off I would keep the efficient men who were experienced in that line of work and pay them time and a half overtime.

The Chairman. Go ahead, Mr. Waidner.

Mr. Waidner. Another point I would like to bring out is the fact that we cannot charge more than 10 percent commission, because just as soon as we do we run into a situation where the shipper on the other end is constantly looking for another outlet for his shipments, and besides not being able to add some of these increased costs of doing business to the actual merchandise we are selling it is impossible for us to change this rate of commission. Those people who have tried to do it have found that it is impossible to do it and have gone back to the standard commission charge of 10 percent for handling truckload shipments and for local shipments, and 7 percent for handling less than carloads. Mr. Herr has already mentioned that we handled over a period of years about 800,000 carloads of produce, and figuring your minimum truckload movement it would bring that up to a million cars, and I want to tell you gentlemen that out of the 800,000 cars that were handled, that part of it that was handled on consignment was handled on a 7-percent basis, not a 10-percent basis.

Representative Dunn. Did you say 800,000 cars?

Mr. Waidner. That is the figure that we have.

Representative Dunn. Whom do you mean by “we”?

Mr. Waidner. I mean the produce business as a whole.

Representative Dunn. I see. I thought you said that you, a comparatively small producer, or commission man, with 17 employees, handled 800,000 cars.

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[PAGE 1019]

Mr. Waidner. It would be impossible for us to handle 800,000 cars; yes, sir, that is, our firm.

The Chairman. Is there anything else, Mr. Waidner?

Mr. Waidner. There is one other thing I would like to say and that is that this produce business is one where the employees are not subject to any labor-saving devices. There is absolutely nothing we can do to put any labor-saving machinery in that will be able to cut down on the total number of employees that we have on the pay roll, the way a good many of these other concerns do.

Furthermore, I would like to state that in the produce line of business, while the hours do seem long, and while, at times, there are times during the year when it is necessary to work a man 10 hours or 11 hours and sometimes 12 hours in order to keep the commodities moving the way they should be moving, that is not the same kind of strenuous and hard labor that people are subjected to, for instance, in the assembly line of automobiles, in an automobile plant, or something of that kind. It is a question of it being healthy work where the men are outdoors. There are periods during the day when the men are standing around for an hour or two waiting to have their next order given to them.

There is one question I would like to be permitted to ask, and that is the question about exempting certain employers. I mean, has that been definitely decided?

The Chairman. It has not.

Mr. Waidner. If it is the plan of the committee to put that in there, what is the reason for doing that, if I may ask that question?

The Chairman. Have you any argument against it? If you do we will be glad to hear it.

Mr. Waidner. The argument I have against it is that in this produce business we depend upon the shippers to send their commodities to us for us to make a living out of it, if we possibly can, and the thing is if you have a salesman on the pavement, or in your employ, he is sooner or later bound to know all of these shippers’ names and the sections from which the commodities come, and if by some chance he happens to leave you, opens up a little place of business next door to you, employs his wife, for instance, as the bookkeeper, and has two sons as the helpers in that store. I just want to bring out to you the kind of competition we have to compete with and to put up with in a situation of that kind.

At the same time he is attempting to get shipments and contacting the shippers that you have had for a number of years, he has all that information before him and uses it as a method or a means of getting business, getting it away from us, and at the same time he is exempt, or would be exempt under this particular Federal law if that exemption for employers is put in the bill.

Representative Jenks. What is your principal objection to this bill?

Mr. Waidner. The principal objection is that this particular industry cannot hope to survive under a limitation of hours as proposed by the committee. It is not a question of us being totally opposed. I do not think there is anybody in the industry who is dead set and opposed to limiting the hours. I mean I would like to do it as much as I possibly could, but we would like to have a Federal law whereby it would be workable in our industry.

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[PAGE 1020]

Representative Jenks. Supposing the entire industry would be put on the same basis, I cannot see where it would be any hardship to one if they were all put on the same basis.

Mr. Waidner. Except as I have tried to bring out, it would so tremendously increase the cost of distributing the merchandise that we have to distribute that it would be impossible for us to maintain our present method of doing business, especially in view of the fact that there is no possible way for us to pass this increased cost of doing business to someone else, the way that others have done.

Representative Fitzgerald. Your chief objection is to the number of hours. You do not want any limitation?

Mr. Waidner. I do not say that; no, sir. I do say that if we have a limitation set by the committee or by the law, it should be one that is workable in our industry.

Representative Fitzgerald. You say you do not object to the minimum wage. You said that in your testimony.

Mr. Waidner. That is it exactly; yes, sir.

Representative Fitzgerald. What I gather from your testimony is that you are opposed to the limitation of hours.

Mr. Waidner. I am only opposed to the limitation of hours to the extent that we do not want a limitation in our industry that will put us out of business. Forty hours a week would put us out of business.

Representative Fitzgerald. What would you suggest to be the limit?

Mr. Waidner. Not less than 54 hours a week, which gives us 6 days at 9 hours a day.

Representative Fitzgerald. Of course, you understand that after all the work that has been done in the last several years by the administration, there are still several million people out of employment. How are you going to get these people back into employment if your industry is going to continue to hang onto the 60- and 70-hour week?

Mr. Waidner. I just said I am opposed to 60 or 70 hours. What I would like to see is a 54-hour week established in the industry.

Representative Fitzgerald. Do you think the industry can carry on by reducing from 70 hours to 54 hours a week?

Mr. Waidner. I do not mean to indicate that the industry works 70 hours a week.

Representative Fitzgerald. The testimony given by your representative is that during 1933, when the survey was made, the majority of the full-time employees worked from 48 to 70 hours.

Mr. Waidner. When I first came into the business everybody worked 12 hours a day.

Representative Fitzgerald. What was the average number of hours worked then?

Mr. Waidner. I would say the average at the present time is 10 to 11 hours. It is 10 in the industry at the present time.

Representative Fitzgerald. You said you are working 11 hours a day, 5 days a week in your particular industry.

Mr. Waidner. You asked me what I thought the average was. I am telling you what I think it is in Baltimore, as far as Baltimore is concerned.

Representative Fitzgerald. How many is that?

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[PAGE 1021]

Mr. Waidner. Between 10 and 11.

Representative Fitzgerald. That would be 60 hours a week.

Mr. Waidner. Well, it would be that; yes, sir. I should say 60 hours a week is the correct figure.

Representative Fitzgerald. You say the industry could carry the hours if reduced to 54 without any great hardship?

Mr. Waidner. It would hope to; yes, sir.

Representative Fitzgerald. And it would be a hardship if it was reduced down to 40?

Mr. Waidneb. Absolutely.

Senator La Follette. What percentage of the cost of doing business in your particular concern is labor cost?

Mr. Waidner. Well, the labor cost is, I should say, anywhere from 60 to 75 percent of our total cost of doing business. I mean the labor cost is practically everything.

Senator La Follette. You pay 17 employees 60 to 70 percent of the cost of doing business?

Mr. Waidner. That is it; yes, sir. I say that offhand. I do not have the figures before me.

Senator La Follette. What was your gross profit in 1936?

Mr. Waidner. Our gross profit in 1936 was around $8,000. That was last year.

Senator La Follette. And what was your total labor cost?

Mr. Waidner. I do not know offhand.

Senator La Follette. Would you supply the committee with that information?

Mr. Waidner. I could; yes, sir.

Senator La Follette. What was your net in 1936?

Mr. Waidner. Oh, you asked me for the gross before. I am not familiar with the gross, but the net was around $8,000.

Senator La Follette. You run this on a partnership or a corporation basis?

Mr. Waidner. No; that is sole ownership.

Senator La Follette. And that is after you have taken out your salaries?

Mr. Waidner. Yes, sir.

Senator La Follette. Your own salary?

Mr. Waidner. Yes, sir.

Senator La Follette. What was your salary in 1936?

Mr. Waidner. $35 a week.

The Chairman. Just one or two questions that are prompted by some of the questions that have been asked. We have figured out here that if you had 20 employees and paid them all $20 a week— Senator Ellender figured it out—that would be around $20,000 a year for your wages. Is that right?

Mr. Waidner. Well, I pay some of my employees more than that. The salesmen, for instance, get around $40 to $45 a week.

The Chairman. How many of them?

Mr. Waidner. There are three salesmen that I have.

The Chairman. How many other employees?

Mr. Waidner. Well, we have three employees in the office—four employees in the office.

The Chairman. What do one of those get that gets the least?

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[PAGE 1022]

Mr. Waidner. The least gets $16 a week. That is the bill clerk. There are two stenographers. One stenographer gets $25 and the bookkeeper gets $25, and the man who runs the office gets $35.

The Chairman. Your weekly pay roll is not over $400, is it?

Mr. Waidner. It runs around $400; yes, sir.

The Chairman. That would be, for 52 weeks, $20,800. You do a half a million dollar business a year?

Mr. Waidner. Approximately; yes.

The Chairman. Ten percent of that would be $50,000.

Mr. Waidner. Yes.

The Chairman. So your labor costs would not be 55 percent.

Mr. Waidner. The thing is that our gross in 1936 was around $450,000, and our gross profit was based not on the figure that you used, 10 percent, but around 8 percent.

The Chairman. Now, you had a loss in 1932, did you not, and so reported it to the Government, or your company?

Mr. Waidner. I do not recall having a loss; no, sir.

The Chairman. Did you make a profit and pay an income tax, or your corporation, in 1932?

Mr. Waidner. I did myself, personally.

The Chairman. Did your corporation?

Mr. Waidner. It is not a corporation. I do not know whether it was a partnership at that time or a sole ownership, but I know I personally paid my part of the business at that time. I am pretty sure I paid an income tax every year.

The Chairman. 1932, 1933, 1934, 1935, and 1936?

Mr. Waidner. Yes, sir; I am talking of me, personally.

The Chairman. When you make a report to the committee would you mind letting us know what your net profits were from your business in 1932, 1933, 1934, 1935, and 1936?

Mr. Waidner. Yes.

The Chairman. You know as a matter of fact that it has been going up since 1932, do you not?

Mr. Waidner. The profits?

The Chairman. Yes, sir.

Mr. Waidner. My part of the business, the profits from that increased during those years; yes, sir.

The Chairman. They have increased since 1932, have they not?

Mr. Waidner. I do not know that offhand; no, sir.

The Chairman. Has your salary gone up or down during that time?

Mr. Waidner. That has remained stationary.

The Chairman. It was the same during the depression as it is now?

Mr. Waidner. Yes, sir. In other words, I drew $35 a week.

The Chairman. And expenses? Did you draw anything else?

Mr. Waidner. No; this $35 was all.

The Chairman. Any dividends?

Mr. Waidner. Of course, in a proprietorship there would be no dividends. I mean the profits that accrued during that period would be credited to the capital to me.

The Chairman. When you make your report please show what were the net profits during each of those years, during 1932 to 1936. It would be very interesting to the committee.

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[PAGE 1023]

Mr. Waidner. Would you like to have 1932,1933, 1934, and 1935?

The Chairman. And 1936.

Mr. Waidner. 1936; yes, sir.

The Chairman. Thank you very much.

Representative Griswold. The provisions of this bill providing for the Board considering the marketing facilities, do they have any tendency to remove your opposition to this bill?

Mr. Waidner. There is nothing in the bill that says anything about marketing, is there?

Representative Griswold. The Board might consider that.

Mr. Watdner. It would depend upon what particular line of marketing it referred to. For instance, if there would be anything in the bill that would enable us to absorb the additional expense of being put on a 40-hour week, I would approve it.

Representative Griswold. All right. Thank you.

The Chairman. Thank you.

In reference to Mr. Alldredge, I do not believe he has prepared a statement. I personally asked Mr. Alldredge to come up by reason of the fact that the question of freight rates has come up. Mr. Thomas suggested getting someone from the Interstate Commerce Commission, and we reached the conclusion that it would be better to have someone who had made some study and who was not connected with the Interstate Commerce Commission, and therefore, with the consent of the committee, I shall ask Mr. Alldredge some questions in advance, because he has no prepared statement. I think we can get along more expeditiously that way.

STATEMENT OF J. HAYDEN ALLDREDGE, TENNESSEE VALLEY AUTHORITY

The Chairman. Mr. Alldredge, are you connected with the T. V. A.?

?Mr. Alldredge. Yes.

The Chairman. What is your position with them?

Mr. Alldredge. Transportation economist.

The Chairman. Transportation economist?

Mr. Alldredge. Yes.

The Chairman. How long have you been with them?

Mr. Alldredge. Nearly 3 years.

The Chairman. Have you made any study of freight rates, comparative freight rates, in different commodities for different sections of the country and for different distances during the time that you were a member of the T. V. A.?

Mr. Alldredge. Yes, sir; I have.

The Chairman. You made a report, did you not, to the Tennessee Valley Authority?

Mr. Alldredge. That is correct; yes.

The Chairman. That is to be printed in a public document, as I recall it, but it has not yet been printed?

Mr. Alldredge. Yes, sir; it is being set up in type now. I understand a galley proof will be out in 2 or 3 days.

The Chairman. May I ask you, Mr. Alldredge, to give the committee the comparative freight rates for comparative distances to

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[PAGE 1024]

and from different points as you have them set out in your report ? Do you have those convenient, so we may get the benefit of them?

Mr. Alldredge. Not in the case of all rates. I can give you representative commodities. The Chairman. Well, give it to us on representative commodities.

Mr. Alldredge. I wonder if you would allow me to state, just in a few words, what the real problem is and what it grows out of?

The Chairman. What we are interested in here is the freight rates, as far as your evidence is concerned.

Mr. Alldredge. Yes, sir; we have no national freight-rate structure. What we have is a composite of regional structures, and those regional structures are not made on the same levels, nor according to the same schemes, so that they do not fit together at the borders very well, and a difficulty frequently arises when freight undertakes to move from one region to another. I have here some illustrations that are in this report.

The Chairman. We will be very glad to have them here.

Mr. Alldredge. You can follow them perhaps better if I give you a copy.

The Chairman. Do you have copies of them there?

Mr. Alldredge. Yes; I have copies.

The Chairman. Enough for the members of the committee to see?

Mr. Alldredge. I have several. I do not know whether I have a complete set or not.

The Chairman. This is a map of railroad freight-rate territories. Does that mean regions?

Mr. Alldredge. That is right. They are called territories in rate parlance.

The Chairman. Yes, sir. (The map referred to is as follows:)

MAP

Mr. Alldredge. The committee will notice there the geographic outlines of those regions. Now, in some cases there ere subdivisions within the regions where there are differences in the levels of the

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[PAGE 1025]

rates. There is a subregion or subterritory in Florida, what they call the peninsula of Florida. There is one up in Michigan.

By the way, there has been some recent change in Michigan that I have not been able to check up. There are subregions or zones, as they are called, in this western trunk-line territory, and also in the southwestern territory.

Representative Thomas. In Texas?

Mr. Alldredge. Texas; yes.

The Chairman. What I would like to get is for you to give us some illustrations on the commodities, first, from a special study in connection with the southern territory in which the T. V. A. is located.

Mr. Alldredge. Yes, sir; I have some more illustrations and I will build right up to what you are talking about.

The Chairman. That is fine.

Mr. Alldredge. Here is one that shows the relative levels of the basic-rate scale in these territories, which will enable you to get some idea of the differences.

The Chairman. Before you leave this, and in order to get it explained, this shows seven lines?

Mr. Alldredge. Yes. sir.

The Chairman. And it shows the rate in cents per 100 pounds?

Mr. Alldredge. It shows the relative levels and progressions of railroad intraterritorial first-class rate scales in the United States?

Mr. Alldredge. Yes; that is correct.

The Chairman. What is the lowest rate shown on that chart?

Mr. Alldredge. That is in eastern or official territory.

The Chairman. Where is the eastern or official?

Mr. Alldredge. Roughly, that is north of the Ohio River and the Virginian Railway which runs across the southern part of Virginia, east of the western boundary of Illinois and south of the Canadian border.

The Chairman. Where is the next lowest?

Mr. Alldredge. That is the western trunk-line zone 1. You see it outlined on the first map that I gave you there. It is right next to official territory, on the west.

The Chairman. What States does that take in?

Mr. Alldredge. Iowa, part of Minnesota, part of Wisconsin, part of Missouri, and I believe the Upper Peninsula of Michigan.

The Chairman. What is the next rate?

Mr. Alldredge. That is the southern.

The Chairman. And what territory does that include?

Mr. Alldredge. It includes what is generally known as the Southeast. It is south of the official territory and east of the Mississippi River.

The Chairman. Now, Mr. Alldredge, the next rate? That is, each one of these going up are the freight rates?

Mr. Alldredge. Yes, sir; western trunk-line zone II. That is just west of the western trunk-line zone I.

The Chairman. And what is the next one?.

Mr. Alldredge. Southwestern and trunk-line zone III is the next one. That takes in part of Louisiana, Arkansas, Oklahoma, the eastern part of Texas, on up through the Western States to the Canadian border.

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Chairman. What about the next one, the Mountain-Pacific. Utah scale?

Mr. Alldredge. Yes; they have no absolutely uniform scale up there, but that Utah scale applies generally in that territory. That is west, for it is in the mountain territory and on the Pacific slope.

The Chairman. Now, the southwestern zone is the highest rate. Where is that?

Mr. Alldredge. That is in a western part of Texas and southeastern corner of New Mexico.

The Chairman. You say, “rate in cents per 100 pounds.”' What does that mean, how long a transportation?

Mr. Alldredge. For the distances as shown at the bottom of this graph.

The Chairman. For the distances as shown at the bottom of this page?

Mr. Alldredge. Reading from left to right.

The Chairman. Reading from left to right?

Mr. Alldredge. Yes, sir; that is right.

The Chairman. Unless you have some other illustrations, would you give us some facts----

Mr. Alldredge (interposing). I have another one.

The Chairman. You have another one?

Mr. Alldredge. Yes, sir.

The Chairman. In connection with it would you testify as to this particular exhibit?

Mr. Alldrfdge. Yes, sir; I have one here which is a photograph of a model and it attempts to average the rate levels within these different territories, omitting the zones and subterritories on the manufactured and the processed articles, omitting the low-grade raw-material articles, and I would like the committee to see it.

The Chairman. Yes; what is this, Mr. Alldredge?

Mr. Alldredge. That is the illustration which attempts to portray what the average levels would be on articles that are processed or manufactured, leading out those of low-grade.

Mr. Alldredge. Now, I will name the relative levels, starting with 100 in eastern or official territory as the base.

The Chairman. One hundred for the eastern-official territory?

Mr. Alldredge. Yes, sir. The southern would be 139.

The Chairman. $1.39?

Mr. Alldredge. Yes; or 139 percent; yes, sir, that is right.

The Chairman. 139 percent it is here.

Mr. Alldredge. That is the level of rates. Tile Chairman. That is the rate level? Mr. Alldredge. Within that territory. The Chairman. Within the region? Mr. Alldredge. That is right.

The Chairman. All right.

Mr. Alldredge. Western Trunk Line would be 147, southwestern 175; and Mountain Pacific 171.

Representative Thomas. Go over that again. Let me interrupt you. The Senator [Senator La Follette] and I lost our breath on those figures. Repeat those again.

The Chairman. Explain what that is. Did you understand that?

Representative Thomas. I am afraid we did.

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Mr. Alldredge. I am going to give you some more figures in a minute that will help you.

Eastern or official is there taken as the base of 100, and southern would be 139, Western Trunk Line 147, southwestern 175, and Mountain Pacific 171.

Senator, if you will just give me a little leeway----

The Chairman (interposing). Yes, sir; go right ahead.

Mr. Alldredge. 1 will tell you how we look at this problem. Of course, we are interested in trying to develop a region, and, personally, I do not know how we can do it very well unless we can utilize the resources of the region by converting them into higher forms of goods in the regions where they occur, and then marketing them.

Now, the difficulty when you endeavor to do that is to deliver those goods to the area where the population is. According to the last census of the population of the United States, 51 percent resides in eastern or official territory, and of course, that creates an economic pull on the goods manufactured or processed in the other territories or regions.

Representative Thomas. What was that last statement,

Mr. Alldredge? I did not understand that.

Mr. Alldredge. It creates an economic pull on the goods manufactured or processed in the other regions, because the goods are looking for a market, and that market is generally where the people reside, and 51 percent of the people reside in official territory.

It just happens also that according to the last census of manufactures a little over 71 percent from the standpoint of value of products of the manufacturing of the United States is done in eastern or official territory, and when the goods are manufactured or processed in these outlying regions and start for a market where the population is, those goods generally run into competition with goods that are manufactured in that region.

These regions, not entirely, but generally speaking, are served by separate groups of railroads, and it is difficult to get them together on any common level of rates which will permit that free flow of interregional or interterritorial goods. If the railroads in one region want to get their goods out. and generally they do, they find opposition from the railroads in the region of destination.

Now, I can read you an official declaration by the carriers operating in eastern or official territory, which will give you the setting of this problem.

The Chairman. Yes, sir. Mr.

Alldredge. In the last year or two the Interstate Commerce Commission initiated a proceeding entitled, “Ex-Parte 116”, in which it called for suggestions as to a remedy for this problem. Now it is a troublesome matter to correct, there is no doubt about that, and the carriers operating in eastern or official territory filed a brief in that proceeding in which they set forth their position. I will quote that, if the committee please.

The Chairman. Yes.

Mr. Alldredge (reading): Official territory lines have perhaps the most vital interest in interterritorial competitive adjustments of any single group of carriers in the country, for the reason that the populous official territory provides the market for a large part of the tariff produced elsewhere last year in the United States.

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That territory is hemmed in on the south, the southwest, and the west by territories and carriers serving them, all seeking to market their products within the territory served by official lines.

In many instances, such commodities sought to be marketed within official territory come into direct competition with the commodities produced in that territory. Official lines therefore are In duty bound to protect the geographical or other natural advantages possessed by shippers or producers on their lines, and as a matter of justice and equity they may not be required to join in such low bases of low interterritorial rates as to nullify or neutralize these natural advantages.

So they do not willingly agree on an interterritorial level of rates that is as low as the level applying within that territory.

The Chairman. Now, Mr. Alldredge, I would like for you to give us at this point, if you will, just so we can get the picture before we proceed further----

Mr. Alldredge (interposing). Yes, sir.

The Chairman. I saw some competitive rates that----

Mr. Alldredge (interposing). I have some here; yes, sir.

The Chairman (continuing). From some point in one section to Louisville, Ky., for instance, and from another territory to Louisville, where the distance was the same.

Mr. Alldredge. Yes. sir.

The Chairman. Ana you compared the rates.

Mr. Alldredge. That is right.

The Chairman. Will you give us a few of those so we can get just exactly the picture of the problem?

Representative Griswold. Just a minute, Mr. Chairman. Mr. Alldredge, even these rates are affected depending upon what line they ship the freight over, are they not?

Mr. Alldredge. They used to be.

Representative Griswold. I mean, you can do this: Suppose we ship from Kentucky up to Terre Haute and transfer there going to South Bend in the east in official territory by shipping I. C.-L. and N. you might get a cheaper rate than say snipping I. C. all the way.

Mr. Alldredge. That used to be true.

Representative Griswold. Is it not still true? Is there not a differential there of approximately 2.29 one way and 2.72 the other way right now, say for instance on rock asphalt going out of Kentucky ?

Mr. Alldredge. Oh, that may be true with respect to rock asphalt. You might be entirely correct on that. On the nigher grade goods, though, that, situation has been corrected. There are some of what they call untreated rates which still show those discrepancies.

Representative Griswold. That is what I mean, that still prevails in this country.

Mr. Alldredge. You are correct.

Representative Dunn. May I ask there if the distances are the same? Mr. Alldredge. Oh, yes. These rates are different for the same distances; oh, yes.

The Chairman. That is what I wanted him to give an illustration for, Mr. Dunn, so we can see what he is talking about. I think he will give two or three now.

Mr. Alldredge. Yes; I will be glad to. I cannot give all of them, as there are millions of rates.

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[PAGE 1029]

The Chairman. I understand, but the rates you have worked on.

Mr. Alldredge. Yes. I have used first-class rates as illustrations, because that scale is basic usually in the rate systems. In all the class rates now—and the class rates usually move the high-grade commodities—they start with first class, and all the other classes are related to that first class by definite percentages. If I give you the first-class rate, you will get an idea about what the differences are on the other classes.

Now, taking, for instance, from Nashville to Indianapolis, Ind., it is 297 miles. The present rate across the boundary line is $1.23.

The Chairman. What do you mean by “across the boundary line”?

Mr. Alldredge. That is across that territorial boundary line the present first-class rate is $1.23 per hundred pounds.

The Chairman. You mean from Nashville across the line?

Mr. Alldredge. To Indianapolis.

The Chairman. One dollar and what?

Mr. Alldredge. $1.23 per hundred pounds.

The Chairman. All right.

Mr. Alldredge. Now, from Indianapolis to Kent, Ohio, is 296 miles, just 1 mile less, and that is moving entirely within the official territory. The rate is 87 cents per 100 pounds. The difference there in favor of the level within official territory is 36 cents per 100 pounds.

Representative Griswold. May I ask a question there just to get this clear in my mind?

Mr. Alldredge. Yes, sir.

Representative Griswold. As to your study of these rates, is it based on 1. s. 1. rate, carload, or average of the two?

Mr. Alldredge. Both.

Representative Griswold. An average of this two, L. C. L. and carload lot?

Mr. Alldredge. Yes; some high-grade carloads move on first class, and a good deal of less-tran-carload traffic moves under the same class, Now, from Atlanta, Ga., to Chicago, Ill., the distance is 731 miles, and the first-class rate is $1.91 per 100 pounds.

From New York to Fort Wayne, Ind., moving entirely within official territory, the distance is 734 miles, just 3 miles greater, and the first-class rate is $1.38 per 100 pounds. Tile difference is 53 cents per 100 pounds.

I will give you another illustration if you want it. From Atlanta, Ga.. to Chicago, Ill., the distance is 731 miles, and the first-class rate is $1.91 per 100 pounds.

From New York to Chicago, all rail, the distance is 890 miles, and the first-class rate is $1.52 per 100 pounds, a difference of 39 cents.

Representative Dunn. May I ask a question?

Mr. Alldredge. Would you like to have some reverse distances? The Chairman. Yes, sir; we would like to have some reverse if we could.

Representative Dunn. I am going to ask a question.

The Chairman. Yes.

Representative Dunn. In that rate you just gave from New York to Chicago and your comparison with it from Atlanta, Ga., to Chicago, there is quite a difference.

Mr. Alldredge. Yes, sir.

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[PAGE 1030]

Representative Dunn. Do you not think that one of the reasons is because of competition, as there are two roads that run from New York right direct into Chicago, such as the Pennsylvania and the B. and O., and there is another one, where from Atlanta, Ga., there is just one road, and therefore they can afford to charge more?

Mr. Alldredge. No, sir; that was a rate picked out of the common level of rates within that territory. They are made on a common level with the regions now.

Representative Dunn. All right. Thank you.

Mr. Alldredge. Now, when you reverse the situation----

The Chairman (interposing). Do what?

Mr. Alldredge. Reversing it now and reading from north to south.

The Chairman. Yes, sir.

Mr. Alldredge. You will see that the shipper within official territory in reaching a market within the South has a slight advantage over his southern competitor in reaching the same market for the some distance exclusively within the South.

The Chairman. Mr. Johnson testified to that the other day in connection with cotton. We would like to have those figures.

Mr. Aledredge. I will give you the first-class figures here.

From Knoxville, Tenn., to Atlanta, Ga., a distance of 198 miles, and the first-class rate is $1.02 per 100 pounds.

From Columbus, Ohio, to Lexington, Ky., coming across the line south now, the distance is 196 miles, and the rate is 88 cents per 100 pounds, leaving a difference of 14 cents. That is not as much as going the other way, but it shows that our manufacturer or processor down here cannot even protect his own market against competition.

Senator Ellender. The figures for the first rate you gave were from Knoxville to Atlanta.

Mr. Alldredge. Yes, sir.

Senator Ellender. Now, from Atlanta to Knoxville, would they be the same going north?

Mr. Alldredge. From Knoxville to Atlanta and return; yes, sir; the same both directions.

Senator Ellender. The same rate both directions, no matter where a shipment originates?

Mr. Alldredge. That is correct.

The Chairman. You introduced rates from Atlanta to Louisville and from New York to Louisville.

Mr. Alldredge. I think there is one in here; yes. From Atlanta, Ga., to Louisville, Ky., the distance is 449 miles, and the first-class rate is $1.51 per 100 pounds.

The distance from New York City to Louisville, Ky., is 852 miles, and the rate is $1.49 for 100 pounds, or 2 cents per 100 pounds less than that southern territory rate for twice the distance.

Representative Dunn. Twice the distance?

Mr. Alldredge. Yes; twice the distance.

The Chairman. In other words, practically twice as far from New York to Louisville as it is from Atlanta to Louisville?

Mr. Alldredge. Yes, sir.

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[PAGE 1031]

The Chairman. But the freight rate is practically the same from Atlanta as it is from New York?

Mr. Alldredge. Yes, sir.

Representative Thomas. Give us a rate out of that southwest territory. Your chart shows it has the highest rates. Give us the rates both ways, going and coming.

The Chairman. You had one other thing I would like to get in that particular territory about Louisville. You had some figures from the New England section down into part of the official territory and the southern section and into that, but go ahead and give anything you have.

Mr. Alldredge. I have several here.

Senator La Follette. Mr. Chairman, may we not have all of these examples printed in the record?

The Chairman. Yes; I would like to have them if he has them together. The only thing is he has not compiled a statement.

Senator La Follette. No; but he has some tables or some examples here. He is only giving us a few. Let us have all of his examples and then we can make comparisons, or anyone reading the record can make comparisons.

Mr. Alldredge. If the committee does not dose its record at the end of these hearings, the report will probably come from the printer within a week or two.

The Chairman. There is a full report on the question in a House document, but it has not yet been printed.

Mr. Alldredge. It has been designated as House Document 264.

May I say this: In making the interterritorial rates from these outlying territories to official territory and then in the reverse direction the through rate, the interterritorial rate, has in it some of that lower level prevailing within official territory. It is not as high as the intraterritorial level in the outlying territories, yet you see from these illustrations that they are not anything like as low as the rates within official territory.

Now, from Texarkana, Ark., to San Angelo, Tex., the distance is 454 miles, and the first-class rate is $1.70 per 100 pounds.

From Decatur, Ill., to Little Rock, Ark., the distance is 454 miles and the rate is $1.54. The difference is 16 cents per 100 pounds. I should have read the rate in other sections, that is when the official territory comes down into your territory.

Representative Griswold. May I ask a question right there? That distance from Decatur you gave there, is that your actual distance on which rates were based?

Mr. Alldredge. Yes.

Representative Griswold. There would be several transfers in the shipment in making the distance?

Mr. Alldredge. Yes.

Representative Griswold. You have no direct route by rail?

Mr. Alldredge. No; we tried to get short-line distances in each case. From Little Rock, Ark., to Decatur, Ill., going across the border line, the distance is 454 miles, and the first-class rate is $1.54 per 100 pounds.

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[PAGE 1032]

Now, from Springfield, Ill., to Cleveland, Ohio, exactly the same distance, 454 miles, the first-class rate is $1.06 per 100 pounds, and the difference is 48 cents per 100 pounds.

Representative Thomas. Do you have a rate from Decatur into Little Rock?

Mr. Alldredge. Yes; let me see. The first one I read you----

Representative Thomas (interposing). Was from Little Rock to Decatur. Now give us the reverse distance.

Mr. Alldredge. That is the first one I read you here. I will read it again. From Decatur, Ill., to Little Rock, Ark., the distance is 454 miles and the first-class rate is $1.54 per 100 pounds.

Now, comparing that with another rate within the southwestern territory for approximately equal distances—you see we had to pick out points that reflected nearly the same distances so that you could get an accurate comparison—from Texarkana, Ark., to San Angelo. Tex., the distance is exactly the same, 454 miles, and the rate is $1.70 per 100 pounds.

Now, those are class-rate differences. I have my commodity rate differences here. They are not as high as these class-rate differences. They apply to commodity rates and they are what a layman would call special rates. They are made to apply generally on the heavy commodities that move regularly in large volume. They have them, for instance, on cotton textiles and lower grade commodities. Of course, coal moves on commodity rates, and lumber.

Now, may I say this, Senator----

The Chairman (interposing). Mr. Griswold wanted to ask you a question.

Representative Griswold. I wanted to ask one question, but you go ahead and complete what you started to say if you care to.

Mr. Alldredge. The serious thing about this problem from the standpoint, of the development of a region is that, it has a tendency to deter the manufacturing and processing. These differences usually become deductions from the producers price or manufacturers’ price rather than additions to the consumers’ price. Of course, if the manufacturer-producer could just add the difference to his selling price and get it, then it would not be any problem of his. But he cannot do that unless he can get by on some copyright or brand or some other protection. And then the committee can determine what happens to that deduction after the manufacturer or producer has to absorb it in the first instance.

Representative Griswold. Mr. Alldredge, the bases for fixing these freight rates are fixed regardless of operating costs, are they not?

Mr. Alldredge. They do not follow the cost curve.

Representative Griswold. They do not follow operating costs: that is what I am trying to bring out. For instance, in the eastern or the official territory, the operating costs are higher, from the standpoint of labor there is a differential there between that of the southern territory, and yet you have a 39 percent higher rate in the southern territory with a lower operating cost than you have in the official territory ; is that true?

Mr. Alldredge. Yes, sir; that is my judgment.

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[PAGE 1033]

Representative Ramspeck. And yet the railroads contended up to a short time ago it cost more to operate in the South than it did in the official territory, did they not?

Mr. Alldredge. They have done so in some cases, yes. Of course, you understand that that cost accounting is subject to much disagreement.

Representative Ramspeck. Yes.

Mr. Alldredge. But there is in this report an analysis of costs in the different regions based upon the formula of Dr. M. O. Lorenz, the statistician of the Interstate Commerce Commission.

Representative Ramspeck. Mr. Allredge, if you are through with your statement, I wanted to ask you one or two questions.

Mr. Alldredge. Yes, sir.

Representative Ramspeck. Is it not true that the freight rates as they, exist today were simply a growth beginning at the time when the railroads were originally established in this country, and that there is no logic or reason behind them?

Mr. Alldredge. That is my position; yes, sir.

Representative Ramspeck. In addition to that the effect, as I understand it, is to retard the development of manufacturing or the processing of raw materials in the higher rated regions and to concentrate it in the lower rated regions.

Mr. Alldredge. Exactly so.

Representative Ramspeck. Resulting in the transportation of raw products to the eastern or official territory, which keeps the other regions from getting the benefit that comes from increased value of their raw products.

Mr. Alldredge. I think you have been studying this question. That states it, as I see it.

Representative Ramspeck. I had a bill on this subject which somebody told me was referred to in your report. I have not seen the report.

Mr. Alldredge. Are you Mr. Ramspeck?

Representative Ramspeck. Yes. We have been trying to correct this for some years, but we have not gotten much encouragement from the Interstate Commerce Commission.

Mr. Alldredge. Would the committee like to see what Mr. Eastman had to say about this when he was Federal Coordinator of Transportation?

The Chairman. Yes.

Representative Ramspeck. Yes.

Mr. Alldredge. The statement was incorporated in his first report to Congress as Federal Coordinator of Transportation. It is known as Senate Document 119, Seventy-third Congress, second session, 1934. This is what Mr. Eastman says [reading]:

An objectionable phase of the railroad situation for many years has been the maintenance of regional differences and distinctions which are very imperfectly related to differences in cost and of territorial boundary lines (“Chinese walls”) where rate systems and practices change. It has tended to provincialize the railroads and discourage national unity of action. It has been a prolific source of complaint to the Commission. Regional competition in rates and service has been as keen as the direct competition of parallel lines, and has had equally undesirable and uneven results. It tends to concentrate at the

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[PAGE 1034]

points best located to enjoy it. Moreover, it has been difficult for the Commission to remedy such Inequalities, for the courts have recognized differences in competitive conditions as a defense against discrimination.

Representative Ramspeck. Now, Mr. Alldredge, as an economist, if we fix the cost of the manufacturer in, say, the southern territory or the southwestern territory in regard to labor on the same basis as the cost for a similar manufacturer in eastern or official territory and set up a difference in freight rates against him it puts him in a position where lie may be forced out of business, does it not?

Mr. Alldredge. It is a burden that our manufacturers and processors must assume in some way and in some manner. They cannot pass it on to the consumer.

Representative Ramspeck. In other words, this difference in freight rates in reaching the consuming market must be taken out either of labor or capital, one or the other, does it not?

Mr. Alldredge. You are correct; or out of the profits, that is correct.

Representative Ramspeck. It has either got to come out of his labor or profit.

Mr. Alldredge. I think that is correct.

Representative Ramspeck. There is a very vast difference. Now, it is true, for instance, as you have shown here, a manufacturer in eastern or official territory can get into southern or southwestern territory cheaper than the manufacturer in the latter territory can reach a market in his own territory.

Mr. Alldredge. That is correct.

Representative Ramspeck. Certainly he can reach the official territory much cheaper.

Mr. Alldredge. Oh, yes; that is true.

Representative Smith. May I ask a question right there?

Representative Jenks. Mr. Alldredge, in working out these zones here, have you any figures that show the geograhpical center of population of this country?

Mr. Alldredge. I know it offhand. It is in one of the counties on the western side of the State of Indiana. It has moved in the last 100 years from some county in Maryland to that county.

Representative Smith. Were you through, Mr. Jencks?

Representative Jenks. I am through.

Representative Smith. In view of your answer about the necessity of a differential wage between the North and the South, how do you account for industries of the North migrating to the South during the past period of 25 years?

Mr. Alldredge. I do not think there has been as much migration as one would think.

Representative Smith. Do you have figures showing anything to the contrary?

Mr. Alldredge. Yes, sir; I have the figures here. There has been some migration, you understand, but there has also been some decaying industry.

Representative Smith. Has there not been a real migration in cotton spindles, for instance?

Mr. Alldredge. Oh, yes; there has been a migration in cotton spindles. May I give you that? Now, analyzing it from the standpoint of the value of 'manufactures, which would be one way to determine the rate of progress

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[PAGE 1035]

of industry in the different regions, the census of 1935 shows that 71.65 percent of the manufacturing of the United States done in official territory and 8.47 in southern territory, using those terms in the rate sense.

Representative Smith. How does that compare with 20 years ago?

Mr. Alldredge. In 1909 the ratio in official territory was 72.36, and in southern 6.56. There has been some change, but not as much as one might really think.

Representative Smith. They did not go there for the fun of it. What do you have as an idea that caused them to go to the South if there is no need of a differential?

Mr. Alldredge. You are speaking primarily of the textile industries, I gather?

Representative Smith. Yes.

Mr. Alldredge. I have heard that explained many times in rate cases. Of course, they are getting closer to the points of production in the raw material, and I think that has something to do with it, and perhaps cheaper labor.

Representative Smith. Now, then, if there is something to the point of rates on raw material, why do you still think there should be a differential in wages between the North and South?

Mr. Alldredge. I think you must have misunderstood; I am not taking a position about the wage differential at all.

Representative Ramspeck. I do not think the witness, Mr. Smith, said anything about that.

Mr. Alldredge. No; I am taking no position at all about it.

Representative Ramspeck. He did say this difference would have to come out of either profits or labor.

Representative Smith. What difference?

Representative Ramspeck. The difference in the freight rate.

Mr. Alldredge. That is as far as I wanted to go.

Representative Ramspeck. That is axiomatic, I think. I do not want to put him on record in favor of a differential.

Representative Smith. No.

Representative Ramspeck. In fact, I am not in favor of a differential based on arbitrary rates. I am in favor of a differential if it can be proven it exists.

Representative Smith. So am I.

Representative Ramspeck. Wherever it is located, whether in Maine or Georgia.

Representative Smith. What are your freight rates from New England to Texas; do you have those?

Mr. Alldredge. I do not think I have any of those with me. I could look them up for you, if you would like to have some illustrations.

Representative Smith. I do not suppose you have them either from New England to Nebraska?

Mr. Alldredge. Wait a minute. Maybe I have. For the purpose of this report we had to get illustrations here that were of comparable distances. When the distance was too long we could not get a comparable distance within the region under study. My comparisons do not extend as far east as New England.

Representative Fitzgerald. What difference would it make on shipping raw material from the Southern States into New England? Would it be the same price or same cost?

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[PAGE 1036]

Mr. Alldredge. You can get raw materials through much better than you can get your manuxactured goods.

Representative Fitzgerald. There is a higher cost, is there not?

Mr. Alldredge. Not always; no. The official territory lines frequently agree to set rates going across the boundary on raw materials. It is the finished goods that they do not like to give a parity of rate on.

Representative Ramspeck. Right on that point, if you do not mind, Mr. Fitzgerald, it is true these rates depend on an agreement between the railroads, for instance, in the eastern territory, and the railroads in the southern territory. Then you go to ship raw cotton, we will say. from Georgia to Massachusetts the rate is made up by agreement between the railroads in the southern territory and the railroads in the eastern territory, and the railroads in the eastern territory are willing to agree to a lower rate very often on raw products, as you said, where when it comes to shipping the finished textile products from Georgia into New York, we will say, they will not agree.

Mr. Alldredge. That is correct.

The Chairman. Mr. Johnson gave some testimony----

Representative Fitzgerald (interposing). Just one more question.

The Chairman. Yes, sir.

Representative Fitzgerald. But. even with the fact that that differential is in there, there has been quite a bit of migration to the South, especially in the textile industries, from New England, in the face of the fact that it costs them more to ship back into that eastern territory the manufactured product.

Mr. Alldredge. Back yonder some years ago it did not cost more. There has been a change in that textile-rate situation very recently. I was informed the other day that even on a large part of the cotton textiles manufactured in the South, they were further finished in official territory.

Representative Fitzgerald. That is, shipped as raw material?

Mr. Alldredge. Well, semifinished goods.

Representative Fitzgerald. Would they have a difference in price?

Mr. Alldredge. Sir?

Representative Fitzgerald. Would they have a difference in price in freight rates?

Mr. Axldredge. No. Well, there are some differentials in this recent revision that went into effect, I think on June 8, but I am not thoroughly familiar with that because I have not had time to go into it. There are some differentiations as between different kinds of goods, but still there is a great deal of grouping, too, of the textile commodities under a common rate.

Representative Ramspeck. There has been a change also in the places in the South where cotton is grown in the last 25 years, has there not?

Mr. Alldredge. Yes, sir.

Representative Ramspeck. The heavy cotton production has shifted from the Southeast States to the Southwestern States; and now Texas and Oklahoma produce more cotton than the entire Southeast.

Mr. Alldredge. That is correct.

Representative Ramspeck. And you can ship cotton out of Texas, as Mr. Johnson testified here a few days ago, on a water rate to Boston, Mass., cheaper than you can ship the same cotton from Texas

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[PAGE 1037]

to Georgia. Mr. Johnson testified that in relation to his own business here.

Mr. Alldredge. That is correct.

Representative Rambpeck. And he has a plant both in Chicopee, Mass., and Gainesville, Ga.

Mr. Alldredge. Senator Black, in connection with this discussion of the drift of manufacturing----

The Chairman (interposing). Yes, sir.

Mr. Alldredge (continuing). You may have seen it, but in the issue of Business Week of June 12 there is a chart illustrating that situation very graphically.

The Chairman. May I see it? Briefly, as I understand your evidence, it is that you have these territorial divisions or regional divisions in which freight rates are fixed.

Mr. Alldredge. That is right.

The Chairman. And that the rates in the different regions are not on a parity either as to cost of delivering the goods or cost of operating the railroads.

Mr. Allduedge. I think they are more nearly together in the cost of operating the railroads than they are in the level of rates.

The Chairman. Yes. Now, down South, for instance, they testified here the other day that they pay some of their employees on the railroad very low rates. As I was told later as little as 15 cents an hour. Do the railroads pay any of them that you know of that little up in the Northern States?

Mr. Alldredge. No: I never heard of a rate that low.

The Chairman. The freight rates you have shown are higher, however, in the South where they pay 15 cents as a rate per hour than they are up in the official territory where they actually pay wages on a higher scale?

Mr. Alldredge., Yes, sir.

The Chairman. And you find that even to reach the same point like Louisville, Ky., to come from certain of the other sections like the Eastern States or over in the southwestern part in the State of Texas, that those who want to ship from those Southeastern or Southwestern States are at a decided disadvantage on account of the freight rates?

Mr. Alldredge. That is correct.

The Chairman. And that is in line with the study that you have prepared and just set up?

Mr. Alldredge. That is right. And in my judgment it seriously affects and will continue to affect the development of those outlying regions.

Representative Smith. What do you mean by that? What regions?

Mr. Alldredge. The outlying regions.

The Chairman. In other words, you did not express yourself for a differential in wages, but you did express yourself as believing that this differential in freight rates does have an effect on the States where rates are higher than other States where rates are lower?

Mr. Alldredge. Yes, sir: I can say that much, but I have not made any study as to how this difference ought to be translated into wage scales.

The Chairman. Have you any other questions?

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[PAGE 1038]

Representative Griswold. Just one more, Mr. Chairman. Mr. Alldredge, from your study of this situation, could you find any real basis for a difference, for instance, in the freight rate from Atlanta to Chicago, as compared with the rate from somewhere in New York which was the same distance, we will say, to Chicago?

Mr. Alldredge. Other than just precedent and tradition?

Representative Griswold. Yes.

Mr. Alldredge. No, sir; I do not see any.

Representative Griswold. That is all.

Mr. Alldredge. No, sir; I do not see any.

The Chairman. Any other questions? Thank you very much, Mr. Alldredge, for coming up, and if you will send us all the other statements which you have, we will be glad to place them in the record. In line with your suggestion.

Mr. Alldredge. Ail right.

(The statements referred to are as follows:)

Page 1038 Table I

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[PAGE 1039]

Page 1039 Table V

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[PAGE 1040]

Page 1040 Table VI

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[PAGE 1041]

Page 1041 Table VII

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[PAGE 1042]

Page 1042 Table VIII

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[PAGE 1043]

Page 1043 Table IX

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[PAGE 1044]

Page 1044 Table X

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[PAGE 1045]

COMMODITY-RATE COMPARISONS FROM SOUTHERN TERRITORY TO OFFICIAL TERRITORY AS COMPARED TO RATES WITHIN THE LATTER TERRITORY

The rates used throughout the following commodity-rate comparisons are the regular or basic rates, as distinguished from special rates published to meet motortruck and water competition. Similar differences, although varying in degree, occur in the special rates designed to meet motortruck and water competition, but these particular rates are usually published with time limitations upon their application and they are not considered as permanent additions to the rate structures. For this reason they are not used in these comparisons. While the rates in this subdivision are termed commodity rates, they are frequently made on the basis of exceptions to classifications.

Page 1045 Table XI

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[PAGE 1046]

Page 1046 Tables XII and XIII

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[PAGE 1047]

Page 1047 Tables XIII and XIV

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[PAGE 1048]

Page 1048 Tables XV and XVI

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[PAGE 1049]

Page 1049 Tables XVI and XVII

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[PAGE 1050]

Page 1050 Tables XVII and XVIII

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[PAGE 1051]

Page 1051 Table XIX

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[PAGE 1052]

Page 1052 Table XX

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[PAGE 1053]

Page 1053 Table XXI

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[PAGE 1054]

Page 10 Table XXII

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[PAGE 1055]

Page 1055 Table XXIII

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[PAGE 1056]

Page 1056 Table XXIV

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[PAGE 1057]

Page 1057 Table XXV

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[PAGE 1058]

Page 1058 Table XXVI

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[PAGE 1059]

The Chairman. Mr. John H. Clippinger, president, S. H. Gerrard Co., Cincinnati, Ohio.

STATEMENT OF JOHN H. CLIPPINGER, PRESIDENT, S. H. GERRARD CO., CINCINNATI, OHIO

Mr. Cuppinger. Mr. Chairman and members of the committee, I was called to appear before this committee last Friday afternoon to serve in place of Mr. Crutchfield, who because of the reason of some change in the hearing was unable to attend. I have had no opportunity to prepare a written statement or a printed statement. I appear here at the request of the league and of the Cincinnati division of the league

The Chairman. What league is that?

Mr. Clippinoer. That is the League of Wholesale Fruit and Vegetable Distributors.

The Chairman. That is this same group of the other gentleman?

Mr. Clippinoer. Yes; except our company perhaps—I am appearing for this purpose—covers a very much wider field of operation than simply a jobber.

The S. H. Gerrard Co. is a wholesale fruit and vegetable distributor. It grows, packs, ships, and distributes in carload lots. And we have in Cincinnati a jobbing operation which distributes fruits and vegetables in less than carload lots.

In addition to that, we have at one time or another been interested in a number of jobbing concerns in other markets. We are in constant touch with the jobbing end of the business. We recognize that the production ends of the farmers’ interests are tied up intimately with the interests of the jobbers.

And because of some questions that were brought out here previously, with the indulgence of the committee, I would like to go into an explanation of our operations, so that an understanding of these problems can be better had by the committee.

The Chairman. Are you an operator yourself?

Mr. Clippinoer. Yes; we are.

The Chairman. Are you connected with the Gerrard Co.?

Mr. Clippinger. Yes; I am president.

The Chairman. You are the president?

Mr. Cuppinger. President of S. H. Gerrard Co.

We own and lease land in the West, extensively in the West in California and Arizona. We have shipped out and are shipping out of Texas, and we have in previous years shipped extensively out of Florida, but not so extensively at the present time. We do it as a grower and as a shipper and we handle the products after they get into the eastern market as a jobber.

In every car, contrary to the conception that one of the Congressmen here had, of products that are sold in the market, we have a very substantial financial interest, and where we do not own it outright, I venture to say 97 percent of those cars we have a larger interest in than any grower, although that might have an interest in that car along with us, because when we do ship growers’ products we advance to the grower, generally speaking, about his actual cost of growing, and in addition to that the packing and processing of the fresh fruits and vegetables.

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[PAGE 1060]

Now, I think it is fair to say that this corporation that I worked with in the past 2 years, and I am not appearing as any expert at all, because I am just trying to give the picture of the industry as it operates, and the problems confronting us.

The Chairman (interposing). Are you for the bill or against it?

Mr. Clippinger. The principle of maintaining minimum wages and some reasonable hours we are for, and in my personal opinion I feel that any minimum wage that might be passed would be lower than the minimum wage that predominates in a majority of the jobbing houses throughout the country. So far as we are personally concerned, we ship fruits and vegetables, lettuce, cantaloups, peas, .and celery, and some oranges, and 75 percent of that is concentrated east of the Mississippi River and north.

The Chairman. What you really want to do is to appear and call attention to the fact that your industry is engaged m a seasonal business, is it not?

Mr. Clippinger. Yes. And affected by the weather more than the outsider thinks, not only in the production line but in the consuming. And it affects the consumer’s ability to pay, and it affects the consumer’s taste. I emphasize that because an outsider has no conception of how that works sometimes. Contrary to other industries, the ultimate sales price for our product is not determined as much by cost as it is in the other industries. It is determined by the appetites to some extent, and to a substantial extent the ability of the consumer to pay. But it is also affected by the fact that the consumer has only limited capacity, and if the consumer today does not eat a heed of lettuce tomorrow, that same consumer does not eat two heads of lettuce simply because he missed 1 day’s consumption.

The Chairman. May I call your attention to the fact that this bill provides for a board and for a board to consider seasonal work.

Mr. Clippinger. I appreciate that.

The Chairman. Are you in favor of that or against that?

Mr. Clippinger. Yes; I am in favor of that.

The Chairman. What other suggestion do you wish to make in connection with that ? That is really what you mean.

Mr. Cilppinger. Yes. And I want this committee to realize this group I come from, and it is typical in the industry, so far as I have observed, most employees in this industry are day laborers, and themselves started out in clerks in jobbing houses, and a great many of them are relatives, the laborers they employ are relatives of the employer. And the business cannot be conducted so they, can have a large number of employees. The largest number in any one jobbing house in Cincinnati is 27. The great majority of those employers, in fact all of them, work elbow-to-elbow with their employees.

When I discussed a contract here a while back when we had a labor arrangement worked out, and this was before the Supreme Court----

The Chairman (interposing). We will assume we are all absolutely right.

Mr. Clippenger. I mean they are sympathetic.

The Chairman. Yes.

Mr. Clippinger. I mean they are all sympathetic.

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[PAGE 1061]

The Chairman. I understand they are. What are your suggestions with reference to this bill? That is what we want.

Mr. Clippinger. Our suggestion is this, that before any arbitrary hours per day or hours per week are fixed, a very careful study should be made, or at least elasticity be given to whatever set-up is made under the bill to fix hours and conditions, so that each market that is controlled in the varying conditions in the various producing and distributing markets can function, not only to give the employee a desirable hourly and weekly rate of pay, but an annual income.

If you do not consider the varying conditions which are controlled by weather, by climate, and by constant changing conditions in each market, and by the peak loads, and by the coming on of the various crops from the various parts of the country, if those are not considered and at times the employees permitted to work long hours during the day, what would be long in other industries, but at other times very short hours, then this bill will work a very great hardship. For example, in the Cincinnati market, and this method of selling is increasing, in the auction market there are 14 large principal auction markets, and those auctions are held on Monday, Wednesday, and Friday. And during the day buyers from the stores and from sections of six different States come into Cincinnati and go to that auction, and after the auction they buy from jobbing houses. On those days work is heavy. The men that work at the auctions on those days have to work long hours and in the jobbing houses also. On the days following, however, they work about half the time.

The Chairman. Do you think this bill provides for and gives the Board authority to take care of that situation, and if not. why not; and if you think it does not, what, suggestion would you make?

Mr. Clippinger. I would not say the bill in its general terms does not give the Board that authority, but the question arises in my mind as to what is the general intent of the bill, and whether it does not go in the direction of hewing down to a uniform hour- and-wage base, if it does not encourage that in all sections of the country in our industry. I mean, as I read the bill, it does not prevent it. The very definite impression that you get from it is that the objective is to put a uniform hour-and-wage rate throughout the country. Of course, as applied to our industry I will say that that would be very disastrous, and I say it not from the standpoint of a jobber that is trying to take advantage of labor.

In discussing this with members of the league there in Cincinnati, they felt there were none of them—I know none of the reputable houses—that pay any minimum wage that is as low as this which Congress would probably fix. Our minimum wage is $25 a week.

The Chairman. What, suggestion do you make? I think we get the idea you have that you favor the regulation, that your organization is sympathetic with it. but you want to have, however, the authority on the part of the Board to provide differentials as you suggest and not to have an arbitrary hours per week that would apply to your work in case of stress of the work.

Mr. Clippinger. During the peak periods.

The Chairman. What suggestion do you make about the bill?

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[PAGE 1062]

Mr. Clippinger. Mr. Chairman, my suggestion is that before that structure is set up that this committee get some study and recommendations from the Department of Agriculture as the means of a basis for handling that situation. I appreciate that the Department of Agriculture is not a fact-finding body for Congress and it is set up as a division to take care of that particular job for itself and for the group that it represents.

The Chairman. But under the bill as it is written at the present time, before any industry or line of business activity comes within its scope, a study is to be made for the purpose of determining the very things you have mentioned. As I understand it, that is what you really recommend?

Mr. Clippinger. I want a study, a perfectly impartial study, made of the problems, having in mind these three major things, a fair return to the farmer, and an operation which permits the distribution of goods for these products of fresh fruits and vegetables at the lowest possible cost so that the consumer will have to pay only a reasonable price. Now, that adjustment can be upset very easily by conditions existing in any one of the three parts of the set-up. And I say from my observations that tampering with wages and hours uniformly, if done hastily, will upset the whole structure.

There is one thing that has been pointed out by the witness just previous to me, and I want to point out how the effect of just a few cents one way or the other in added cost will mean the life or death of an entire operation in this business. As has been pointed out, this business operates on a narrow margin. The Federal Trade Commission has studied the industry as a whole and found that the wholesale end took less than 5 percent of the consumer’s dollar. This witness that preceded me mentioned something about 10-percent commission. I know we never pay over seven as a grower, and we never charge over seven. The average and prevailing commission is 7 percent. That means about a little bit less than 5 percent of the consumer’s dollar is paid to the wholesaler for his services of distributing and marketing. Now, just a slight variation of a few cents a package occasioned either by a freight rate or cost of products might mean the life or death of a deal.

The Chairman. I think we all understand that.

Mr. Clippinger. It has happened to us.

The Chairman. What I would appreciate is for you to suggest— I do not want to suggest that what you want to say is immaterial to the bill—-if the bill is not all right, what changes do you want to make in it, and if it is all right, which part of it do you want to remain as it is?

Mr. Clippinoer. I say the part announcing and working for a minimum wage is not objectionable provided that is not handled so as to encourage reduction from higher wage standards to that minimum wage.

In the industry, for example, at Cincinnati, we pay $25 a week for common labor as a minimum. Now. if you establish a minimum wage of $15 or $16 uniformly throughout, the country which, I am not in a position to say, might, be a fair and reasonable wage in some sections, and particularly I notice that the low wages are paid in the South, where they employ a different type of labor, and they say they cannot operate on another basis, and I do not know, I do

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not claim to know, but it might be interpreted as an encouragement of a reduction from the current rate of wages to a lower level. Now, that of course would be no help. I say if it can be done so as to not disturb the higher rates of wages, then it would be a desirable thing.

The other thing that I want to emphasize that has already been pointed out is that I do not think it will do much good to eliminate the smaller operator in this industry. In fact, it will upset your whole structure if the small operator is permitted to be exempted, because a great many of them are small operators, and if you eliminate those with the minimum number of employees, two or three, or just himself and his family, you are going to upset the whole wage structure that the other employees have maintained. That phase of the bill, I think, is objectionable.

The other phase of the bill that I do think should be improved, is the phase relating to unfair labor practices. It has been pointed out here that labor unions, according to the Federal Trade Commission findings, and according to knowledge that has been existent in the industry for years, have a racket in the principal markets, they have a monopoly upon tracking in Chicago, New York, and Philadelphia.

So far as New York is concerned, they impose an unnecessary expense on the farmers and the consumers of approximately $50 per car of products of the kind and character we handle, and that goes on the product as an expense to the farmer, as an expense to the jobbers, and as an expense to the distributors. And if we should be guaranteed a net profit of $50 per car on the products we handle, we would consider we had a very handsome profit. You take that $50 per car and it comes out of the pockets of the farmers and out of the pockets of the consumers. And it is unnecessary cost and yet it is permitted only because, as the Federal Trade Commission points out in its recent findings in this examination, because in those three markets there is a racketeering going on.

The farmer cannot come into the Chicago market, for instance, without paying a penalty. The result is that he is not taking it there and is taking it somewhere else. The Chicago produce market is paying a higher price than it should, and it is being denied an opportunity to enjoy some of the low-priced produce grown in some other territory.

Senator Ellender. How is the farmer kept out of that market?

Mr. Clippinger. You say how is the farmer kept out of that market?

Senator Ellender. Is he kept out of the city?

Mr. Clippinger. No; but the farmer is kept out of the market, and if he can unload it in Indianapolis or Cincinnati at a lower price without paying racketeers, he is going to do it, because when he comes in our market he does not have to pay anybody a tribute for unloading his truck.

The Chairman. You mean an organization which requires somebody to pay 10 cents a crate without any services performed?

Mr. Clippinger. Yes. What they do is they won’t permit the farmer to haul on his own truck or unload it? They either make him pay a tribute without any services performed or make him unload it.

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Senator Ellender. What is the authority for that? Who makes him pay it? Is there a law to that effect?

Mr. Clippinger. Oh, no. The trucking union will just waylay them and stop them. In New York you cannot load your produce direct from your car into the truck unless it goes through this organization, and they require you to move it from the cars up to another point of distribution, making additional trucking charges which are entirely unnecessary in a great many haulings and instances. And they charge a very high rate.

The Chairman. What do you suggest that this committee or this bill should do about that?

Mr. Clippinger. I suggest that this bill stamp that thing as an unfair labor practice and as beyond the pale or approval for that sort of thing. It does not help the employee and it certainly does not help the consumer, and it takes the money out of the pockets of the farmers. Now, if there is some provision in there to stamp or give authority to determine what is an unfair labor practice on the part of labor leaders that are racketeers, and they are not of course typical of the labor leaders, but they have control, and that condition has existed for years in those principal markets, and it has a tendency to spread, and I say that if there were authority there to do it and stamp that sort of thing out it would help the labor situation as well as the farmer and the consumer.

Another thing I wanted to bring out and give a fair picture of as to the trade—I do not know about conditions previous to 2| years or 3 years ago, but I do know in the past 2 years—is that no responsible reputable dealer has dumped goods into the market because they could not get what they thought was a fair price for them. In the first place, there is a Federal act which does not permit dumping of fresh fruits or vegetables except with a permit given by an inspector. All of the local markets and local authorities have similar regulations. The highly perishable character of all of the products we move demands that stuff move rapidly and be sold rapidly, and it has at times gotten to a point where it was questionable whether it was desirable to be sold, and the inspectors have condemned it and it has been dumped.

The Chairman. Do you make any suggestion that this bill have any provision about dumping?

Mr. Clippinger. No; I do not, because that is properly taken care of by the perishable act now.

The Chairman. Have you any other suggestions about the bill?

Mr. Clippinger. The only other suggestion that I have is the one that has previously been made as to a definition of where the line of the agricultural help begins and where it stops. There has been a great deal of confusion which has arisen under the administration of the Social Security Act, because the definition of what is an agricultural employee has been constantly changed, and I could point out to this committee the different rulings that have been made by the different internal-revenue collectors and the confusion that has been brought about and I think an unfairness to the employees as well as employers, and there is considerable chaos.

For example, in packing, when a man who packs is employed in the field by a man that grows the crop, they have ruled that he is an

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agricultural employee, but if that man steps into a shed and does the same operation under the roof of a shed then he is not an agricultural employee, or they have held that regardless of whether the man works for an employer who is packing in the field or in a shed, if the principal objective or principal business of the employer is that of a commercial packer, then the employee is not an agricultural worker.

The Chairman. Have you a definition that you suggest?

Mr. Clippinger. I think the demarcation is the one suggested by the League, that that is the most satisfactory one.

The Chairman. That is the one that was suggested by the other gentleman?

Mr. Clippinger. By the league.

The Chairman. Have you any other suggestion?

Mr. Clippinger. No; I do not believe that I have any further suggestions at this time.

The Chairman. Any questions?

Representative Jenks. I want to ask just one question for curiosity. Do you know if and when a farmer brings produce into Chicago and does not pay that tribute what happens to him?

Mr. Clippinger. You will be waylaid and your truck might be dumped. You just cannot get in, that is all.

Senator Ellender. How many hours per week do you work your labor?

Mr. Clippinger. Now, if you will tell me what kind of labor, I will be glad to give you the answer.

Senator Ellender. The people you employ.

Mr. Clippenger. We have so many different kinds. Now, there are people who work in the yard and in the jobbing end. Are you talking about the jobbing business?

The Chairman. Tell him about all of them. That is the quickest way.

Senator Ellender. Generally.

r. Clippinger. The jobbing labor in the terminal market in Cincinnati and other houses in which we are interested we state a 48-hour week. That is what we shoot at. We work longer. We pay time and a quarter for time over 48 hours in Cincinnati. Some days they might work 10 or 11 hours, and some days they might work 4 hours. As a general proposition, we try to keep them at 48 hours for $25 a week. That is the minimum. Our truck drivers get $32.50 per week minimum on the basis of 48 hours. They do not work 48 hours. Our salesmen get from $35 to $40. Now, that is general There is some variation. These are our own company’s wages. Now, that is what you have in mind?

Senator Ellender. That is right.

Mr. Clippinger. As to our shed people and people like that in every district at the shipping point, we have a different rate of pay, a different arrangement, and some of them want hour pay and some of them piece work. Take, for example, our shed packers in the Imperial Valley, and they do not want to work on an hour basis, because we ship under temperatures of 110 and 120 in the shade, and we will ship in 1 week 10 percent of the total production from that territory. They want to work piece work. I checked over on the shed packers, and the average pay for shed packers was $176 a week, and several of them made $200 a week. There was not any of them

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that made less than $100 a week. That was on piece work. They could not possibly have made that on any hour rate, even if the rate had been $2 per hour. Those fellows want to work on piece work. And, try as we do, we cannot keep them consistently employed.

Our deal is cut off in California before Arizona gets on the peak. We try to keep the men employed the year round, although the deals do not go one right after another, though we operate in many sections of the country. Now, it is only in those lines that that occurs.

The Chairman. All right. Thank you very much.

Mr. Charles W. Havener, of Pittsburgh, Pa. Is he here?

Mr. Herr. Mr. Chairman, he did not snow up. He is not here.

The Chairman. He is not here. All right.

Mr. T. H. Howard, president of the Phoenix Glass Co., Monaca, Pa. Will you come around?

Mr. Howard. Mr. Chairman, our superintendent is here, and as I heard the questions asked here possibly he could answer them better than I. He is Mr. T. W. McCreary.

The Chairman. Yes, anybody. Mr. who?

Mr. Howard. Mr. T. W. McCreary.

The Chairman. We only have two more witnesses after Mr. McCreary, and if we can get through with those we will be through for the day.

STATEMENT OF T. W. McCREARY, VICE PRESIDENT AND GENERAL MANAGER OF THE PHOENIX GLASS CO., MONACA, PA.

Mr. McCreary. Mr. Chairman and gentlemen of the committee: With your permission I will just say a few preliminary words before I state anything in connection with the bill.

As a way of introduction, we have been in business for 57 years. We started off about 56 years ago. We organized about 57 years ago. Fifty-six years ago we made our first glass in the factory.

The factory then was a small 10-pot furnace capacity, four to five tons per day, and employing about 100 to 125 people. Since that time we have grown considerably until today we have a capacity of about 40 tons a day, and we employ between 550 and 560 people.

We have trade relations with a labor organization and have had those trade relations for 57 years, ever since we organized. We have never had a serious strike in our factory for more than 50 years.

We are the second glass company in the United States to sign for the N. R. A. And I am merely stating that to show our relations with labor have been friendly and are regarded as being friendly with those we employ.

I did not get an opportunity of reading the bill, Mr. Senator, until I got here this morning. All my opinions and the opinions of our company were based upon the newspaper report of the bill, as we read them from the newspapers. And unfortunately I have not had an opportunity of going completely through the bill, but there are certain features of it I went through hastily this morning after getting a copy of it that do not appear to us to be practical from the standpoint of the glass industry, and particularly in view

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of the fact that we have signed agreements with a labor organization and they in a measure conflict with some of the provisions of this bill, or would tend to conflict with it.

I notice by way of diversion a little bit that in the eighth line of a paragraph in the second section of definitions you omit “providing tor domestic service.” Whether that is intentional or unintentional I do not know.

The Chairman. It is very intentional.

Mr. McCreart. It was intentional?

The Chairman. Yes. Can you figure out how they would be engaged in interstate commerce?

Mr. McCreary. I do not know whether I can or not, Senator, but I do not see why exceptions are made in this bill and not in other bills on domestic service.

The Chairman. I mean this bill does not attempt to regulate anything except interstate commerce where it comes in direct connection with interstate commerce provisions.

Mr. McCreart. I did not know what the intent was.

The Chairman. May I ask, does your company employ domestic servants, and would they be interested in that?

Mr. McCreart. My company?

The Chairman. Yes.

Mr. McCreart. No. I was interested and I just thought you would be interested.

The Chairman. This bill does not attempt to regulate anything except interstate commerce, and it does not attempt to regulate all of the small local businesses throughout the country nor domestic service.

Mr. McCreart. In other words, we are trying to get away from the obstacles that trapped us on N. R. A.

The Chairman. Trying what?

Mr. McCreary. We are trying to get away from the obstacles that trapped us on N. R. A.

The Chairman. I thought it covered too much territory.

Mr. McCreary. I did not think so either, but other people did.

The Chairman. I say I did think so.

Mr. McCreart. You do?

The Chairman. Yes. Go ahead.

Mr. McCreart. On page 5 in paragraph 10 of section 2, line 1 states in giving the definition:

"Oppressive wage” means, with regard to any employment to which the provisions of this act with respect to an oppressive wage shall have been made applicable by regulation or order of the Board under section 4 (a), a wage lower than the minimum wage standard of-------- cents per hour, unless and except insofar as another minimum wage standard is established for such employment by regulation or order of the Board under section 4 (c).

There you fail to state what the number of hours or what the oppressive wages would be. What is the minimum wage? Is it the intention anywhere in the bill to specify a minimum wage? It does not specify it now. We have a minimum wage agreement with out own organization of 40 cents for male and 32 cents for female workers.

Another objection, as we saw it, coming again from the newspaper reports, was that we have not had an opportunity to find out what

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the minimum wage in the bill is. You may know there is a difference between male and female workers as to the rate of wages paid. You merely provide for the wages blank. According to newspaper reporters where will be provided a wage of 40 cents an hour. That is what our agreement is with the labor organization, with the understanding that the female help, unless the female help performs the same type of work with the efficiency of the men, where the female help will get the same rate of wages as the men, but it has been our experience that female help is placed upon a line of work which is not done by the male help in the history of the industry.

Consequently, the work is light, not dangerous, easily performed, and we pay now running from 33 to 35 cents an hour, which is higher than the provisions of our agreement with our labor organization. We do not believe female help should be placed at the same wage- rate basis as the male for the reason that they do not perform exactly the same work, and in cases where we have had experience of both male and female on the same line of work we have found they are not competent to perform the same work as efficiently as the male is.

When we work piece work we pay the same rate per hundred to the female, yet the female earns 30 to 35 percent less on the same rate per hundred as what the male does.

So when we work female help on the day rate or by the hour we pay them 20 percent less than we now pay the male help for the same work, because they cannot perform the same work as efficiently as the male.

Another thing we are opposed to, we are opposed to leaving us in the dark about the weekly hours. We work 40 hours a week now with the proviso that the men who do not work 40 hours a week are allowed to work Saturday morning. If they reach 38 hours per week up to Friday evening then they are permitted to work Saturday morning.

The Chairman. What hours do you recommend?

Mr. McCreary. We recommend 40 hours. We are not opposed to the minimum wage, but we are opposed to leaving that open for the Board to decide what rate to get in excess of that minimum. I read this morning that this Board would have the power to regulate the wages up and down according to conditions as they found them.

Senator Ellender. You want the Board to have the right to lower the minimum wage for the limit?

Mr. McCreary. I beg your pardon?

Senator Ellender. You want the Board to have the right to lower the minimum wage for the limit?

Mr. McCreary. No ; we do not want them to lower the wage, but we do not want them to raise the wage above the conditions which we are facing.

The Chairman. In other words, you want that it be left to the Board to determine?

Mr. McCreary. We want the Board to have the right to stipulate a minimum wage.

The Chairman. It does that.

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Mr. McCreary. But not stipulate a minimum wage for one section of the country lower than they stipulate it for another section of the country for the same line of work.

The Chairman. You want the Board to fix the same rate for every section of the industry in every State or section?

Mr. McCreary. Provided it is not regulated by living conditions, because our sales are based upon what it costs us to produce the article and not what it costs us to live in a community, and according to this law the Board would have the right to be guided by action in deciding these things by taking into consideration living conditions. We do not think that is correct. We do not sell based on living conditions in different sections of the country. We base the price on selling costs. Those costs should be uniform. Under the agreement we have with the American Glass Workers’ Union, under which we have been operating for 50 years, the wages are the same in Texas, Louisiana, Canada, San Francisco, New York, as they are in Pittsburgh, the rate of wages are the same per hunderd, per thousand, per dozen, and per day. Consequently the only advantage that any manufacturer has over the other is more efficient men, more efficient management, and he can probably increase his. production without necessarily increasing the cost.

In our relations and in our agreement with our labor organization the wages are based upon a certain given number, depending upon what the article is. And one man may make 200 or 300 for what is called a half day’s work, and yet of other articles we may make 800 or 900, according to the size, and the wages are based on that. Some men make one-half or 2 days’ wages in what we call 2 half day’s work: and others may not do it. In the company that is the most efficient and the most up to date in the management it will get the best results, and it will get the best production.

The Chairman. I think that is clear. What is your next suggestion?

Mr. McCreary. I beg your pardon?

The Chairman. What is your next suggestion?

Mr. McCreary. The next suggestion is we do not believe the age of 18 should be permitted. If a boy does not work before 18 Senator, he is a bum 9 times out of 10, and he does not amount to anything. A boy cannot learn to blow glass unless he starts in to learn early. I was a gathering boy at 15 years of age and I got a man’s pay. I think to deny me to have my children to go into a factory before 18 is taking a step in the wrong direction. It is absolutely wrong.

The Chairman. What is the next suggestion?

Senator Ellender. What age does he suggest?

The Chairman. "What age do you suggest?

Mr. McCreary. Sixteen; personally I think 16 is fair.

The Chairman. All right.

Mr. McCreary. I can teach a boy at 16, but after he gets to be over 16 you cannot teach him anything.

Under paragraph 16 under the same section explaining what “substandard” means, a wage lower than a minimum fair wage I am ready to discuss, and I do not believe it should be permitted to go lower than the minimum wages established.

The Chairman. You have already stated that.

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Mr. McCreary. Now, as to the substandard wage I do not think we should be prohibited from working when necessary even though we do exceed 40 hours per week. For example, there are two periods in the year when we are rushed with work. According to our agreement with our Glass Workers’ Union in those two periods on any period when there is rush work our men can work over without any pay of time and a half for overtime, and they get the same rate of wages as when working regularly. But we are not permitted to force those men to work. We get their consent and it is a voluntary act on their part.

The Chairman. What is your next one?

Mr. McCreary. We do not believe that should be changed.

If you will have a little patience with me I have just marked these things here and I will come to them.

The Chairman. Yes. sir. That is the reason I thought you could just go right through them.

Mr. McCreary. I think, Senator, that is about all I have marked out. All the other markings I have got here are in relation to the points I have discussed.

As I said, we have had friendly relations with our labor organization and our men for over 50 years without any trouble and without any strikes, and I myself have been a member of the executive committee appointed to settle disputes over 38 years, and during that time, all of that time, there has not been a serious strike in the industry.

And we do believe in the consideration of hours and rates of wages above the minimum it should be left to the discretion and judgment of the members of the industry, both the workers and the manufacturers, because we believe, without any disrespect to anybody else, we are better qualified to judge as to what the trade will bear, what the tariff will bear, to put it another way, than people who have no familiarity with the industry.

Now, in conclusion, to impose an increase of wages unnecessarily on our men just increases our burden to the point where we are breaking. We have a list of taxes we are now compelled to pay. We pay State income taxes in Pennsylvania, the Pennsylvania franchise tax, an unemployment tax, an old-age-pension tax, a West Virginia capital-stock tax, a capital local tax, a New York franchise tax, a bonus settlement tax, a Federal income tax, undistributed profits tax, and that does not bother us, Mr. Chairman, as we have no undistributed profits, a county tax, a municipal tax, a school tax, oil taxes, gasoline taxes, and God knows how many unseen taxes on the materials we use. We are just taxed out of existence, and with labor on one side supported by legislation they do not hesitate about taking advantage of it, and although we are fighting with them all of the time we get along somehow, but of course they take advantage of anything they can get.

The Chairman. Is your industry typical of the glass industry?

Mr. McCreary. It is, Senator, on hand-made.

The Chairman. I meant, you can generally say whether the bill would be satisfactory to your organization, would be satisfactory to the industry?

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Mr. McCreary. We believe it would; yes; although I am not speaking for the industry, but I am only speaking of my own company.

The Chairman. I am glad to hear that because we just sat here and commented on the fact that the suggestions you made, if you had not read the newspapers, the bill already fills the requirements you have suggested.

Mr. McCreary. It does?

The Chairman. It does; yes.

Mr. McCreary. All right.

The Chairman. The next witness is B. W. Stonebraker.

STATEMENT OF B. W. STONEBRAKER, REPRESENTING SOUTHERN ASSOCIATION OF ORNAMENTAL METAL MANUFACTURERS, ROANOKE, VA.

Mr. Stonebraker. Mr. Chairman and gentlemen, if you will give me just about 5 minutes to go through my statement without interruption I believe it will be the quickest way to get it before you.

The Chairman. That will be fine.

Mr. Stonebraker. Then if you have any questions to ask I will be glad to answer them.

I am president of the Southern Association of Ornamental Metal Manufacturers, and our territory covers from Virginia on down into the South and into Texas.

Our vice president and secretary, by the way, are from your native State of Alabama—Birmingham and Decatur.

We represent the main outstanding firms of this industry in this territory.

At a meeting of the board of directors held Saturday a week ago we discussed this bill about half an hour and it was gone over pretty thoroughly with a lawyer and the only conclusion we could reach was that the bill as it now stands we were absolutely opposed to it.

We feel it is far more drastic than the N. R. A. ever attempted to be. In the South we are still pretty groggy from the Wagner Labor Act, and we feel like another act something along this line following that up might put us out while we are down.

Quite a few of our directors had the experience of going through the N. R. A. I personally was a member of the code authority and I feel this is more drastic than N. R. A. ever attempted to be.

As far as our industry is concerned we are not an industry that has been accustomed to paying starvation wages. I believe you will agree with that, but as far as the depression with us is concerned the depression is not over and the way business has been in our line of work in the industry in the past few years.

We feel no emergency exists which should call for such drastic legislation at this time, and we feel the fact that the entire industry of this country is being turned over to a board of five to almost do as they please with it is very drastic, and no doubt it contains some good points, but we feel it is being jumped at too quickly and it should be given plenty of time and study and thought and the good points could probably be worked out.

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A board of five could not possibly get familiar with every line of industry, you might say, and if they did it would take them 10 or 15 years. They might know one line, but you cannot get a board of five that would be familiar with the requirements of industries covering the entire United States.

Another thing, if the bill is passed we suggest that you give careful consideration to these recommendations: It has been brought out before and no doubt will be brought out often that you are leaving out the little fellow that employs less than 15 people. In the South that has been a thorn in our flesh to our industry for a long time, and we should strongly recommend if the bill is passed you should cut out any exemption for any certain part of the industry, because certainly an industry like ours if it should cover anybody it should cover everybody, otherwise the middle-sized firms, such as us, would be unable to compete with the little fellow who employs less than 15, and others would be unable to compete with the big corporations because of the quantity differentials on the materials they are able to save in buying that we are not. And that would simply mean ruin to the middle-class shops.

We are also against any drastic shortening of hours. We feel 40 to 44 hours should be the minimum. We are absolutely convinced that it is necessary that there should be a differential in wages between the North and the South.

We are very much scattered, as you know. Our firms down there may be 1 to 50 to 100 to the north and east. We are scattered all over the country. Our freight rates, the getting of the material in, shipping it out, the differential in rates, along with shorter hours and higher wages will simply put us out of business. I do not mean we want to go North and take their business away from them. We do not. Our business is 90 percent in the South. But we want to have something to keep the North from coming into the South with freight rates, and the like of that, and getting our business.

There is no question in our minds, and I believe you will agree with us, in the South we are easier going, we do not drive the men to the last pitch that they do in the North and the city. In fact, you cannot drive them. Another thing, our mechanics are widely scattered. We cannot pick them up like they can in the eastern cities, and we have to train and raise them. And living conditions are entirely different. We have men down there that we pay 50 cents an hour. They will see in the papers they can get 90 and 95 in Washington or Baltimore, and they will strike out for it. I have never had one leave, I think, that did not send word or write us a letter in about 1 or 2 weeks’ time and ask whether he could not come back home.

I believe you will agree with me, Senator, that you would rather live in the South on $5,000 a year than in the North on $10,000. At least, that is my understanding, and I have lived in both places. I have worked in the city of Chicago, where you may take an hour or an hour and a half going to work and an hour or an hour and a half going back from work, and the time you are working and going to and from your work you put in more hours’ work, and that along with the cost, of living make up for the difference of the fellow who works in the South. He has a little garden and he walks to his job, and the conditions are entirely different than we have in the South.

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And we have the Negro problem to contend with when it comes to hours and wages.

To sum it up: First, we are opposed to the bill, and we oppose it because we feel it too hasty and puts too much power in the board of five.

And if it is passed, we recommend you either establish or leave to the board a differential in hours and wages between the North and South. We recommend you include the smaller industries, or at least an industry like ours, be made so that the bill can include everybody in it, regardless of whether there is 5 or 6 or 1,000 men in the shop.

We do not see why it should be necessary to leave the State’s standards item in there. In other words, if New York should put a standard with their highly unionized organized efficiency up there, a 50- or 60-cent minimum and we have a lower minimum we have absolutely no chance of going North to get the business, but it would, as we see it, give the northern shop the opportunity to come South where our standard may be a tittle smaller and in interstate shipment it looks to us as if that clause would not work both ways, and we surely recommend that you keep the clause in there that provides for both members from the different sections of the country, because we have felt ever since the Civil War and still feel nobody but a Southerner can understand really the problems of the South, and we would surely hate to see that clause left out where we might not have a southern representative on that Board if the bill is passed.

If there are any questions I would be glad to answer them.

The Chairman. All right. Thank you.

Senator Eluendeb, You suggested a maximum week of 40 to 44 hours. What is your suggestion on the wage-per-hour basis?

Mr. Stonebraker. Per hour?

Senator Ellender, Yes.

Mr. Stonebbaker. Thirty-five cents, I would say, as a minimum.

Senator Ellender. That is all.

Mr. Stonebraker. For the South.

The Chairman. Thank you very much.

E. R. Stowell, representing the Sailors Union of the Pacific? He is not here.

(The following statement, dated June 11, 1937, submitted by Mr. S. Odenheimer, Lane Cotton Mills Co., New Orleans, La., was authorized by the chairman to be incorporated in the record:)

Lane Cotton Mills Co.,

New Orleans, La., June 11, 1937.

First. I favor a minimum wage to apply equally to everybody—farm and domestic labor excluded.

I favor maximum hours, but flexible, to apply equally to everybody—farm and domestic labor excluded.

Second. I favor the exclusion of child labor under 16 years.

Third. I am not in favor of a commission with powers as outlined in your bill, but a commission for the sole and only purpose of fixing maximum hours.

A great emergency—unemployment—confronted us in 1933 when you introduced your bill for a 30-hour week. The same emergency is before us now— millions of people unemployed.

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[PAGE 1074]

The present labor bill should be based on nothing else but to overcome this great emergency. Its only object should be to solve this unemployment question, that is, by such legislation as will permit commerce and industry to expand, and thereby find work for the unemployed, under conditions suitable to the American way of living, and such legislation should be clear cut, short, and precise, so everybody can understand it. The law to go into effect as soon as it is passed, and not be depending on decisions or regulations by a commission, or anyone else.

The economic welfare of this country requires confidence in the stability of present and future conditions.

Violent changes in the economic structure are disastrous. Human nature, as it is, will adjust itself to gradual changes, but not to revolutionary changes.

Legislation can only help commerce and industry, provided it fits in with prevailing conditions.

New and violent changes in the structure of labor conditions will retard, and not improve them, and will not accomplish the profitable employment of more people.

Staple conditions are necessary so that commerce and industry can look ahead, and expand, and thereby employ more people. Capital has to be invested In the enlargement of present and new plants. Confidence in the future is necessary for capital investment, and only new capital can employ more labor.

The powers invested in the commission, as outlined in your bill, would not restore confidence, but would prevent capital investment in fixed assets, and would not permit forward sales of manufactured articles, on account of contingencies staring us in the face, due to constant changes we have to look forward to by the exercising of the unlimited power delegated to such commission in your bill.

There should be a commission, but its only powers should be to regulate hours of labor, and only with due regard to the number of unemployed from time to time, or with due regard to the impossibility with the labor employed at the time, to furnish in given hours, the quantity of manufactured goods required.

If, for instance, the hours of labor should be prescribed all over the United States as 40 hours per week, and at some future time it should be found by the commission that there are still a great many unemployed, then they would reduce the hours. On the other hand, they would give us longer hours if there is a scarcity of manufactured articles.

We are all in favor of legislation referring to social security, but economic security is even more important for the welfare of the people, and it should be safeguarded against overnight changes.

Our present form of government permits Incentive and the enjoyment of the fruit of our labor—regimentation is foreign to the American spirit Bureaucracy has no place in a democratic country.

Only emergencies, such as the great mass of unemployed today, justify legislative changes in our economic life, and such changes must only be to overcome the emergency.

We all agree that short hours are not necessary for one’s physical well being, but are justified only to employ the unemployed.

Under present conditions, it is believed, that 40 hours would be right, with permission to work longer hours, by paying time and a half.

There should be a minimum wage, and it is suggested that 30 cents per hour would be about right, but this 30 cents per hour to apply to everybody. This, of course, to be the minimum wage for all occupations, and would not apply to a great many occupations in which the minimum wage is now a great deal higher. Such higher minimum wages will adjust themselves between the employer and the employee.

There should be a differential between northern and southern labor, the cost of living being less in the South.

Hours of labor must be flexible, and must apply equally to everybody in the United States, equally to commerce and industry.

That completes the witnesses for the day and the committee will recess until tomorrow morning, at 10 o’clock.

(Whereupon, at 1:10 p. m., an adjournment was taken until tomorrow, Tuesday, June 22,1937, at 10 a. m.)

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[PAGE 1075]

FAIR LABOR STANDARDS ACT OF 1937

TUESDAY, JUNE 22, 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 presiding.

Present: Senators Black (chairman), Allen J. Ellender, Josh Lee, and James J. Davis.

Representatives Robert Ramspeck, Reuben T. Wood, James H. Gildea, George J. Schneider, Arthur B. Jenks, William J. Fitzgerald, and Albert Thomas.

The Chairman. Before we proceed with the witnesses, I have been requested by the National Association of Finishers of Textile Fabrics to place a statement prepared by them in the record, which I give to the reporter to place in the record.

(The letter and statement referred to are as follows:)

National Association of Finishers of Textile Fabrics,

New York, June 16, 1937.

Hon. Hugo L. Black,

Chairman, Senate Committee on Education and Labor,

Washington, D. C.

Dear Sir: On behalf of the National Association of Finishers of Textile Fabrics there are forwarded herewith to your honorable Joint Committee of the Senate Committee on Education and Labor and the House Committee on Labor 50 copies of a brief statement regarding the Fair Labor Standards Act.

This statement is respectfully submitted as reflecting the views of this association with the hope that it will be duly considered by the members of your committee.

Very truly yours,

Wm. J. Matthews,

Chairman of Executive Committee.

To the honorable members of the Joint Congressional Committee of the Senate Committee on Education and Labor and the House Committee on Labor:

The members of the National Association of Finishers of Textile Fabrics are opposed to the above bills and desire to submit the following views and reasons:

The humanitarian impulses and objectives are not in issue. Notwithstanding many generalizations in this record to the contrary, the President has stated many times that 9 of every 10 employers are maintaining labor standards that are fair. As far as the employees affected by these measures are concerned, no figures or facts have been offered to refute that statement, and data has been placed into this record not only corroborating such 90 percent of fair-standards observance, but tending to prove that very generally the degree of fair labor treatment is more nearly 100 percent. A careful analysis of most of the labor disputes will show that causes other than differences regarding wages and hours have led to discord and distrust, and enormous waste and loss.

Assume that 45,000,000 are gainfully employed, approximately 32,000,000 of those people are included in the following classes of workers: Farm, local, and distributive service, domestic servants, government, and institutional work, businesses where less than 20 are employed, and the self-employed.

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[PAGE 1076]

That leaves about 13,000,000 who may be subject to the act, and a very large percentage of this last number are above the minimum rate of pay class. Official estimates are that three out of every four workers affected are now paid more than any minimum wage which would be established in this manner. Hence, a minimum-wage provision would not affect more than approximately 3,000,000, 90 percent of whom are working under fair-labor standards according to the above statement. Furthermore, official figures show that the lowest wages are paid agricultural laborers, domestic servants, and small local service and manufacturing concerns, none of whom would be subject to this act.

It is in this record that the average work-week of a number of representative industries employing more than 1,500,000 employees is 41 hours, and employment is 1.9 percent higher than in 1929.

Undue haste in the enactment of a measure of so great importance is heavily weighted with dire and evil portent. A variety of opinions have been submitted to this committee regarding the various provisions of the bills, many of them volunteered, and others made in response to direct questions. They are hopelessly in conflict, both as regards administrative procedure and fundamental principles. The Secretary of Labor, in reply to Representative Schneider’s direct question about including provisions for production control in these bills stated that she had not found what she considered a satisfactory conclusion but it may be necessary in time. Inability to be more explicit undoubtedly is due to the absence of factual surveys of the entire field and individual situations covered by this type of legislation. Such factual bases have not been prepared for the guidance of legislators, because there has not yet been a forthright announcement of the necessity of a national self-control policy of all industry. These bills themselves, however, clearly point toward such a national policy of complete transition.

One of the framers of these bills is quoted as having said: “It is a mistake to regard the present Fair Labor Standard Act as an instrument for spreading work in industry. This act is designed to establish basic rules of competition * * * It means that the Government will seek to end labor exploitation. * * * This is an effort to establish minimum standards of competition.”

On the contrary, the bills eliminate competition entirely by the establishment of a national final control to the degree provided by the bill. The competitive theory heretofore relied upon for the protection of all interests is to be supplanted by paternalism to the extent involved. These bills go much further than just minimum wages and maximum hours of work. Whether they do or do not is not so important as to first consider and determine whether the national policy shall encompass all industry. Such control, or supervision, regarding minimum wages and maximum hours necessarily will very soon ripen into the faking of supreme command. In order to effectuate the purposes of measures regulating or controlling any of such labor standards, it will be claimed that production and prices, and the allocation of capital must be controlled.

If industries are to be controlled it will be necessary to have Federal incorporation of enterprises instead of State incorporation. Allocation and supervision of capital and its reinvestment will be necessary to regulate plant expansion. Taxation of surpluses, thereby forcing the distribution of dividends, would be an aid in directing the channels of reinvestment. These and many other plans have been outlined and urged, and some already are on the statute books. Controls exercised anywhere in the intricate business structure will have direct effects in many other places. It is futile to talk about basic rules of competition as applied to minimum wages and maximum hours, and disclaim any need for the exercise of the same power to control all wages, production, and prices.

Whatever be the avowed purposes of the measure it is clear that management will be displaced and the judgment of others not competent to deal with individual situations and problems will be rendered regarding essentials which will have to do with the success or failure of the particular enterprise. Without success, obviously the social objectives cannot be achieved. Theoretically, it is easy to write plans, but the difficulties will arise when the measure is put into effect. The painful but salutary lesson of N. R. A., easily and quickly formulated, and unanimously condemned as a result of its own enforcement shortcomings, should not be ignored. The establishment of an all-powerful board, with discretionary flexible powers, following or rejecting reports of its own appointed advisory committees, is not a real difference in the method of rendering edicts, from that followed by the Code Authorities from June 1933 to May 27, 1935. During that chaotic period there was an absence of ascertainable standards for the guidance of the administrators, similar to that which obtains in these bills, which standards would be necessary

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[PAGE 1077]

for the Labor Standards Board to avoid the accusation of legislating, instead of administering a clear, definite law. The orders of the board will mean government by men and not by law.

Without quoting the involved, confusing, and conflicting provisions of the measures, it is evident that the framers have avoided the facts by creating a board with power to rule and decide matters which could not be written with certainty into a law. It may deal with the wages of all classes, raise or lower minimum wages or maximum hours within limits, disregard wages and hours agreed upon through collective bargaining, recognize regional and other differences in fixing minimum wages and maximum hours.

No emergency exists. National control of all industry is not necessary. The methods proposed will not work. Private management will have to close shop for all business except to attend to the numerous matters which will instantly develop, and which cannot be properly determined by absentee supervisors. Obviously there must be tolerance, particularly with reference to hours, not only in individual plants but in different industries. Because of particular orders, or seasonal requirements, or the character of the goods being processed, flexibility of hours is essential. Loyal employees welcome the opportunity of working a few hours a week without raising any issue about overtime pay, when necessary to finish a particular lot of goods.

Arbitrary dislocation of established cost and selling-price ratios provoke substitution with unexpected results. For example, rayon has displaced silk to a large extent because it is so much cheaper. The measures contemplated in these bills will involve the necessity of wide increases in tariff rates if many lines of domestic industry are to survive higher costs. This opens up a vista of endless complications because of the trade treaties already consummated or under negotiation. Many branches of the textile industry are so close to the danger line at present, that they cannot assume higher cost without compensating protection. Failing upward tariff revisions the alternative is closed mills and increased unemployment.

Thirty-two million people working for a living are not directly subject to the provisions of these bills, but will be affected in some manner by them. If the Federal authority be once established to fix wages or hours by law directly, or indirectly through the delegation of that authority to a board then, in some form, that power will be exercised over those who do not come directly under this measure. Being presented in the form of a measure to regulate one element of competition, obviously that phase of competition cannot be adequately regulated without expanding the scope of the undertaking. This accounts for the sweeping in of such business as will be claimed to affect interstate commerce.

As stated, a forthright announcement should be made as to the need of a national policy to have national control of all industry. If the people want such a complete transition involving the negation of States, then it should be frankly avowed and then decided whether it should be brought about by piecemeal legislation, or otherwise, and done in a valid manner. It is misleading to imply in any form that the power to compulsorily fix minimum wages or maximum hours by a Federal law, does not carry with it the power to determine all wages, control capital, production, and fix prices, and that such power, once established, will not be exercised in full. If such a policy be regarded as necessary and imperative, a complete survey should be made for the purpose of verifying such a conclusion, and most certainly, in any event, before rushing into legislation so seriously affecting the lives of every individual in the country.

The decisions of the Supreme Court written since 1933 have made very clear two principles which completely demolish these bills. (1) A law which compels one to make a contract containing prescribed terms is not valid; (2) production is not commerce.

The Schechter, Bituminous Coal and Labor Relations Act decisions have clarified the confused attitudes, evidenced by these bills, toward our complex governmental structure, and our interrelated system of business enterprises.

In the Wagner Act cases, the Court said:

"The act does not compel agreements between employers and employees. It does not compel any agreement whatever.

“Undoubtedly the scope of this power (commerce power) must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate this distinction between what is national and what is local and create a completely centralized government.”

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[PAGE 1078]

In the Schechter case the Court said that hours and wages have no direct relation to interstate commerce.

There is a wide difference between requiring one to negotiate with another to settle a dispute, and compelling one to agree. To carry on business, contracts must be made. A law specifying terms and conditions of a contract, whether affirmatively or negatively, which contract must be made to exist, is a compulsory agreement. To require an employment contract to contain specified terms and conditions, is a deprivation of freedom of contract and the taking of property by enactment of law. No decision has yet been rendered, involving conditions of employment, sustaining a Federal law, providing for the taking of property by virtue of such a law.

The decisions in the Convict-Made Goods case and the State Minimum-Wage-Law cases are prophetic as to where the line must be drawn between Federal and State authority in regulating commerce. In order to preserve the quasi-sovereign rights of the States to legislate regarding the economic and social affairs of their own citizens, the court has pointed the way for valid Federal legislation by approving a law prohibiting the shipment of goods into a State made under conditions contrary to the laws of such State.

The problems raised by these bills could be solved in the manner outlined by the Supreme Court, within the bounds of the constitution, the existence of the States perpetuated, and such laws would command the respect and observance of all the people.

Respectfully submitted.

National Association of Finishers of Textile Fabrics,

William J. Matthews, Chairman of Executive Committee.

The Chairman. The committee will doubtless recall that Saturday a week ago we had intended to have Hudson B. Hastings, professor of industrial administration at Yale University. It has been requested that he appear before the committee. The request was that he appear here on Saturday, and the committee agreed to meet on Saturday, but we failed to receive an acceptance from Dr. Hastings, in time to have him appear.

I have here a statement from him which he wishes placed in the record. Preliminary to placing it in the record, I note that it says in a number of places that he does not know of a single professional economist in the world who subscribes to the thesis on which this bill is written.

In that connection, simply as a preliminary to his statement, I wish to read and place in the record a few short lines from a book originally written in 1875 by Mr. L. Brentano. This book gives a history of the relation of wages and hours to production, and particularly gives a part of the history of England and other countries in connection with the regulation of hours. I read this particular part of it in connection with the statement that all the professional economists agree that this bill is on the wrong thesis.

He says:

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[PAGE 1079]

And the historian says this:

That each further curtailment of the working day the latter—

speaking of the English manufacturers—

’demonstrated in the most positive manner that the proposed new limitation could not fail to rob them of all possible profit, to raise the price of goods, to lower wages and to ruin the export trade.

This movement, however—

he said—

to curtail hours enjoyed the sympathy of all men except the manufacturers and the political economists of that day.

That is read from a book originally published in 1875.

The reporter will place here the statement of Dr. Hastings, of Yale University.

(The statement referred to is as follows:)

Statement on H. R. 7200 by Hudson B. Hastings, Professor of Industrial Administration, Yale University

In submitting a statement concerning H. R. 7200, I shall confine myself to comment on the most important economic issues which are involved, and I will not attempt to comment on the details of the administration of the proposed law as outlined in the bill.

The two major economic objectives of the bill seem to be: (1) To reduce involuntary unemployment; and (2) to increase the real wages of the rank and file of nonsupervisory workers in business and industry.

1. Reduce involuntary unemployment. The provision to give the Labor Standards Board the power to set a maximum workweek is clearly based upon the assumption that improvements in machinery and methods tend to create permanent unemployment and that the only way to avoid a constantly growing horde of the unemployed is to shorten the workweek commensurate with technological improvement.

This is an idea which is very prevalent, particularly among the working class, but I do not know of a single professional economist in the world who subscribes to this thesis. It is universally held by all who have studied this problem with care that economic forces set in motion by technological improvement automatically create, within a comparative short period of time, as many opportunities for new jobs as are initially destroyed by the introduction of the labor-saving machinery or method, provided we maintain a flexible price and wage structure.

The idea that technological improvement creates permanent unemployment is not only unsound in theory, but there is nothing to support it in the facts.

In 1870 the United States Census Bureau reported that 32.4 percent of the population were gainfully employed. This percentage has risen in every decennial census, with the exception of 1920 when the percentage dropped from 41.5 percent in 1910 to 39.4 percent in 1920. This drop, however, was largely due to the fact that up to 1910 members of farmers’ families were enumerated as gainfully employed, whereas beginning with 1920 they were not so classified, inasmuch as they were not working for hire.

In 1930 the percentage of gainfully employed was 39.8 percent showing a resumption of the tendency toward a larger percentage of the population gainfully employed, and this despite the fact that by January 1, 1930, we had already begun to suffer a material decrease in employment due to the beginning of the present business depression which started in the spring of 1929.

In summary, both careful analysis and the facts support the unanimous opinion of professional economists that technological improvement neither decreases or increases, permanently, the total number of available jobs. It changes the character and often the location of jobs, but does not affect their total number in the long run.

Both careful analysis and the facts support the thesis that as long as we maintain a flexible price and wage structure such as we have had in the past, the total number of jobs will closely approximate the number of people seeking gainful

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[PAGE 1080]

employment, except during periods of business depression. The chief economic effect of technological improvement is to increase the real wages of the worker through lowering the costs of production.

Thus, although technological improvement unquestionably results in temporary unemployment, it does not tend to create a growing number of permanently unemployed.

If this bill is passed, with a provision for a maximum workweek appreciably shorter than the present workweek, I am firmly convinced that although the initial effect would be a reaction which would set in within a few months which would carry the number of employed below the present levels, it would be a matter of years before our economic system could readjust itself to a materially shorter workweek.

It is inevitable that costs would rise materially, and this would decrease the demand for goods in both the domestic and foreign markets. It would also tend to increase our imports sharply. The difficulties of permanently absorbing the present unemployed would be much greater with a shorter workweek than they are under present conditions. Many concerns, particularly’ the smaller-sized units, would be forced out of business.

2. Increase the real wages of the rank and file of nonsupervisory workers in business and industry. If the workweek is shortened, it will inevitably result in an even greater reduction in the real weekly wages of the worker. With but few exceptions, industry cannot afford to pay workers higher rates than they now do, without adding the increased cost to the price of the product. But even if they should maintain the present wage rates, the worker would lose in his real yearly wage because of the added costs per unit of manufacturing resulting from the shorter workweek. This would be principally due to the following factors: (1) The inefficiency of production at the start and finish of each day would constitute a large proportion of the total working time and therefore add to costs; (2) it would force producers to hire employees for jobs for which they' were not fitted; (3) there would be the added expense per unit of output on account of clerical work involved in pay-roll and cost-accounting procedure; (4) a shorter workweek would mean that each unit of output would have to bear a higher burden on account of fixed charges such as interest, taxes, depreciation, obsolescence, insurance, etc.

In addition to the added costs per unit of output mentioned above, I would also like to call attention to the fact that the administration of all of the features provided in this bill would require the full-time services of something like 75 to 100 thousand people in Federal, State, local, and private service, and the tremendous bill for these services and the expenses connected therewith would have to be added to the price of goods and services.

Although the immediate result of the shortening of the workweek would give many of those now unemployed a temporary increase in their real income, it would mean for everyone else in the country an even greater reduction in their real income. I believe it is conservative to say that a 20-percent reduction in the workweek would mean a reduction in real income of labor now gainfully employed, of at least 25 percent.

With very few exceptions, what the workers of this country need today is not more leisure, but more real income, and it is utterly impossible to give them a higher real income unless they produce more, not less, goods per annum.

Another feature of the bill with which I strongly disagree in the provision to allow the Labor Standards Board to set minimum wages. If operations under this provision of the law were confined to the elimination of what is known as the “sweatshop”, all fair-minded persons would approve. But the law, as now drawn, contemplates going way beyond such level of wages, as it provides that the board may set minimum wages as high as 80 cents an hour or $1,200 a year.

Experience has shown that the tendency on the part of the board would be to set minimum wages so high as to prevent millions of workers who are subnormal in their physical or mental capacities from securing any employment whatsoever. There are such great differences between the earning capacities of laborers, and such a wide difference in the cost of living in different communities in this country, and such an infinite variety of surrounding circumstances to jobs, that it would be simply impossible for any central Federal agency to establish minimum wages which would l>e fair to all concerned.

So far as legal action is concerned, I believe it is much better to leave this problem in the hands of the several States, reenforced, by collective bargaining and public opinion in each community. If it were not for the protection which workers now receive in seeking to bargain collectively with their employers, there would be much justification for legislation on the subject, but I think that under the

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interpretation of the Wagner Act which has been rendered by the Supreme Court we may confidently look forward to the practical elimination of the sweatshop at a comparatively early date.

I am also convinced by our experience with N. R. A. that centralized Federal control over wages, hours, and working conditions, would result in driving out of business a large proportion of our smaller companies, with the resulting heavy losses to both owners and employees. Furthermore, favoritism, politics, and even corruption, would inevitably creep into the administration of the law in a major degree.

There are many who believe that labor in general is being exploited by the owners of business, but I see nothing in the economic facts to justify this opinion.

Many of our ablest statisticians have stated that, taken as a whole, the owners of business receive less than interest on their capital over a period of years. There are, of course, instances among all sizes of concerns where the wages paid are less than the going rate, which results in the owners receiving an unfair return on their investment, but these instances are real exceptions and not by any means the general rule. At least 90 percent of the value of capital to society goes to the consumer in the form of lower prices.

Our problem, then, is to eliminate the exceptional cases of exploitation of the worker, and, as I have said above, I believe this can be better and more safely left to local collective bargaining supported by public opinion, and to State legislation where the States deem this advisable.

Summary: It is my firm conviction that the net result of the operations of the Labor Standards Board, as contemplated by this bill, would be (1) a material increase in the amount of unemployment and (2) a markedly lower level of real wages for the average worker. Constructive progress toward the solution of these problems is to be found along quite different lines of approach.

The Chairman. I wanted to wait, if possible, for Mr. Ramspeck.

I might state that we have this morning for the day 13 witnesses. There may be another one who will appear which might make it 14. Let all who have requested to testify before this committee understand that, because it is agreed to close the hearings today, and I state that also because this morning I have a continuation of a series of telegrams from several different parts of the country seeming to be wholly disconnected with each other, but by coincidence they all state we should not act hastily until industry has had time to thoroughly digest this bill, but they do not request to appear. So when we close today we will have notified everyone who requested to testify up to late yesterday afternoon, and we will have given each one of them an opportunity to appear before the committee.

Mr. Charles M. Hay. Mr. Chairman, may I inquire whether your program includes Mr. Leo Keller, assistant to the president of the Railway Brotherhood of Maintenance of Way Employees?

The Chairman. If it does not, and he wants to testify, it will. Yes, it does so.

Mr. Hay. Yes? Thank you.

The Chairman. Mr. Lewis, I had hoped that Mr. Ramspeck would get here before you started, but since he is not here, if it suits you, we can proceed, or we can, if you desire for us to hear some other witnesses, wait until he arrives before hearing you?

Mr. David J. Lewis. I wish you would.

The Chairman. And then you testify?

Mr. Lewis. Yes.

The Chairman. Which would you prefer?

Mr. Lewis. The latter which you suggested.

The Chairman. The latter?

Mr. Lewis. Yes, sir. Thank you.

The Chairman. Is Congressman Moser here?

(No response.)

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[PAGE 1082]

The Chairman. Then, Mr. Lewis, if you will just sit down up here with us until Mr. Ramspeck comes, if that is what you prefer, we will proceed with the other witnesses.

Mr. Lewis. Yes, sir.

The Chairman. Is Mr. Joseph Adams here, or Mr. Harley Langdale, president of the American Turpentine Farmers’ Association?

(No response.)

Senator Pepper requested that those witnesses testify this afternoon.

Mr. Samuel Fraser, International Apple Association. Will you come around, Mr. Fraser, please, sir?

I believe that if we would observe the rule today that we originally agreed upon, not to ask any questions until the witness has completed his statement, we would probably get through better, and then have an opportunity to ask all the questions. Since we have quite a number of witnesses, I believe that would be most satisfactory.

STATEMENT OF SAMUEL FRASER, ASSISTANT SECRETARY, INTERNATIONAL APPLE ASSOCIATION, ROCHESTER, N. Y.

Mr. Fraser. Mr. Chairman, I am appearing for the International Apple Association. I have given the clerk the list I am appearing for so as to get it right.

The Chairman. Yes, sir.

Mr. Fraser. The Wenatchee Valley Traffic Association, Wenatchee, Wash.; Wenatchee-Okanogan Cooperative Federation, Wenatchee, Wash.; Yakima Valley Traffic and Credit Association, Yakima, Wash.; Yakima Fruit Growers Association, Yakima, Wash.; Yakima County Horticultural Union, Yakima, Wash.; Hood River Traffic Association, Hood River, Oreg.; California Fruit Exchange, Sacramento, Calif.; Rogue River Valley Traffic Association, Medford, Oreg.

We have all got together to submit one statement so as to save time.

The Chairman. You are Mr. Fraser?

Mr. Fraser. Yes, sir.

The Chairman. What is your position with the apple association?

Mr. Fraser. I am assistant secretary of the International Apple Association.

The Chairman. With headquarters here in Washington?

Mr. Fraser. I beg your pardon?

The Chairman. With headquarters here in Washington? Where are your headquarters?

Mr. Fraser. No. Rochester, N. Y., 1108 Mercantile Building., R. G. Phillips, secretary. I have just filed that with the clerk.

The International Apple Association is a nonprofit membership association made up of growers, wholesalers, shippers, distributors, and others interested in the production and distribution of apples, pears, and other fruits and vegetables, and is the largest association of its character in the United States. I have a roster of our membership here, if you wish to look it over.

The Chairman. I would be glad if someone would hand it to us while you are testifying.

Mr. Fraser. That is my own copy.

The Chairman. All right. We will look at it a moment while you are testifying.

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[PAGE 1083]

Mr. Fraser. The other associations include growers, cooperative associations on the Pacific coast with individual producers and shippers as represented through the traffic associations and exchange designated.

The Eastern Horticultural Council, representing eastern and middle western growers, will appear through its secretary, W. S. Campfield.

These bills are clearly drawn with regard to the production, manufacture, mining, handling, and transporting nonperishable commodities; “or in the production of tools and dies used in the production of such goods.” See Definitions, section 2 (24).

We are engaged in the production, handling, conserving, and distribution of perishable commodities which grow, come to harvest, and perish if not properly and promptly handled and conserved.

Let us consider the grower for a moment. I am a grower myself, so I know what I am talking about.

The Chairman. Where is your orchard?

Mr. Fraser. Geneseo, N. Y. I have 240 acres.

The Chairman. Of peaches?

Mr. Fraser. I. have grown up to 60 acres of peaches. I am not growing any just now. I have grown up to 60 acres.

The Chairman. Yes.

Mr. Fraser. For 8 years I was on the Wadsworth estate and handled 16,000 acres, so I am quite familiar with farming. I have been engaged all my life in farming.

A peach crop is unfit to pick today, ready tomorrow and, if a rain comes, may be on the ground and worthless the day after. The financial return to the grower, for perhaps 5 years’ expenditures of capital and labor in bringing the trees into production, rests entirely on his ability to get the crop harvested, packed, marketed, and transported on time and that time is short and the labor supply at country points may be scant and the price the grower receives in return for his labor is not high.

In the case of an apple crop, with a variety like Baldwin in New York which bears a crop every 2 years, under good conditions, not allowing for any loss of crop due to a freeze or some other factor, a grower has a chance to harvest and make 15 sales from a tree in a bearing life of 30 years. The tree may take 12 years additional to come into bearing before any crop is secured. We are not engaged in making machines where a plant is built, equipped, supplies secured and a weekly output assured to meet a known and developed market. The grower must work with the elements to spray and protect the crop and grow it, regardless of hours, and then fight wind and frost and drought Or rain to harvest it and then we are handling a perishable, which after all has been done, may or may not sell for the costs in it, but it must be sold for what it will bring and sold with necessary speed to avoid deterioration. It is not an automobile which may be left in the salesroom window until someone is willing to pay the catalog price.

The growers’ returns may not be known until the end of the season, after all sales are made. It seems clear to some people that the costs of growing the crop— spraying, fertilizing, and tillage—must be paid for by the grower, but it is difficult to convince them that the crop has no value on the farm and that the only possibility of the grower getting a return

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[PAGE 1084]

depends on bis ability to find a market and a price at the market in excess of the cost of preparing the crop for market and placing it at the market for sale as well as the previous costs. All charges added are paid by the producer or by the owner of the commodity.

The storage facilities must be available day and night at harvest time. The field heat which is in a crop must be removed if the crop is to be held. The only way we may enjoy the varied assortment of fruits and vegetables is by permitting the work to be done when and as the necessity arises.

The crops work on no 40- or 30-hour week, they grow and perish, m one’s sleep. There is ceaseless activity; Sunday in the realm of nature is the same as Monday except that Sunday may be the one and only day in which the work may be done.

The exemption of common carriers from certain features of the bill is justified on the grounds of necessity and the same reason will justify the exemption of the packer and the packing plant, the storages and the processors and those engaged in the handling of fresh fruits and vegetables. The retailer is exempt but the wholesale handler is one whose services are as closely linked with the chain of operation as any other. As already indicated, the bill shows that no thought has been given to the production of handling of perishables. It was drawn solely with nonperishables in mind.

Either the bill should carry the list of industries to which it is to be applicable or the production, harvesting, preparation for market, packing, conserving, processing, transportation, and marketing of fresh fruits and vegetables should be definitely and specifically exempt from the bill.

Exemption of agricultural labor.—The bill proposes to exempt agricultural labor, with which we are in fullest sympathy, but at no place does it define agricultural labor. On the contrary, it leaves it to the board to “define” and “delimit” and to that we emphatically object.

Unless Congress writes its own definition, you can be very sure that any board will so define and so delimit that the growers, packers, processors, conservors, and distributors of these perishable crops will not receive the protection to which they are entitled. This is conclusively illustrated in the action of the Bureau of Internal Revenue in its interpretation of agricultural labor under the Social Security Act and where it has so defined and delimited it that the producing end has received only very limited protection and far less than prevailed under N. R. A. and A. A. A.

A concrete illustration came to our office last week from one of our members in Pennsylvania who owns and personally operates an apple orchard. He has to hire a young man to help him keep his records which are required by other laws such as the income tax and revenue laws and also to assist him in marketing his output. The Bureau of Internal Revenue rules that this clerk, hired by the farmer himself and whose work is based entirely on the farmer’s own output, is not exempt and that he will have to pay a tax on it. And this in spite of the fact that the Social Security Board’s definition of “agricultural labor” as applied to the farmer himself and his own output is that labor employed by the farmer in packing, packaging, processing, transporting, and marketing his own output is exempt.

All of the costs and charges of packing, packaging, washing, grading, conservation, putting the commodities on board some transportation

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[PAGE 1085]

agency for transportation to market, in the end come squarely out of the pocket of the grower. They cannot be passed on to the consumer. This is conclusive and axiomatic. Agriculture would not be in its present plight if that were not the situation. The farmer has had to pay them. Perishable products have to be sold for what they will bring. If it were otherwise, perishables year after year would not be selling in consuming markets at barely enough to pay freight charges. Anyone who is interested in handling these commodities is quite familiar with that situation time after time.

The growers of every State in their various functions from growing to necessary preparation for market can easily be loaded up with impossible burdens under the Black-Connery bills.

This proposed Labor Board is empowered to define and delimit agricultural labor. Based on experience, we feel we can be absolutely certain that any such Board will delimit it to the last notch and unless Congress specifically writes into the act what they mean by agricultural labor, then the producers of perishable commodities in the country are going to be up against a very difficult situation.

What was the intent of Congress in exempting agricultural labor in the Social Security Act? It has not worked, all the way through, as it was anticipated by the producer.

Now, let us take the board. The board is to be given defined power, discretionary power, and legislative power.

The granting of discretionary powers to a board which is appointed for a term of years and is not subject to court review is to be questioned, and that is a very important feature to us, a very serious matter, and when that discretionary power is coupled with legislative power, as in this case, we have a bureaucratic control with despotic power over not only the definition of agricultural laborer, but over all industry.

The granting of legislative power to an appointed board is a serious matter, especially so if Congress takes the position that it, in its wisdom, does not know what may be needed to be done, so it extends its legislative power to a board whose rulings and regulations are beyond review.

The Chairman. What legislative power?

Mr. Fraser. That is the point I am coming to.

The Chairman. Tell us what legislative power.

Mr. Fraser. Because they can define what agricultural laborer means.

The Chairman. Is that the only thing in the bill you refer to as conferring legislative power?

Mr. Fraser. As far as we are concerned. But I at the same time do not want to put the laborer under any such control for this reason—

The Chairman (interposing). I am not talking about that. I did not want to ask you any questions, but you made a statement that this bill granted legislative power. Are you a lawyer?

Mr. Fraser. They can determine----

The Chairman (interposing). Are you a lawyer?

Mr. Fraser. No, sir. I am a farmer.

The Chairman. What other legislative power now do you say it grants?

Mr. Fraser. They can fix and they can define geographically a consideration they will give to any industry.

The Chairman. You say that is legislative power?

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[PAGE 1086]

Mr. Fraser. It fixes the income supposedly those people are to get.

The Chairman. You say that is legally legislative power?

Mr. Fraser. I would regard it as an extension of the legislative power of Congress; yes, sir.

The Chairman. What else? What other legislative power do you consider it grants?

Mr. Fraser. Well, I think in the end you are going to fix the amount of money I get, and I will illustrate it this way----

The Chairman (interposing). I am talking about what is in the bill. I do not want to interrupt your prepared statements, but since you made that statement there I wanted you to put those things in which you consider legislative power of this board in this bill. You made a general, broad statement that this bill granted legislative power. What other legislative powers do you say it grants?

Mr. Fraser. Why, they have considerable power under the bill.

The Chairman. I am not talking about power, but legislative power.

Mr. Fraser. The extension of all the things that Congress leaves them at their discretion.

The Chairman. Everything in there you consider legislative power?

Mr. Fraser. They can extend legislative power of Congress.

The Chairman. Go ahead.

Senator Davis. Did I understand you to say a moment ago you wanted exempted in this bill all of those who are employed to handle fruit rather than agricultural workers?

Mr. Fraser. Oh, no. I am speaking now for the fruit and vegetable workers, Mr. Senator, you see. I have not been asked to represent all agriculture. I am a farmer. The definition of “agricultural laborer” may apply to the farmers, but I want it also to include, as I shall bring out, the growers and handlers of fresh fruits and vegetables, which is the most important branch of agriculture in the United States today. More income is derived from those two sources than any other. Forty-six percent of all rail charges paid on products of agriculture were borne by fruits and vegetables in 1935.

Senator Ellender. Will you discuss how far you want it to go?

Mr. Fraser. Yes, sir; I will.

As 1 stated, the granting of legislative powers to an appointed board is a serious matter, especially so, if Congress takes the position that it, in its wisdom, does not know what may be needed to be done, so it extends its legislative powers to a board whose rulings and regulations are beyond review.

Because if a hearing has been held (pt. V, sec. 12, 13) and there is some evidence to support the ruling, the court of appeals (sec. 25) will decline to review on the facts. The practice in the court of appeals, with the language provided in this bill means there is no review of a regulation. Before submitting new evidence one must convince the Board that there were reasonable grounds for failure to present it and no stay in proceedings can be granted in a labor standard order except under bond, according to section 25 (b).

The Board has exercised its discretionary power and its legislative power. If it defines a certain agricultural activity, for instance, the packing of oranges or apples is not agricultural labor, there is no basis for review. Then it defines its discretionary power and its legislative

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[PAGE 1087]

power. And there is no basis for review if you gentlemen do not define agricultural labor for us. I can assure you once the Board has held a hearing and they have considered the matter, there is no possibility of getting a review, and I speak because of our contact with the Internal Revenue on seeing what broadening we can get in rulings under the Internal Revenue with regard to the Social Security Act.

An act of Congress can go to the Supreme Court, but by this legislation an act of an appointed board cannot be carried to the Supreme Court, unless one is able to show that it is capricious or arbitrary. It may be contrary to fact and yet not be so far removed from the law that it is possible to show that it is either capricious or arbitrary, and no review of the regulation will be possible.

The power of the Board is beyond the law and is governed solely by its own individual complexes and when Congress so far extends its power to a board, there is no more need or place for Congress. Congress is an elected body. The Board is an appointed body, subject to removal by pressure of the Executive, so that someone more to his liking may be put in power.

Now, returning to the subject of agricultural laborer as defined and delimited by the regulations of the Board, section 19. What is an agricultural laborer? How will the term be defined and delimited by the Board?

In this we see opportunity for the exercise of both discretionary and legislative power and couple this with the wide powers granted the Board to grant exemptions when and as they see fit on a geographical basis, on the ground of necessity or on the many wide grounds granted this Board, and you have as wide a field for discrimination as it is possible to provide all granted on the assumption it will be used wisely. The laws should be definite, setting forth clearly the intent of Congress.

For some years I was a farm laborer. On a fruit and truck farm I planted and grew the crops, sprayed and harvested them, and I washed the vegetables. I graded and packed them and took them to market and sold them for my employer.

I drove team and I took hay and straw to market and sold it.

One winter I threshed wheat with a flail piecework because it was a way to make a little extra money. I was an agricultural laborer threshing for hire, but if the threshing crew and a power outfit is employed, is it agricultural labor? The Social Security Board decision is “no”, and it is beyond review.

When I washed the radishes and lettuce and bunched them on the farm I was an agricultural laborer; but if a grower takes his produce to a central point because he is short of water and have it washed and bunched and packed for him, it is not agricultural labor in the eyes of the Social Security Board. What will this Board rule?

A group of apple growers organize a washing and packing plant. I judge you gentlemen are familiar with the fact as to the way we have to operate. If we do not put on 12 times as much arsenic to kill codling moths as we are allowed to have on the apples when we sell them, we cannot control the codling moth, and we cannot make any agreement with the codling moth that it will attack only so many apples. In the way we operate, we have to wash the apples. Last year I hauled water because of a shortage for my orchard. It takes 5,000 gallons of water in order to wash a carload of apples a day; 5,000 gallons of water must be on hand.

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[PAGE 1088]

If a group of apple growers organize a washing and packing plant because there is not enough available water or help on each farm, and it is the easiest way to handle the problems of washing and packing to meet the standards of the Food and Drugs Act and the grading and packing laws, then the workers in such a plant are not agricultural labor, but if the work is done on the farm where the apples are grown, the workers are agricultural labor for the purposes of the Social Security Board. Agricultural labor is exempted from the Social Security Act, but it is not defined and no one knows what it means. That is the serious point I want to get across.

The index numbers of prices of fruits grown in the United States in 1936 was equal to the average of the years 1909-14, and in the case of apples 4 percent less than 1909-14. That is what we got for them. The fruit growers of the United States received 38 percent less average price in 1936 than in 1926 and the apple growers 33 percent less. They are in no position to be saddled with additional costs.

Page 1088 The Agricultural Situation

The continuing devastating effect of a long period of low prices was particularly felt by the orchardist who found his capital fixed in an industry requiring in many cases 10 years to bring the trees into production with upkeep costs which must be met annually if the plant was to be maintained. Income for years has failed to meet the overhead and reserves are now sadly depleted. The survivor of this ordeal is not now in any position to be saddled with a burden of additional costs. These commodities are affected by depression.

The fruit grower in 1935 averaged 9 percent less than index and the apple grower 3 percent, with decliniug prices in the spring of 1936. The 1936 apple crop was the shortest in 15 years, whole districts having no crop. The prices of all leading fruits averaged 100. (1909-14=100.) Fruits and vegetables are perishables. They must be harvested and packed or stored today, if we would eat tomorrow. And, as I stated, there is no surplus of help in the country. One cannot find two sets of help to run a picking crew, and a packing crew

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[PAGE 1089]

must be as large as the picking crew if both operations must go on at the same time.

ITINERANT LABOR

Much of the additional harvest and packing help is itinerant, of which there is no possible way of keeping record. This was one factor in determining N. R. A. to exempt agricultural labor—the great difficulty of obtaining any record of the floating population. Last year with the drought in the Midwest, farm families moved to the Pacific coast and harvested and packed the fruit and vegetable crops. In this way they earned additional funds and aided m harvesting and packing a crop for which additional help was needed.

I live in a county of 37,000, and I checked up and we had 900 on relief, and they won’t work. When I pick cherries, and I grow 30 acres of cherries----

The Chairman (interposing). Just one moment. I do not like to interrupt you, but you made a statement there were 900 people on relief who will not work. Do you make that as a positive statement of fact?

Mr. Fraser. Let me put it this way, Senator----

The Chairman (interposing). That is what you said, did you not?

Mr. Fraser. Right; yes.

The Chairman. You said you knew of 900 people on relief.

Mr. Fraser. I said I knew of 900 on relief in my county and they won’t work.

The Chairman. Where is that place?

Mr. Fraser. Geneseo, Livingston County, N. Y.

The Chairman. You state definitely and positively you know those 900 people will not work?

Mr. Fraser. The group I have contacted won’t work.

The Chairman. How many did you contact personally?

Mr. Fraser. They won’t work in this sense—they are not working.

The Chairman. How many did you contact personally?

Mr. Fraser. I beg your pardon?

The Chairman. How many did you contact personally?

Mr. Fraser. I took 20 in my own town the fall before last and tried to get them to pick apples, and they won’t work for me.

The Chairman. Will you give us the names of the 900 you say won’t work?

Mr. Fraser. I could not give you the list. I would have to check the names.

The Chairman. Can you give us the name of one?

Mr. Fraser. That has been on relief?

The Chairman. That has been on relief that you know will not work.

Mr. Fraser. I can.

The Chairman. All right. Give us all the names you can think of.

Mr. Fraser. I just know him as Joe. He told me he couldn’t work. And I will find his name and give it to you.

The Chairman. He told you he could not work?

Mr. Fraser. No; he said, “I can’t afford to come and work.” He said, “Because I can do better on relief.”

The Chairman. He is what?

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[PAGE 1090]

Mr. Fraser. He is getting more money on relief. He says “I can’t afford to work.”

The Chairman. How much did he say he was getting on relief?

Mr. Fraser. He is getting $15 a week for him and his family.

The Chairman. What did you offer him?

Mr. Fraser. I offered to give him $2 a day.

The Chairman. How many days in the week?

Mr. Fraser. Six.

The Chairman. You offered him $12 a week?

Mr. Fraser. Yes. And he could not make the $2 a day.

Senator Ellender. How many hours a day?

Mr. Fraser. We generally work 9 to 10.

Senator Ellender. Is that all?

Mr. Fraser. I have to drive them from the village to the farm, collect them.

Senator Davis. Does that include his meals while he is on the farm?

Mr. Fraser. He might get some dinner and he might not. It depends.

The Chairman. He might not?

Mr. Fraser. Sometimes he does.

The Chairman. Give us the names of the 899 others you know won’t work.

Mr. Fraser. I will check the list and file it with you. I cannot name the whole .900 now.

The Chairman. You have made a definite positive statement charging that 900 men won’t work.

Mr. Fraser. Yes, sir.

The Chairman. And with what I consider to be a very grave offense. Give us the names of those 899.

Mr. Fraser. I tried three or four of them this spring.

The Chairman. Give us the names of them.

Mr. Fraser. I will have to get them from my man on the farm.

The Chairman. Do you know the names of any of them?

Mr. Fraser. I will file the names with you.

The Chairman. And you do not know the names of a single one of them?

Mr. Fraser. I know several of them as Joe and this and that.

The Chairman. What are the others’ names? The one n^med “this”, what is his regular name?

Mr. Fraser. I will file the list because----

The Chairman. You do not know it, do you?

Mr. Fraser. Yes, I know the men. I will file with you the list.

The Chairman. How many people have you asked whether or not they would work?

Mr. Fraser. Twenty.

The Chairman. You have personally asked 20?

Mr. Fraser. My foreman asked 20.

The Chairman. I am talking about your asking them.

Mr. Fraser. No; I had my foreman do it.

The Chairman. Have you asked any?

Mr. Fraser. Yes, sir.

The Chairman. How many?

Mr. Fraser. This man Joe I asked him coming down to the train. I am not home very much.

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[PAGE 1091]

The Chairman. Is that when you were on the way down here today?

Mr. Fraser. No. Last year I asked him and he told me he could not come to work.

The Chairman. How many have you asked besides Joe?

Mr. Fraser. We had three of them we were trying to work a week ago and you could not pay them $2 a day and get your salt out of them, and we let them go.

The Chairman. In other words, you let them go because you could not get as much work out of them as you thought you should?

Mr. Fraser. You could not make a cent out of them.

The Chairman. You could not make a cent out of them.

Mr. Fraser. No.

The Chairman. Give us the names of all of those you asked to go to work who would not.

Mr. Fraser. I will supply you with the list.

The Chairman. Have you asked personally any of them?

Mr. Fraser. I will file with you the list.

The Chairman. Have you asked any of them?

Mr. Fraser. My foreman has asked them.

The Chairman. Have you asked any of them?

Mr. Fraser. No; I am not chasing around asking them.

The Chairman. You have not asked any?

Mr. Fraser. No, sir.

The Chairman. Then your statement of 900 people you know will not work who are on relief is based so far as your personal knowledge is concerned upon the fact that you asked one man and he would not. work for you for $2 a day.

Mr. Fraser. No. I have had my foreman contact the man Houston in charge of P. W. A. and I phoned Houston myself to see whether he could give me some of those men to put to work.

Last year when I was picking cherries I got in touch with Governor Lehman and I told him the situation that I could not get my cherries picked and that the men would sit around and tell me, “If you want the apples picked or cherries picked bring them to me”, and they were on relief.

The Chairman. Which ones told you that?

Mr. Fraser. What is that?

The Chairman. Which ones told you that?

Mr. Fraser. I talked with three or four men over the phone when I called them up.

The Chairman. Give us the names of the men working for the W. P. A. who told you that.

Mr. Fraser. I will get the names. I do not carry them in my mind.

The Chairman. Do you know any of them?

Mr. Fraser. I know them; I see them.

The Chairman. As a matter of fact, you have been a constant critic of everything this administration has done up there.

Mr. Fraser. I beg your pardon?

The Chairman. As a matter of fact you have been a constant critic of everything this administration has done up there, have you not, not only on relief but everything else?

Mr. Fraser. I think probably I might, express a difference in opinion when I believe it is detrimental to me.

The Chairman. Yes; the entire program you have been criticising the relief, have you not, to the Governor and everybody else?

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[PAGE 1092]

Mr. Fraser. I do not know that I have expressed myself on the relief program until now.

The Chairman. Did you not say you talked to Governor Lehman?

Mr. Frazer. I talked to Governor Lehman to get my own cherries picked. Why wouldn’t I?

The Chairman. Oh, you went to Governor Lehman and talked to him in order to get your cherries picked.

Mr. Fraser. Absolutely; when they could tell men to go to work and go off relief, which he did.

The Chairman. Did they go to work?

Mr. Fraser. They picked indifferently.

The Chairman. They picked indifferently.

Mr. Fraser. Absolutely. Such help would.

The Chairman. All right. Go ahead.

Mr. Fraser. And they are not worth the powder to blow them up.

The Chairman. I just wanted to see who the names of those men were. I would like to see those names.

Senator Ellender. You will file that list?

Mr. Fraser. I will file 20 in my town.

The Chairman. When you file it will you swear to it before a notary public and give us the names of those you personally asked to work.

Mr. Fraser. I will.

The Chairman. And the conversations where they said they would not work, where those conversations were had, and who witnessed them?

Mr. Fraser. I certainly will.

The Chairman. We will be glad to have it.

Mr. Fraser. These men have worked for me in the past, and they told me they could not afford to work.

The Chairman. We want their names and the facts in connection with it.

Representative Fitzgerald. The reason they would not work you wanted to pay them $12 for about 60 hours, and they were able to get $15 for 40 hours.

Mr. Fraser. For nothing; for no work.

Representative Fitzgerald. But that is what they were getting.

Mr. Fraser. Just scratching around in the park among some trees, having a nice play, and then going home.

Representative Fitzgerald. If you were in their plaoe would you work 60 hours for $12?

Mr. Fraser. The point is this: We are not earning as much on our farms as they are getting.

Representative Fitzgerald. I am asking if you were in their place would you work 60 hours for $12?

Mr. Fraser. But on our farm we work longer hours for less, the men who are paying the taxes to keep them. That is the serious point.

Representative Gildea. But you sell your produce to the men who are working on W. P. A.?

Mr. Fraser. I beg your pardon?

Representative Gildea. You sell your produce to the men who are working on W. P. A.?

Mr. Fraser. Sure; they buy some.

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[PAGE 1093]

Representative Gildea. It goes around and around.

Mr. Fraser. I beg your pardon?

Representative Gildea. It goes around and around, and actually they pay your taxes.

Mr. Fraser. If you sell for enough to pay your cost of production. If you do not sell for enough to pay for your cost of production it does not go round and round. And that is just where it is pinching. It does not go round. It stays.

Representative Wood. You said you were not earning as much on your farm as they are getting.

Mr. Fraser. Our farmers did not make as much on the farm the last 3 years due to drought or some other factor as those men were getting; no, sir.

Representative Wood. You would have been better off if you had joined the relief roll, would you not?

Mr. Fraser. Yes; I would have been better off if I had joined the .relief roll. A lot of them said that was why they were on relief. It is the major industry of the United States.

Representative Wood. Why did you not go on relief if you were not making as much as the relief workers?

Mr. Fraser. I have just had enough backbone to stay on the farm. I have lived on a farm and worked on a farm for 50 years, and I do not want to leave it. I am not ready to quit.

Representative Wood. You did not pay your taxes then, did you?

Mr. Fraser. I paid my taxes; yes.

Representative Wood. Oh, you did pay your taxes. How much farm have you?

Mr. Fraser. I beg your pardon?

Representative Wood. How large is your farm?

Mr. Fraser. I am working a farm of 240 acres. About 80 of it is in fruit.

Representative Wood. Eighty acres of it is in fruit.

Mr. Fraser. Yes, sir. I have 240 acres of a farm.

Representative Wood. Is that all the property you have—all the farms you have?

Mr. Fraser. I have got a house, and I am working.

Representative Wood. I mean farm land?

Mr. Fraser. I beg your pardon?

Representative Wood. You have 80 acres of fruit?

Mr. Fraser. Yes, sir; that is what I have.

Representative Wood. How long will it take to pick your crop?

Mr. Fraser. To pick it? I try to arrange my picking so I can pick some early apples in the early season and some in the medium season, and I have put in some cherries which I pick in July and August and get a little income then. I grow some nursery stock so I can sell it in the spring also. In other words, I try to arrange my business so something is coming in all of the time.

Representative Wood. How did you fare in 1931 and 1932?

Mr. Fraser. We have not made money.

Representative Wood. What did you do with your crops in the fall of 1932?

Mr. Fraser. 1933?

Representative Wood. 1931 and 1932.

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[PAGE 1094]

Mr. Fraser. I usually follow the one policy----

Representative Wood (interposing). What did you get from your apples in 1932? Were you able to sell them?

Mr. Fraser. If you want me to file that, let me do----

Representative Wood (interposing). Did you pick your crop in 1932?

Mr. Fraser. I pick my crop every year.

Representative Wood. How much did you get for your crop in 1932?

Mr. Fraser: I will file it with you.

Representative Wood. How much per bushel did you get for your apples.

Mr. Fraser. Let me file that—if you will let me.

Representative Wood. How much per bushel did you get for your cherries? Can’t you tell us approximately how much per bushel you got for your apples when you have 80 acres?

Mr. Fraser. We sell them according to grade and variety.

Representative Wood. Do you know how much you got for apples in 1932?

Mr. Fraser. No; I would not carry that in my mind.

Representative Wood. Do you know how much you got for your cherries or apples or peaches? Did you get $1 a bushel?

Mr. Fraser. I could not answer that. We do not sell them that way.

Representative Wood. Did you get 25 cents a bushel?

Mr. Fraser. We do not sell them that way.

Representative Wood. Did you get 30 cents a bushel? What did you get for your average in 1931 and 1932?

Mr. Fraser. Let me give you that later.

Representative Wood. Do you have any idea of what you got for them.

Mr. Fraser. I would not want to answer that offhand, because I do not carry those things offhand in my mind.

Representative Wood. If you sold your apples in the fall of 1932 for around 25 cents a bushel and in 1936 you got around $1, you would know approximately what you got for your crop, would you not?

Mr. Fraser. I can tell you what I did in 1936; I can tell you that, because the crop dried on the trees, and I sold them for cider.

Representative Wood. I am not talking about that failure at all.

Mr. Fraser. We just had a failure. It was a very bad crop last year. We are short in rainfall, about 4 feet of water short in the past 5 years. The drought was worst in the last year. I put the apples largely into cider last year

Representative Wood. You did not have any drought in 1932; you had a pretty good crop, did you not?

Mr. Fraser. I will have to check my crop in that year. I do not carry that in my mind. I will try and answer it for you later.

Representative Wood. What kind of crop did you have in 1935?

Mr. Fraser. In 1935 it was fair. I took a licking on it, and it did not sell for enough money to pay the cost of production.

Representative Wood. What did you get per bushel in 1935?

Mr. Fraser. Sold them at any price, 75 cents in the fall, and sold them up to $1.25 in storage.

Representative Wood. Thirty cents a bushel?

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[PAGE 1095]

Mr. Fraser. In 1935 I sold some down to 75 cents in the fall, and up to $1.25 in storage.

Representative Wood. What did you get in 1934 for your apples? You remember very distinctly what you got in 1935, 75 up to $1.25.

Mr. Fraser. If you give me the time I might think them all up, but I do not remember those.

Representative Wood. You remembered 1935.

Mr. Fraser. I remember 1935, and I remember 1936.

Representative Wood. But you remember nothing about what you got for them in 1932?

Mr. Fraser. No; I am not ready to say.

Representative Wood. Would you say you got 10 cents in 1932?

Mr. Fraser. I think I got more.

Representative Wood. Would you say you got 25 cents in 1932?

Mr. Fraser. I would not like to answer what I got. I will file it.

Representative Wood. But you say you got more than 25 cents a bushel in 1932.

Mr. Fraser. I hope so.

Representative Wood. How much more?

Mr. Fraser. I do not know. I cannot remember 1932.

Representative Wood. You do not remember?

Mr. Fraser. No, sir.

Representative Wood. You remember 1934 and 1935?

Mr. Fraser. I remember 1935 and 1936.

Representative Wood. How much did you get in 1933 for your crop?

Mr. Fraser. I do not know. I will tell it.

Representative Wood. Do you know what you got in 1934?

Mr. Fraser. No.

Representative Wood. You know nothing about how much per bushel you got?

Mr. Fraser. No; I do not remember.

Representative Wood. Approximately?

Mr. Fraser. No; I won’t approximate it. I will file it.

Representative Wood. You know nothing about it at all?

Mr. Fraser. I do not remember it.

Representative Wood. You could not give any estimate at all?

Mr. Fraser. No, sir.

Representative Ramspeck. Go ahead with your statement.

Representative Gildea. The apple merchant on the city streets was a distinct sign of the depression. Maybe that is why you do not remember the price you got in that period.

Mr. Fraser. I do not follow' that.

Representative Gildea. With the unemployed selling apples on our city street was a very distinctive sign of the depression.

Mr. Fraser. Yes; we had them on the streets in 1931 and 1932, in New York, I remember distinctly.

Representative Gildea. We do not have them today. They are selling through the regular commission merchant.

Mr. Fraser. We hope we can sell them. We do not know what we are going to do with them this year. We do not know yet.

Representative Gildea. I am just wondering if the fact you were selling apples, for instance, through employed might be a reason you cannot answer the question of Congressman Wood.

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[PAGE 1096]

Mr. Fraser. No; that is not it. I am not ready to put a figure down unless I know I have it right. .

Representative Ramspeck. All right; go ahead with your statement.

Senator Davis. Out of the seven or eight million still unemployed you could get a lot of apple peddled if you went out on the street and got them.

Mr. Fraser. Senator, we do not know where we are going to sell apples in 1936 and 1937. We know conditions are better than in 1932 and 1933.

Senator Davis. Everybody knows that.

Mr. Fraser. Everybody knows that. And the world led the United States into prosperity; we did not earn it.

Senator Davis. But there are a lot of people now who would like to have a job selling apples on the comer because they are unemployed.

Mr. Fraser. Yes. And I ran into people in Chicago only a little .time ago, and the kids had not had apples to eat last year. And we saw they got some. We sent them to them. We actually found people in Chicago who had not had an apple, and a lot of people can be apple eaters yet.

Senator Davis. Lots of people in all the world would like to have an apple right now.

Mr. Fraser. Yes, sir; and they cannot buy them yet. We have a long way to go to get out.

Representative Ramspeck. All right; go ahead with your statement.

Mr. Fraser. I have three men on 240 acres today, and I could use five. W. P. A. has the men road building or on relief. We have had over 900 men in my county on relief, and they would not work. When I pick cherries I may need 50 pickers to harvest the crop on time.

If 10 small growers buy a power sprayer and have a man operate it for them for hire, the operator is not an agricultural laborer for the purpose of the Social Security Board. What did Congress mean when they exempted agricultural labor from the Social Security Act? And what do they mean in this case?

Agricultural labor should be defined, and to meet the needs of the fruit and vegetable industry, which is the most important field in American agriculture today, furnishing 46 percent of all rail revenues derived from products of agriculture in 1935, for this important group remove all doubt as to what agricultural labor means and say:

“For the purpose of this act, the term ‘agricultural laborer’ includes all employees engaged in the planting, growing, spraying, harvesting, preparing for market, packing, conserving, processing, transporting, and marketing of fresh fruits and vegetables, and their delivery to storage or to a carrier for transportation to market, no matter by whom employed.”

The grower himself cannot personally perform all these functions, and neither can they all be performed on his own farm. He has to hire outside agencies or to combine with others to get this essential work done, but it is the producer who pays the bill.

Representative Thomas. As to the processing, would not that refer to all the canneries?

Mr. Fraser. In the present definition of agricultural labor, under the Social Securities Act, the processing on the farm is permitted, of

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course; but I would feel that in the case of perishables you should allow the canner to work the necessary time to use up the crop the day it is harvested. I do not see how you could do otherwise and conserve food, which is the intent of common sense.

Representative Thomas. Would not the transportation you have in there include all railroads and everybody concerned?

Mr. Fraser. Under the Social Security Act, as defined by the Internal Revenue, we are exempt under the definition of agricultural labor so far as the production of our own raising, even to transporting it to market and selling it, and I do not see how you can provide for a farmer to grow a crop and not allow him to sell it; and I do not see how you can provide, after he has grown the crop, that he cannot take it to market or even to the grocery store to deliver it. I do not see how you can limit the field. With the complexities, I think the safe thing to do is to leave the whole of agriculture out of the bill and write a bill, short, concise, and affecting certain lines of manufacture and industry—make it clear, throw the Board out of the window, and leave agriculture entirely out and let the farm-workers’ wages be carried up by the general upturn this bill is supposed to bring.

Representative Thomas. Mr. Fraser, let me interrupt you. You have offered a very wonderful suggestion. I wonder if you would be kind enough to have someone in your association prepare the type of bill you want, and I believe it would be of great assistance to the committee.

Mr. Fraser. If I had the ability.

Representative Thomas. You have the ability to make a very analytical argument, and I believe you have the ability to prepare that type of bill.

Mr. Fraser. I would certainly go get some other minds who was conversant with the problems, and I would get them together, and I would give this bill a thorough investigation and take lots of tune for it, because nothing you can do is so important as to put labor in its proper position.

Representative Thomas. Let me renew my suggestion. Do you not have some facilities or some other people you converse with as to it? I do not think you need to consult very many people.

Mr. Fraser. Who is going to pay me when I do it? I am a farmer, and I have got to earn a living. Who is going to pay me?

Representative Thomas. You do not want this bill enacted in its present shape, because it may prevent you from earning a living, according to you. After all, we are asking you to do a very patriotic thing, from a very selfish point of view.

Mr. Fraser. Certainly. But that is for Congress.

Representative Thomas. You came here and seemed to be very analytical in your study of this bill, and I think you are very helpful and let us do not tear down everything, but let us build something constructive.

Mr. Fraser. I would make that bill, add to it----

Representative Thomas (interposing). Put your thought as to the bill on paper.

Mr. Fraser. I would make that bill very short.

Representative Thomas. That is fine. Thank you.

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Mr. Fraser. I would make that bill so that labor would be allowed to have its day in court, and I would not put them under a board, from whose rulings there would be no review.

Representative Thomas. Then you do that.

Senator Davis. I know he has great respect for this congressional committee when he wants to make a suggestion to this committee.

Representative Thomas. I believe he b a pretty good lawyer himself.

Mr. Fraser. Of course, I am looking at it from a farmer’s point of view.

Representative Thomas. All right. You do that.

Mr. Fraser. Now, I am going to take the selfish point of view, if you will permit me, for a minute. In 1929, when the pay roll of factory workers was about $11,000,000,000-——

Representative Wood (interposing). The pay roll of what?

Mr. Fraser. In 1929, when the pay roll of factory workers was about $11,000,000,000 the agricultural income was about $11,000,000,000.

In 1932, when factory workers received about $5,000,000,000 income, the farmers got about $5,000,000,000.

As a farmer I am deeply concerned in the income of labor. It is a very impressive thing. And when you attempt to fix the pay roll of the worker you are going to fix my income as a farmer. If the workers do not get the money the farmer does not get it. That strikes me as clear, if the worker does not get it the farmer does not get it. So I have a direct personal and selfish interest in this matter. I do not want something done to labor which will injure its ability to buy. My interest is in seeing an improvement in purchasing power.

And with this end I want to say that kiting wages will not necessarily increase purchasing power, and we demonstrated the futility of this- Under N. R. A. in certain lines of industry. There are only two in which you actually increased the purchasing power of the workers when you augmented the wages and in every other line you diminished its purchasing power, and I want you to study this matter very carefully before you attempt to proceed with a program along those lines.

The data prepared by Dr. Leo Wolman, of the Labor Advisory Board, as set up and issued by the National Bureau of Economic Research of New York, shows that the important factor to consider if we would improve the position of the worker is to increase his purchasing power. We must recognize that earned wages have a variable purchasing power, varying with the prices of commodities.

No law can fix wages, much less purchasing power. Congress may fix a rate of wages but it cannot enforce employment and if there is no work there is no wages. The wage philosophy of N. R. A., according to Dr. Wolman as quoted by the National Bureau of Economic Research, was—

That, in part at any rate, the wage rate is the key to the income of labor, and that, if wages are lifted, the earnings and income of labor will at the same time rise, and the income in the country rise proportionately.

Dr. Wolman’s data permits a comparison of June 1933 with conditions in the last quarter of 1934; that is, during the full flowering of N. R. A. and this shows:

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Page 1099 Table B

Wages of all workers were increased. Soft coal and metal workers were the only two groups who had an increase in purchasing power.

The Bureau of Economic Research emphasizes that artificial raising of the wage rate under N. R. A.—

1. Prevented some business men from embarking on new enterprises.

2. Put some firms out of business.

3. Increased the cost of business in some instances so that the net result was that higher prices adulterated the higher wages.

The rise in wages does not necessarily lift the purchasing power of the worker. If recovery is flowing strong, the improvement may carry the worker into a position of having greater purchasing power: this, attends when the increase comes from sound economic causes. Wealth consists of that which a man has, not the thing he has not. And when you attempt to write a minimum wage so many dollars, what dollar? Is it going to stay on gold at $35 an ounce? Probably not. There are already rumblings in the air. It won’t.

It is the function of Congress to maintain the dollar in adjustment with foreign currency, but I question in my mind whether it is the function of Congress to tell me how many dollars I am going to get for my year’s work.

This factor of the unit of currency is important: Let me give you one illustration. The French sou was a gold coin in the thirteenth century, a silver coin in the seventeenth century, and in the nineteenth century a copper coin, and today you could not afford to manufacture a 20-sou piece in France. And measured in sous the wealth of France is fabulous, but the sou is worthless. So when you attempt to write in dollars the fixed amount the men will get you have missed the point. To enact by law that a worker is to be given a certain number of units of currency per hour, week, or year is meaningless unless the currency is representative of purchasing power. Business

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is developed on the basis of exchange of purchasing power. It is purchasing power you want to make for the workers, not dollars, do something for purchasing power, so that the farmer will participate in it. We reduced the gold content of the dollar in 1933 and we reduced it in 1934, and we may reduce it again.

Representative Ramspeck. Mr. Fraser, we have got about 10 witnesses here, and the money question is not involved here. Please complete your statement.

Mr. Fraser. Thanks. I wished to refer to it.

Representative Ramspeck. Nobody ever agrees about the money questions, and we cannot hope to.

Mr. Fraser. What I am asking for is the definition I have suggested, if the bill goes through, the exemption and defining of agricultural laborer, to the end that the farmer himself and all workers handling his products will be exempt from the bill if it goes through in its present form.

Representative Wood. If the gentleman is through I would like to ask some questions. You just made a statement warning us as to the maximum hours and minimum wages. You said that would be bad legislation. You are opposed to the bill in its entirety?

Mr. Fraser. I do not see how----

Representative Wood (interposing). Are you in favor of the bill if you are exempted from it?

Mr. Fraser. I do not see how you could apply it to agriculture. I am not going to express myself on industry excepting this.

Representative Wood. Are you in favor of it if you are exempted from it? Do you believe in the principles of this bill establishing maximum hours and minimum wages?

Mr. Fraser. I think they are going to come in industry to maximum hours and you may establish minimum wages.

Representative Wood. Are you in favor of that proposal?

Mr. Fraser. I do not see how you can do otherwise than establish it for certain industries, but I do not think you can wisely attack the whole problem in blanket fashion.

Representative Wood. You are in favor of the bill?

Mr. Fraser. Not as drawn now.

Representative Wood. You made the very unusual statement just now that the world dragged the United States into prosperity. What did you mean by that?

Mr. Fraser. It is leading us because even Great Britain is enjoying a prosperity in excess of 1929 and we are below it now.

Representative Wood. Give us some of the other countries.

Mr. Fraser. Sweden has already gone ahead. All the others tied to the pound have achieved a degree of prosperity which we have not yet reached. They have all got a prosperity above 1929.

Representative Wood. Oh, they have?

Mr. Fraser. That is purchasing power, sure. And we are 20 percent below it.

Representative Wood. Can you furnish us with some statistics on that?

Mr. Fraser. I beg your pardon?

Representative Wood. You are so sure on that, can you furnish us with some statistics on it?

Mr. Fraser. I take the League of Nations last release on that.

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Representative Wood. Could you furnish us with that?

Mr. Fraser. Certainly.

Representative Wood. You know so much about them we would like to have them I am sure.

Mr. Fraser. Certainly.

Representative Wood. You say that all nations of the League of Nations reached prosperity before this Nation?

Mr. Fraser. Those nations tied to the pound did.

Representative Wood. What about now?

Mr. Fraser. We are 20 percent below England now.

Representative Wood. What are the taxes in those countries on wealth?

Mr. Fraser. The taxes of Great Britain? The debt is about 39 billion against 36 billion for us. They have a bigger debt and they have a very high tax especially on account of their war preparations at the present time.

Representative Wood. Were you in favor of Agricultural Adjustment Act?

Mr. Fraser. The Agricultural Adjustment Act?

Representative Wood. Yes.

Mr. Fraser. No, sir; I opposed it.

Representative Wood. You were not in favor? You opposed it.

Mr. Fraser. I opposed it. I am a farmer.

Representative Wood. What country in Europe do you say is most prosperous right now and able to pay its debts?

Mr. Fraser. Why I would say England is in good condition. Sweden is in good condition. There are two countries in good condition.

Representative Wood. How about New Zealand?

Mr. Fraser. New Zealand is a small million and a half unit.

Representative Wood. It does not make any difference about the size. I am asking about a nation. I am asking you if you think those other countries are in more profitable condition than New Zealand?

Mr. Fraser. I do not want to go to New Zealand for wealth, but for enjoyment.

Senator Lee. If England would pay us what she owes us we would not be in such bad condition.

Mr. Fraser. Let us take the most you would get if she paid every dollar and you would have a little over 4 billion.

Senator Lee. We would have that much.

Mr. Fraser. We had that deficit this year. You cannot put the $4,000,000,000 England owes us as being accountable for our predicament.

Senator Lee. The per-capita tax in England is about three times greater on individuals in England.

Mr. Fraser. I did not get you on that.

Senator Lee. The per-capita tax in England is two or three times what it is in this country, is it not?

Mr. Fraser. I am not sure how that measures up.

Senator Lee. Pardon me, Mr. Wood. You probably were not through. I just wanted to inject that.

Representative Wood. How do you think England retained her prosperity you say she has?

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Mr. Fraser. I think she helped herself very much by departing from fixing prices on gold and price fixing.

Representative Wood. Do you not know that England has long since passed numbers of social legislation acts that we have not yet adopted?

Mr. Fraser. Absolutely.

Representative Wood. And do you not know that England today is more of a regulatory nation than this country and always has been-----

Mr. Fraser. There is no closed shop.

Representative Wood (continuing). As to wages, hours, old-age pensions and social security?

Mr. Fraser. There is no closed shop.

Representative Wood. What?

Mr. Fraser. There is no closed shop.

Representative Wood. What do you mean by “closed shop”?

Mr. Fraser. That states that all labor has to be unionized before it can be worked.

Representative Wood. England is not a closed-shop country?

Mr. Fraser. England is not a closed-shop country.

Representative Wood. Do you call this country closed shop?

Mr. Fraser. No. There are attempts to try and make it closed shop.

Representative Wood. Just what is the percentage of closed shop in England as compared with this country?

Mr. Fraser. England is not a closed-shop country.

Representative Wood. Do you not know that England has more closed shops than this country ever had?

Mr. Fraser. I would not say so.

Representative Wood. Do you not know that England 20 years ago had more organizations per capita than we had?

Mr. Fraser. You mean labor organizations?

Representative Wood. Yes; and under closed-shop agreements.

Mr. Fraser. That is not my understanding of the situation.

Representative Wood. You do not know your history very well then.

Mr. Fraser. Perhaps not. I admit that. I lived there 25 years.

Representative Ramspeck. Any other questions?

Senator Lee. Mr. Fraser, there is one point you drifted afield from a little, but it was a point I think of interest to us and I would like a suggestion a little further on and that is how we can distinguish as to agricultural labor. I am interested in that as referred to in this bill. I would like to define it as far as we can so we can exempt agricultural labor. Now, how far would you follow the product? 1 do not quite agree with you on transportation and processing.

Mr. Fraser. That is the transportation-----

Senator Lee (interposing). To the market only.

Mr. Fraser. You have exempted the common carrier anyhow; remember in the bill on his transporting the product. He is exempt anyway. You have exempted him so you do not have that hurdle to take. He has to transport the goods. You have exempted the retailer. The only man you would have any question at all about would be the wholesale handler and in the Federal Trade Commission investigation which was recently released he receives only 4.6

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percent of the consumer’s dollar in the case of fresh fruits and vegetables.

Senator Lee. The wholesale dealer would not be included?

Mr. Fraser. No, sir.

Senator Lee. Have we not got him exempted and protected?

Mr. Fraser. He is paying wages above what you suggest. He has to work when the goods come in. For instance, only a little while ago in New York a fleet of trucks came up from Delaware with strawberries. It was closing hours. Shall they be allowed to rot or be sold? The sensible thing was to go work extra hours and sell them and get them eaten.

Senator Lee. We are still not on the point. Mr. Fraser.

That is the wholesaler’s job.

Senator Lee. How can we define agricultural labor so it will exempt agriculture? I am seriously interested.

Mr. Fraser. I think that definition I have given you is well worth thinking about.

Senator Lee. That is what I am asking. It says “processing and transporting.”

Mr. Fraser. Yes.

Senator Lee. That includes all factory workers in fact that have anything to do with the farm processing, and transportation includes railroads, ships, busses, and everything else.

Mr. Fraser. But transporting is exempt under the bill now.

Senator Lee. All right. Take the processing now.

Mr. Fraser. In the case of N. R. A. we found it so impossible to put the canners under hours and properly conserve food that we gave them no limit to hours during the processing season and let them work all the hours essential to take care of the crops. We simply could not do otherwise under N. R. A.

Senator Lee. Then you exempted all processes including the manufacture?

Mr. Fraser. For the canning season to take care of the crops, which was a sensible thing.

Senator Lee. There would be no reason to exempt them any other time.

Mr. Fraser. You may or may not exempt for instance the regular storage engineers.

Senator Lee. When the farmer cans on his farm he is already exempt, is he not?

Mr. Fraser. He is exempt under the Social Security Act definition—

Senator Lee (interposing). If the farmer processes meat with a pressure cooker he is exempt now?

Mr. Fraser. He is doing his own business just as you would.

Senator Lee. I cannot get it in my mind how much farther you want it to go unless you want to include everything else. If you want to exempt, the farmer I am interested, but if you just want to destroy the bill you are not much help.

Mr. Fraser. No; but I am trying to point out to you in the interest of economy we must save these perishables when they are ready to be saved and so provide in the bill.

Senator Lee. We want to do that.

Mr. Fraser. Whether they be canned or stored for market. The crops must be handled when ready. Now, to put on 40 hours week or

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10-hour day when one has no more help and not allow the workers to conserve all that is harvested each day is going to be detrimental to the best interests of the United States.

Senator Lee. Of course, our purpose is to put on more help' and absorb some of the unemployed by shortening the hours.

Mr. Fraser. But there are not, in many places, a suitable number of the workers who are trained to do that work, for instance picking and packing or canning. You cannot get two crews at certain points And therefore you must allow one crew- to do the work.

Senator Lee. That still does not have anything to do with the defining of agricultural labor.

Mr. Fraser. I want you to define agricultural labor in the bill as I have it presented so that all those operations named may be carried on during any number of hours found necessary; in other words, exempt these operations specifically from the bill, not leave it to a board to determine whether to exempt or not and I repeat the proposed amendment—

CHART

Representative Ramspeck. Mr. Fraser, were you formerly employed by Senator Wadsworth?

Mr. Fraser.. I beg your pardon?

Representative Ramspeck. T say did you formerly manage Senator Wadsworth’s farm?

Mr.. Fraser. No. His cousin’s.

Representative Ramspeck. His cousin’s? All right. Thank you very much. The next witness is Congressman Lewis, of Maryland.

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STATEMENT OF HON. DAVID J. LEWIS, UNITED STATES REPRESENTATIVE FROM MARYLAND

Representative Ramspeck. I suggest that we let Congressman Lewis finish his statement and then ask him questions.

Representative Lewis. If I can be so indulged I think about 20 minutes will suffice for the main statement.

LEGAL PROTECTION FOR RIGHT TO WORK

Gentlemen of the committee, I am very deeply concerned in this subject. I am going to discuss with you this morning the subject of providing legal sanctions for the right to. work, legal protection as effective as that provided for the rights of property. I may offer an amendment for that purpose, and wish now to lay the general reasoning on the subject before you so that in offering such an amendment to the Black-Connery bill you will be fully apprised of the supporting argument.

Early in the depression I made a visit to Europe with a view of studying the coal industry then in the very slough of despond, and other industrial conditions. When I returned mends were always asking, “How did you find things in Europe, Lewis?” My answer was, at that time, that in Switzerland, in Holland, in Belgium, indeed in France as well, conditions were very near their normal, but in highly industrialized countries like England and Germany unemployment conditions resembled those in the United States, with this important difference, the agony was taken out of it for the workmen of those countries by their social-insurance system. Over there the prime minister did the worrying. And why should he not do the worrying? Representing a modem industrial state, who could be more responsible for unemployment than the prime minister?

RESPONSIBILITY FOR UNEMPLOYMENT

Who more than the prime minister is responsible for the conditions in which the disemployed workman finds himself? Has it not been the policy of. these states for over a century to produce, in large part, just the conditions of disemployment under which we now suffer? Have they not encouraged the sciences? Have they not subsidized the inventor with exclusive patents? Have they not formed great industrial organizations to secure mass production; and all for what purpose? In order to reduce the cost of production for the benefit of society. And their policy has succeeded. Seven men now do the work of 10 men of a generation ago.

And all to what purpose? All in order to promote the general welfare by economy in production. How well that policy has succeeded, that State policy. Even in 1929 there were said to be 2 million out of employment? We did not hear their wails of woe because we were glorifying at the banquet tables, making ourselves millionaires in a week, or multimillionaires in a month.

Mr. Chairman, we have to thank the scientist, the inventor, and the efficiency engineer, and we do thank them, for the achievements by which production labors have been so greatly lowered. Doubtless,

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in the long run it is desirable that the work of society should be accomplished with a minimum of labor; but, Mr. Chairman, it is only desirable provided certain fundamental conditions are not violated, and one of these conditions is the right of the human being to earn his living in the sweat of his face. The world does not owe a man a living, I grant you, but as surely as society rests on moral foundations, it does owe him a chance to make a living.

This maximum hour bill is intelligently alleviative, I think, but in my view, sir, it does not sufficiently complete its methods to achieve the great end. There are mere eatables, there are major capables, there are super-capables as workers in industry. It is still left to the fortunes of commerce and industry, to managements competing to lower labor and other costs, as to whether a large proportion of these capable human beings are going to enjoy their right to work.

LEGAL PROTECTION LACKING

Now, this right, the actual opportunity to labor, is being constantly reduced by these inventions, by this policy of encouraging efficiency in industry. The men are being deprived by inventions of their habitual employments, of modes of labor, through which they and their ancestors nave been able, in the past, to earn a living. There is no compensation, no indemnification given them for the loss of their trades.

IS THIS EQUALITY BEFORE THE LAW

Is this equality before the law, the equality we so love in the United States?

Well, now the workman’s job is being taken away. There are millions of them unemployed at this moment; and even during the depression, there has been a reduction in the employability of workmen by 15 percent, due to improved methods in industry. The job is being taken away from him and it is being justified on the ground of the advancement of the general welfare through this economy in production.

Now, let us see what happens when property is taken away to promote the general welfare. In your home town the council finds it is necessary to cut a new street through from one avenue to another. The proprietor objects. His father died there, and he was born there, and wants to die there, too. But the city fathers answer that the convenience of the city the communal welfare must prevail over his individual desires; and so, despite his protests, he is evicted from the premises, the house is torn down, the street is cut through, but not, gentlemen, under our accepted ethics and our laws until just compensation is made to him for the property rights taken away.

UNEMPLOYMENT CHRONIC

This problem, may I say, of growing unemployment is a chronic one. It belongs to our civilization. I know that economists, of the type you, Mr. Chairman, quoted this morning, are eager to persuade themselves that inventions are self-compensatory; that is, that work is created as work is eliminated, but the practical fact is this, that work reducing and work increasing inventions are not in balance, and have never been in balance since the advent of steam.

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An illustration will suffice. Consider the ditch-digging machine, where two men are said to take the place of 100. There is another kind of invention where an immense increase in employment happens to be involved and that is the automobile and its attendant road building. It would be awful to think of our plight today had not the automobile entered as a great employer of labor during the last generation.

Now, if these two kinds of inventions fell like the rainfall,, if they were handled by some power of nature like the distribution of the sexes, one little boy, one little girl, one little girl, one little boy, they would equate out and, society should be able to take care of the suffering human being during merely technical changes. But they do not come like the sexes. Especial emphasis is placed on the work-reducing machine. In the factory of any size I think you will usually find a suggestion box where the inventive and ambitious workman is invited to drop his suggestion about operating improvement, especially in the direction of economy. With reference to work-enlarging inventions there is no such general motive, there is no such emphasis and constant incitement to special effort. A clerk Maxwell and a Hertz must first contribute their unpaid genius 50 years before to give us the radio.

Two great ones have come in the course of human history. The printing press that means many millions of people employed directly and indirectly and the automobile are the larger examples, but otherwise a disproportionate advance in the work-reducing inventions has been going on throughout civilization.

MORAL AND LEGAL RIGHTS

Let me moralize a moment, in regard to the right to work. Who has ever disputed right in all your experience? It is necessarily a twin right with the other great right to own property, and it is the first born of the twins, because property could not exist until the right to work had been exercised. Nobody has disputed the right to work from the beginning of the world, yet that right will not assure a single unemployed man a loaf of bread tomorrow or his family against eviction.

One would say, “Oh, that right, the right to work, will be sufficiently protected by human instincts.” But we cannot rely on human instincts. I will take the liberty of giving you one illustration. It occurred during the depression upon a railway system that I will not name. The traffic of the road fell one-third, the revenues of the road fell one-third and the road managers found that they would have to correspondingly reduce employment to protect their budget. The issue was put to the union. In this instance it happened to be a company union. A secret meeting of the union occurred: Shall the company retain six men 4 days a week on our reduced opportunity, or shall we give four men, the seniors, 6 days of work a week? The seniors voted the four men should have 6 days a week. Now, I have an observation to make as to their conduct: it is that those very men, workmen though they be, members of the union though they said they were, have invented a new form of blacklist by which they outlawed their own brothers, pushing them off the raft of life, a blacklist equally as odious as the blacklist their workingmen fathers have denounced for generations.

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[PAGE 1108]

But I am not done. How about the railway manager that would submit an issue? If it had been a question of dividends and the dividend fund had fallen one-third would he have felt like he should put it to a vote of the stockholders as to whether the senior stockholders or the larger stockholders should take the whole two-thirds of the dividend fund leaving the others out in the cold? No, he would not do it, gentlemen, and he would not do it because there are courts around the corner that would quickly stop that outrageous violation of property rights; not more outrageous, however, than the process by which this one-third of the men were eliminated from the flour barrel. We have enough experience on these matters to know that if this was a property right legal protection would be found. From his cat to his car, from his cow to his castle the property rights of the citizen are definitely safeguarded.

Some of you here, perhaps, are old enough to remember the time when bankrupt debtors could prefer their creditors, but the social conscience revolted against that sort of discrimination and so we have the bankruptcy laws under which it is intended that a just and equal distribution of the assets of the bankrupt should be made.

LEGAL CONTROL OF EMPLOYMENT ASSET

Now, gentlemen, surely we have experienced such changes in the development of industry that we must wisely and boldly face a great issue. We have got, I think, to make this admission to ourselves. The most important asset society possesses today is the employment asset. In protecting this right to work, a just, wise, and practicable distribution of the employment asset among those who are entitled to work is the problem we have to face.

The maximum-hours provision works in that direction. There is nothing striking, nothing new about that part of the proposal surely. Even in my own life and family I can trace the daily mining hours from 12 down to 7 hours a day and from 6 to 5 days a week. Within my own family contacts I can trace boys entering the mines at 6 years of age, in the case of my father, in my own case at 9 years of age, in Pennsylvania, and now at 16 years of age

Some of this progress has been made voluntarily by conscious recognition of duty on the part of those engaged in the struggle, but for the most part no progress could have been made worthy of mention had it not been for the civil power prompted by the social conscience. India and China are examples of what we should be, or what Europe would be at this day, were there no democracies having power, through government, to force sane and just regulations upon the operations of industry.

Now, I know that a peculiar psychology surrounds this subject of the employment of labor. The owner of the factory property naturally looks the employment attribute connected with the property the same way he looks upon physical attributes. He thinks the employment attribute belongs to him wholly. The conception is unsound and unworkable. It does not belong to him wholly. The employment attribute belongs as well to the men who must enjoy its exercise if they are to live their lives in this world.

It is true that the legal profession and the lawmaker are to blame for this misconception. I mention the legal profession because

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lawmakers in the United States have been mainly lawyers. It is actually true, after a century of capitalism and industrialism in the United States that when a man walks into a lawyer’s office to acquire a deed for a mining property he is given the same kind of title, with all its implications, a fee simple title, that is given him when he is asking for a deed that grants him only his own home and garden. In his own home and garden he can be monarch of all he surveys. He can lock the gate and tell his neighbors to keep out, but in the case of industrial deeds which involve the subsistence of whole communities, it is obvious that no matter what the lawyer has written in the deed about the title starting from the center of the earth and running out into the ether, about the title being the same as for house and garden. Such a deed will not work because of its dependency on a whole set of social relations.

Yet note one of the results. The psychology of the owner of factory property is that his rights are complete and absolute, complete and absolute there as they are in his own home which, we are glad to concede him as his own castle. I will give you an illustration of it. Some years ago a very prominent and able manager of industry had his men go out on strike. When a proposal of arbitration was presented to him he put his hand in his pocket and pulled out his wallet and said, “That is mine. There is nothing to arbitrate.” He was thinking of his factory title in the same terms that he was thinking of his own hat or his own home.

Now, then, the managers have their troubles, most trying ones of course, and they have my greatest sympathy in the difficult conditions set up under the competitive conditions they must meet.

EMPLOYES EFFICIENCY

There are three kinds of men, it may be said, who are available for employment in this limited roster. There is the supercapable, there is the major capable and there is the merely capable man. Whom will they employ? Well, obviously, first the supercapables, then the major capables, and only as many of the merely capable as are actually necessary. But the right of the man merely capable to earn his living in the sweat of bis face, as a moral proposition, is not less fundamental than the right of the supercapable himself.

With these eliminations, with these men thrown out as culls on the scrap heap, not because they are not capable but because of the exigencies of competitors in industry, we are creating a new class in the United States which I christen “America’s untouchables.” Gentlemen of the committee, as lawmakers and responsible citizens, we owe it to society, we owe it to the future to provide these worthy workers with the necessary legal protection for their right to work.

Ah! But industry might be slightly less effective, less productive if all were employed and all given their chance to do their share of work. Let it be, let it be less effective. We can surely rely on science and engineering for future increases in effectiveness, if we may judge by the past. But remember the American workshops are not arenas, not Roman arenas, with only thumbs down on the worker lacking gladiatorial strength.

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Mr. Chairman, I have now to indicate the legislation by which to achieve these legal sanctions for the right to work. I have introduced a bill on the subject. I call it my “Thomas Jefferson bill.” I shall attach to my remarks an analysis for your convenience.

Now, gentlemen, I have not gone into the mechanics of the necessary legislation to provide such legal sanctions. That would take some time. However, I will indicate briefly by one illustration. Let it be granted that people competent and qualified to work, say in mining, have been guaranteed under the law a just share of the available employment asset in respect to coal mining. I mention coal mining because of my personal familiarity with it. Miner Lewis, let us say, finds himself unable to get work in the mines. Each boss says, “I have got all the men I want.” What then does Lewis do? Having this legal right to be employed as a miner he files his petition with the Workmen’s Accident Compensation Commission of his State, setting forth his competency, his experience and background in mining.

In the meanwhile the mining industry has been organized under plans proposed, not by myself originally but, by Mr. Swope, president of the General Electric Co., plans which contemplate an organization of nine men for any given industry, three on the part of the employers, three on the part of the employees, and three on the part of the public. He made this proposal with respect to unemployment insurance, old- age insurance, accident compensation, and the like. I am using it to justly distribute the employment asset. When the Workmen’s Accident Compensation Commission has received my application it serves a copy upon the proper coal mining trade organization, broken into regions, say a half dozen in the United States, for that purpose. That trade organization is under a duty, within a week, within 2 weeks, whatever might be found prudent, to give reasons why Mr. Lewis is not employed. Now, they may give some good reasons. One of the reasons may be that Lewis had been employed but that despite the laws of the State, despite the most serious mining regulations he had carried matches in his pocket and a pipe into a gaseous mine, that he was disqualified on moral grounds, although capable. That is an example of what would be a good answer. But suppose no such answer is made? Then my right to a share of the available employment guaranteed by the statute providing legal sanctions, becomes enforceable and the trade association will be responsible to me for the prevailing wages, or some proportion of the prevailing wages, during the period of my undesired idleness when they choose to ignore my right.

Now, as to the rest of the mechanics briefly. The idea is that the trade association, under those circumstances would place me, somewhere, because if they did not place me, there would be this bill of wages to pay. From what fund should it come? A small tax on the whole industry exclusively dedicated to paying such bills. That means instead of Lewis going on the general dole, he earns his own support by realizing his share of the employment available. Let us assure each man Ins share of the work and save the taxpayers the burden of an unending and budget-breaking dole.

Now, may I add just one further statement. I believe that this treatment of legal sanctions can be fittingly incorporated into this

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maximum-hour measure, and if the committee shall consider the subject and proposal as deserving such incorporation, I will be very glad to lend my cooperation.

(Information referred to is as follows:)

Exhibit A

ANALYSIS OF RIGHT-TO-WORK BILL

Section 1. (a) Declaration legalizing citizen’s right to work and on proof of competency to share of the employment available in his trade; which if denied, compensation payable from the trade in lieu thereof.

(b) Competent worker, unemployed, may apply to workmen's accident compensation commission of State for employment in his trade, which notifies Trade Association, which may contest his competency and record. If these be good, commission orders Trade Association to employ or place him.

Boards of National Trade Associations to submit rules for determining competency; also disciplinary regulations in relation to discharge, suspension, or demotion for neglect or occupational misconduct.

Incompetency shall not be imputed to worker on account of age unless he has reached pensionable age, nor on account of a physical defect if he can in fact do the work involved.

(c) If Trade Association refuses or fails to place worker in 1 week after certificate by commission, it may be sued by worker for compensation before such workmen’s: accident compensation commission, which, if case proved, shall order Trade Association to pay the worker compensation, to continue until worker is employed. Compensation to be governed by the wages prevailing in the State.

(d) Each Trade Association required to establish compensation fund.

(e) Secretary Trade Association to make monthly reports to Federal Trade- Commission showing pending compensation claims and state of fund. Monthly excise tax sufficient to pay such claims is levied upon corporation members of association to be assessed by Federal Trade Commission based on number of employees.

(f) Workmen’s accident compensation commissions of States to have plenary jurisdiction to enforce the act, from which same appeals may be taken to same courts as in workmen’s accident compensation cases.

Sec. 2. The act shall apply—

(a) To corporation employing not less than 10 persons engaged in (1) manufacturing, (2) mining, (3) transportation, (4) electrical communication, (5) building construction, (6) distribution of gas and petroleum products, and electrical energy, printing industries. (c) Such industries to be classified by the Federal Trade Commission into trade associations according to products or services suitable to carry out the act.

Sec. 4. (a) Temporary initial board members to be designated by the Federal Trade Commission:

(1) Three members on behalf of the public from persons affiliated with organizations of consumers of the product or service.

(2) Three employees from unions of workmen in the trade.

(3) Three employers from the corporations engaged in the trade.

(b) Terms of office shall be staggered so that of first appointments one third of each set of members shall serve 1 year, 2 years, and 3 years, respectively.

(c) Meetings of the boards; (1) To organize and adopt bylaws.

(d) Permanent members of the board to be elected according to system prescribed by the Federal Trade Commission.

(e) Corporations to continue payment of wages to employee members while on association business.

Sec. 5. (a) Plans for stabilization of industry and employment shall be prepared by the national trade associations:

(1) Equitable partition of available work among competent workmen.

(2) Stabilization of production.

Operation by—

(1) Trade Association under its rules and regulations as approved by Federal Trade Commission.

(2) Boards in each corporation representing management and employees.

(3) Administration expenses shall be paid by members of trade association in proportion to number of employees.

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[PAGE 1112]

STATEMENT OF HON. GUY L. MOSER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. Moser. Mr. Chairman and members of the committee, I spoke to my associate in the House Civil Service Committee, Mr. Ramspeck on the subject of letters that are received from my district, from a man who served his local community where the population is small, a small industrialist, from whom I received some letters.

Mr. Ramspeck told me you had gone into some detail on that subject and he asked me to file with you those letters. You will take them, I believe, with you, because it is something he had written to the code authorities of the N. R. A. affecting the small industrial community that he served, a village of possibly 300 population, or perhaps in the heart of a rural community some miles from the railroad where they bring their raw product and process it and turn out their finished product and turn it back to the line of transportation again to compete with similar commodities in the markets. They would like what consideration your committee is able to give them. Those people usually sell their product to Sears, Roebuck; J. C. Penney; Montgomery Ward; and such people as that.

I think you will understand the competition that they have to meet. This gentleman is a constituent of my district and he was unable to appear, so he asked me to present these letters, he asked for this privilege.

Representative Ramspeck. I ask that the letters be incorporated in the record.

The Chairman. Without objection they may be incorporated in the record.

(The letters referred to are as follows:)

Mount Aetna Shirt Co.,

Mount Aetna, Pa., January 8, 1934.

Mr. Ralph Hunter,

Temporary chairman, care of Cotton Garment Code Authority,

New York, N. Y.

My Dear Mr. Hunter: This is in reply to your letter to us dated January 3, 1934. From September 1 to November 24, 1933, we operated our plant, consisting of an equipment of 42 machines, but were only able to give work to 27 employees, about 55 percent of the time of a 40-hour week, trying to cooperate with the President’s Reemployment Agreement. In our cooperative effort to carry out the theory of the recovery idea we increased wages to our help amounting to more than 100 percent. Since November 24 we were compelled to discontinue operations on account of our inability to secure any business owing to prevailing competitive prices paid to contract manufacturers—and carry out the terms of the N. R. A.

Our plant is located in a village of about 300 population where we operated for the past 20 years and were always able to supply work for the workers with satisfaction and mutual benefits to employees. However, since the N. R. A. we find ourselves at a disadvantage to compete with the larger centers of population, inasmuch that the help, not only in the urban and rural communities, are seldom of the highly trained type by reason of their lower living costs but chiefly because of a required substitution of different operations where the worker is less efficient to produce but yet which unavoidably must be done to supply the help with work and keep a system in order most economically and advantageously for the help. Thus it is apparent that the larger centers of population, which can procure from the more available help the necessary number required to confine such help on one particular operation exclusively, becomes highly efficient in producing the maximum at a minimum cost—have by far the advantage over the small communities.

In view of this fact, and to make it possible for these smaller businesses to exist and continue supplying work to workers, who for years past earned their livelihood,

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it becomes essential that unless exemption be made to such communities with less than 2,500 population it seems that all these smaller businesses which are not operated in connection with a larger plant will of necessity be eliminated on account of such handicap and their unmasterable disadvantage in competing with the larger centers. While we are heartily in sympathy with the purpose of the N. R. A., but in fairness to us, as well as numerous others of whom you may not have heard from or never will, we decided to submit this information for your consideration.

The fact that differentials and exemptions have been admitted in other codes in centers of population less than 2,500 in consideration of the smaller businesses no doubt should apply with equal logic to this industry and may well be worthy of the claim for consideration by your authority.

I hope to receive an answer from you to this letter by return mail which may be of value and guidance to us in determining the most advisable thing to do. We are,

Very respectfully yours,

Mt. Aetna Shirt Co.,

S. A. Helm, Proprietor.

_________________________

Mount Aetna, Pa., March 12, 1944

Mr. A. D. Whiteside,

Division Administrator, Washington, D. C.

My Dear Mr. Whiteside: In accordance with notice of a public hearing, to be fiven March 20, 1934, on application of exemption from the Cotton Garment industry Code, we are writing you.

Also enclosed you will find a copy of a letter dated January 8, 1934, to the Cotton Garment Code authorities by us, which we respectfully submit for your consideration.

Since November 24, unavoidably we have been forced out of the open market on a competitive basis of prices, with competitors of larger centers and plants, which has not permitted us since the above date of reopening our small plant an exception to this uncontrollable situation, but every other locality of similar size, of which we know and which are numerous, for which no escape is possible under created present existing conditions by competitors of larger centers and capacity.

As evidence of this contention, these smaller plants from the urban and rural communities, even though operated in conjunction with larger plants from larger centers, have already been discontinued and withdrawn to more centralized sections, despite the established history of these smaller enterprises existence from 30 to 40 years, supplying work to this class of labor. The structures thus vacated remain as a memorable monument to this changed condition and its former inestimable benefits to labor in these communities.

Through years past these smaller units of manufacturing in these localities have become highly important to the maintenance of living and that the elimination of them leaves no alternative to such labor but an added hardship to be self- sustaining.

While this class of labor in general is the same as that employed in the larger areas, yet by reason of natural environments, expenses highest in centralized areas and highly efficient organization of workers, on strictly and highly specialized straight-line production methods, as is possible only in larger plants, causes the labor to be of a distinct different type in these smaller communities.

Therefore it seems reasonable that the only course left to continue the existence of these smaller enterprises is exemption from the provision of the Cotton Garment Industry Code, relating to the $0.32 per hour, per 40-hour week, in the northern jurisdiction, for plants of 50 machines or less.

In the event of the adoption of a uniform piece-work rate, a differential of not less than 25 percent of such rates paid in the larger plants to be allowed to these smaller plants, with an additional 25-percent allowance for learners, old age, and incapacitated help of the total number of workers.

There is no objection to a 40-hour week other than a still further reduction, which on account of the small weekly output would seriously handicap these smaller plants so as to make it extremely difficult to induce manufacturers to supply the material, owing to delayed deliveries which these small plants cannot avoid, even on a 40-hour-week schedule. A better workable plan for these small plants with less than 50 machines would be a maximum of a 40-hour week with an allowance of a 9-hour day for 2 days in any one week.

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In these letters we have tried to give you unbiased statements of the facts and conditions as they actually exist, in order that you may have them before you for consideration.

We hope to receive an answer from you, which may be of some guidance to us. We are.

Very respectfully yours,

Mt. Aetna Shirt Co.,

Per S. A. Helm.

The Chairman. Is Mr. Joseph Adams here?

STATEMENT OF JOSEPH ADAMS, SOCIAL SECURITY BOARD

The Chairman. Mr. Adams, you have had experience in statistics with the Social Security Board?

Mr. Adams. That is right; yes.

The Chairman. Do you have some information in connection with the wage earners of the country?

Mr. Adams. Yes; I have some in general, and one specifically.

The Chairman. We will be very glad to have you make a statement to the committee.

Mr. Adams. Mr. Chairman and members of the committee, in the everyday experience of the individual, certain standards of living have become essential to happiness and well-being. To live a contented, normal life is the desire of most workers. The ordinary needs and wants of an individual are regular and recurring, but the income of the wage earner possesses no such stability.

Unexpected emergencies bring to every household events such as marriage, sickness, births, and the death of dependents, which make demands upon the income which wages are unable to fulfill.

In the Brookings study, America’s Capacity to Consume, it was brought out that in 1929, 42.4 percent of the families with incomes received less than $1,500 per year and that 21.4 percent received less than $1,000 per year.

The United States Department of Labor, through the Bureau of Labor Statistics and the urban study of consumer purchases, have given the following figures on incomes in various sections of the country during 1935 to 1936:

Columbia. S. C., 50 percent of all families received-----------------------------------1 $1, 351

Pueblo, Colo, 50 percent of all families received-------------------------------------------1 1,245

Gastonia, N. C., one-half of all families received------------------------------------------------ 887

Dubuque, Iowa, one-half of all families received--------------------------------------------- 1,084

Denver, Colo-------------------------------------------------------------------------------------------------------- 1,527

Portland, Oreg. --------------------------------------------------------------------------------------------------- 1,497

Everett, Wash------------------------------------------------------------------------------------------------------ 1,202

Butte, Mont---------------------------------------------------------------------------------------------------------- 1,606

Aberdeen, Wash------------------------------------------------------------------------------------------------- 1,249

Bellingham, Wash----------------------------------------------------------------------------------------------- 1,027

1 Or less.

The families in this low-wage group make up a large potential consuming power, with not enough income to cover their necessities.

The Chairman. Is that 50 percent?

Mr. Adams. That is 50 percent in each case.

The Chairman. You mean the highest was in a city in South Carolina?

Mr. Adams. Well, the highest was in Butte, Mont. The lowest was in Gastonia, N. C., $887.

The Chairman. What was the highest one?

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Mr. Adams. The highest one was at Butte, Mont., $1,600.

The Chairman. What was that South Carolina you referred to first?

Mr. Adams. Gastonia.

The Chairman. That is North Carolina.

Mr. Adams. That is North Carolina; Columbia, S. C.

The Chairman. How much was that?

Mr. Adams. $1,361.

The Chairman. All right.

Mr. Adams. I recently made a study of income and expenditures of a group of families in Haverhill, Mass., based on figures obtained from the urban study of consumer purchases. The purpose of this study was an attempt to determine the amounts and sources of family income, amounts, character, and relative value of reserves; the extent these reserves were drawn upon, the amount of debt incurred; the spending habits for the necessities and pleasures of life, and the ability of the average family to build a secure future. The material for the study was obtained from the families themselves, through personal interviews with members of the family. The information called for in the survey was obtained from a sample of employed white families which is representative of all classes, occupational groups, and family composition who indicated a willingness to give the information requested. While the urban study of consumer purchases covered 48 States, 126 villages, and 2 metropolises and 389,000 families in these communities, the figures about to be given are confined to only this one city of Haverhill.

The spendable revenue of this group ranged from $250 to $9,000 a year, but for the purpose of this hearing, remarks are being confined to those families whose incomes were $1,250 a year or less, which was represented by 28.6 percent of the families studied. The following table will show the source of the average income per family of this group;

Salary—wages ---------------------------------------------------------------------------------------------------- $874.67

Other income (rents, interest, gifts) ---------------------------------------------------------------------- 45.85

Total earned income ------------------------------------------------------------------------------------ 920.52

Withdrawn from savings or surrender of life insurance ---------------------------------- 106. 85

Borrowed money ----------------------------------------------------------------------------------------------------- 29.32

Debts on installment and open accounts -------------------------------------------------------------- 80.66

Spendable income above earnings ------------------------------------------------------------ 216. 83

Total spendable income ---------------------------------------------------------------------------- 1,137.35

This shows that this group of families, in order to have the necessities and possibly a few luxuries, spent 23.5 percent more than they earned. The following table will show the extent that these families were able to set aside a reserve:

Cash --------------------------------------------------------------------------------------------------------------------------- $1.48

Life insurance ----------------------------------------------------------------------------------------------------------- 47.71

Payments on property ------------------------------------------------------------------------------------------------ 8.27

Repayments on debts ----------------------------------------------------------------------------------------------- 10.07

Total ------------------------------------------------------------------------------------------------------------------ 69.53

In analyzing reserves the liquid value or availability in cash to meet urgent needs and relieve suffering should be considered. Cash

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such portions of life insurance as may have a loan or cash surrender value and other property which can be quickly turned into cash may be regarded as liquid. A study of the previous table shows that as a group, they were unable to set aside a liquid reserve for emergencies or retirement and in case a need did arise, would at once become dependent upon society, either through relief or by going into debt. There were only three out of this whole group that did put actual cash in a reserve. Some form of life insurance was carried by 89.5 percent of the families. Payments in most cases were in small weekly premiums and in many cases this was the only form of reserve. Most of the families carrying life insurance, and this is typical of the low-wage earner, had the industrial type of policies. Some of the families had small policies on each member of the family. Such policies are for small amounts and because the families cannot be relied upon to come to the office to make payment, a collector is required, which increases the cost of these policies. The cost of this type of insurance is very high in comparison with the amount of protection and the cash surrender or loan value is very low.

In a study of this type of insurance, conducted in Philadelphia in 1933, out of 560 families that had gone into this form of insurance, only 34 were able to borrow or cash in on their policies. Because figures on home ownership were not readily available and because only five of this group owned their homes, I will not go into an analysis of this form of investment, except to comment that home ownership in times of distress might be a serious liability. These points in regard to reserves are brought out to show that the families receiving small wages are unable to become independent and with the increased availability of credit they are becoming a serious problem to business and the community.

To show that these families were not unreasonable in their expenditures, the following table will show how the income was apportioned:

Gifts, donations, taxes. --------------------------------------------------------------------------------------------- $21.74

Housing ($18.09 month) ----------------------------------------------------------------------------------------- 217. 12

Household operation ------------------------------------------------------------------------------------------------ 139 90

Medical care --------------------------------------------------------------------------------------------------------------- 39. 69

Food ($ 1.09 per day) ---------------------------------------------------------------------------------------------- 398. 83

Automobile expense --------------------------------------------------------------------------------------------------- 48. 21

Clothing ---------------------------------------------------------------------------------------------------------------------- 75. 96

Other transportation -------------------------------------------------------------------------------------------------- 13. 00

Personal care -------------------------------------------------------------------------------------------------------------- 23. 73

Furniture and equipment ------------------------------------------------------------------------------------------ 28. 89

Miscellaneous expense ----------------------------------------------------------------------------------------------- 7. 18

Recreation ------------------------------------------------------------------------------------------------------------------- 21.22

Tobacco ---------------------------------------------------------------------------------------------------------------------- 25. 86

Education, reading ----------------------------------------------------------------------------------------------------- 20.28

Total --------------------------------------------------------------------------------------------------------------- 1,152.72

Food is the most expensive item in the family expense account of the wage earner and in the case of these families represented 34.7 percent of the average expenditure for all purposes. The average food item followed a definite trend upward as income increased.

In this group 23 percent were able to either live on their earned income or within that amount. The question of the management of the individual income is an important factor in his ability to live within income. Because of the lack of training in financial matters, the average person is unable to manage his income so as to set aside a portion for himself.

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It may seem difficult to understand why in this country, the richest country in the world, there is a growing tendency for its citizens to become more and more dependent upon society for their very existence. It has been generally believed that it is within the ability and the responsibility of each individual to maintain his own standard of living and that of his family and to provide for exigencies such as unemployment, sickness, accident, and maintenance in old age.

This might be satisfactorily accomplished were it not for three factors: First, too large a proportion of the consuming public is receiving inadequate wages; second, American citizens have had little or no training in the management of either their income or saving; third, the selling pressure exerted by trained sales forces and powerful advertising is lying in wait to separate a wage earner from his money, even before he gets it.

More than three-fourths of the people in this country, which at the bottom of the depression was worth over $300,000,000,000, have accumulated little or no part of its wealth. I believe that the increase of wages of the low-income group, together with an educational program, to teach them how to advantageously use their income, will have a stabilizing effect for the economic security of a country. The economic security of any country is dependent to a certain extent upon the economic security of its citizens.

The individual household is the largest and most important industry, in the country. Billions of dollars are invested in houses and equipment. The household is more fundamental than stores, banks, railroads, or even factories, because everything begins and ends with the consumer in the home.

The household by its activities tends to augment the economic forces which bring periods of prosperity, while on the other hand, tends to intensify and prolong periods of depression. Everything should be done by business and government to strengthen the households and free them from the worries of poverty and debt.

Also in that study and in a study by the Bureau of Labor Statistics, it was found that about $1,900 income was the point where the average could begin to get above their earnings. If there are any questions I will be glad to answer them.

Representative Ramspeck. Mr. Adams, how do you account for the difference in the figures that you used relative to Columbia, S. C., and Gastonia, N. C.?

Mr. Adams. These figures were obtained from the urban study and consumer purchases, and I took the figures that they gave me. The difference would probably be accounted for by the fact that there were more people in the low group than there were in the high group, naturally.

Representative Ramspeck. Well, did your study include any information as to what type of work these people did?

Mr. Adams. This comprises wage earners, clerical workers, salaried professional and business people, and independent professional and business people. Although, according to the Bureau of Labor Statistics, only wage earners and clerical workers earned under $1,250.

Representative Ramspeck. Did you take an equal number of each classification in making up these figures?

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[PAGE 1118]

Mr. Adams. It was averaged in proportion to the number in that particular group.

Representative Ramspeck. Then the fact that Gastonia, N. C., is primarily an industrial center and Columbia, S. C., is not, probably accounts for that difference.

Mr. Adams. No doubt. Apparently the wages paid in Gastonia are much less than in the other city.

Representative Ramspeck. I happen to know that the county of which Gastonia is the county seat has more than 100 textile mills in it. It is primarily an industrial city. Columbia, S. C., is more of an office and distributing center than an industrial center, which would indicate to me that the industrial worker on the average makes less than a clerical worker and an executive in the distribution end.

Mr. Adams. That is perfectly true, because the salaried business and professional people did not earn under $1,500, and no clerical worker earned under $1,000, and the wage earner went down below that.

Representative Jenks. May I ask Mr. Adams a question?

The Chairman. Yes.

Representative Jenks. You have given Haverhill, Mass., as the one city that you have cited there, that you have analyzed.

Mr. Adams. That is correct.

Representative Jenks. I wonder if anything was taken into account as to the industrial conditions in Haverhill in comparison with other industrial centers?

Mr. Adams. Well, I made a sample study of a very few cases in Detroit of the year previous, and the figures were pretty nearly the same.

Representative Jenks. Do you know it to be a fact, or do you not, that the city of Haverhill probably had more labor trouble than any city in the United States?

Mr. Adams. It has had. My home is very near Haverhill and I know Haverhill quite well.

Representative Jenks. Then you know the situation.

Mr. Adams. They have had a great deal of trouble in the shoe industry.

Representative Jenks. That is the principal industry there.

Mr. Adams. In the past few years many of the shoe concerns have moved out and a new industry has come in that is very much more diversified.

Representative Jenks. Would that affect your figures there, the fact that they have had so much labor trouble and unemployment on that account?

Mr. Adams. I do not think it would have any effect for these years, because, as I say, employment in Haverhill has shown, in the past few years, a marked increase because of new and diversified industries that have come into town.

Representative Jenks. I happen to know about the conditions that exist there. I was wondering if that affected the figures.

Mr. Adams. I do not think so, because they are comparable to Detroit.

The Chairman. Thank you very much. Mr. W. S. Campfield, secretary of the Virginia State Horticulture Society, Staunton, Ya.

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[PAGE 1119]

STATEMENT OF W. S. CAMPFIELD, SECRETARY, VIRGINIA STATE HORTICULTURE SOCIETY

Mr. Campfield. Mr. Chairman and gentlemen of the committee, I am secretary of the Virginia State Horticulture Society, and also have authority and have been requested to represent the Horticulture Societies of West Virginia, Maryland, and Ohio. I have those authorities with me here.

Those societies, and my representation here, gentlemen, is largely confined to the apple- and peach-growing interests of the great Appalachian Belt, and extending out into Ohio. The growers of this section object to certain features of this bill, to say the least, and would like very much to have the bill definitely define agriculture so that it will be stricken out, or, rather, come in the exemptions of the bill. I think there is probably no disagreement that at the present time agriculture is not specifically exempted from the bill but is left to the definition and delimitation given it by the Board, which may, of course, or may not be detrimental to agriculture. think we should not ignore the possibilities on both sides.

Agriculture, or at least the fruit interests which I represent, would like that uncertainty removed. They would like to know whether they are in or whether they are out, and they would like to be fully in or fully out. I think I can say that because I believe you men can readily see that if the Board should define a certain phase of horticultural labor, say, the packing crew, as being within the restrictions of the bill and subject to minimum wages and maximum hours, that would immediately upset the whole harvest operation on the farm. The pickers would become dissatisfied and all the rest of the crew would then become dissatisfied or insist upon coming in on similar regulations.

So I say agriculture should be either all in or all out to avoid conflicts, and I am going to present an amendment in just a moment.

The Board, I think you will agree, has the authority to define. Now, the bill is right broad. I think in part 4, page 32, sections 9 (a) and (b), in which it ostensibly limits the operation of this bill to interstate commerce, but in those two sections, which I will not read, or paragraphs, I am assuming you are familiar with them, the Board is given power to reach out and go within a State and there control the labor operating in the production of goods that sold within that State, entirely intrastate, if the Board, in its discretion, finds that that labor producing goods intrastate and sold intrastate should come in sufficient competition with interstate goods produced elsewhere to cause a depression of the interstate goods, the labor situation. That is rather broad. That, I believe, as I see it, gives this Board almost complete authority, that is, authority that they could exercise both interstate and intrastate.

The same thing, I take it, is true on page 17, section 6 (a) as to the number of employees. As I read the bill, I anticipate that there will be a number of employees written in here, a minimum number that will come under the provisions of the bill. That is left blank in the copy that I have, but in that same section a similar provision prevails, that if the Board finds that a lesser number of employees are having an effect of breaking down the regulations of the bill then they can

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reach, out and control them, which, as I take it, would mean that they could control the farmer with one man, or two men, or more. That, I think, would cause a great deal of trouble.

Now, in closing, of course we do not like that court review section. Farmers believe in court review. They always have, whether they are right or whether they are wrong. They strongly believe that we should have a court review of all acts, and they would like to have their grievances, if any, heard by a jury, but in this bill, as Mr. Fraser pointed out, the court review is limited to the legality, and the finding of facts are, of course, conclusive, provided that there is evidence and a fair amount of bases on which those facts were formed.

Now, I am going to hurry along. I would like to discuss other phases of it, but I know you gentlemen are in a hurry and want to get through with this matter.

I presume there are a great many of you in Congress, and probably on this committee—I do not know whether it is a majority or not, we will find out soon, I expect, but I presume there are a great many of you who earnestly desire a bill of this kind passed which you hope will bring a greater amount of justice to labor, and particularly the unfortunate unemployed labor. I assume that that is the purpose of the bill.

Now, gentlemen, I want to say if that is your purpose there is no better way that I know of of defeating that purpose than to bring agriculture arbitrarily within the terms of this bill and starting a reaction of dissatisfaction on the part of agriculture.

I am in pretty close touch with the agricultural sentiment of various sections in the East, and no doubt many of you men are who represent agricultural States, but I have here a pamphlet as to the present trend of labor conditions and the strikes and strife that would occur if agriculture should be agitated by a bill of this kind that will press down, as they feel, upon them. You will turn agriculture definitely against labor, I can assure you gentlemen, and you men from the agricultural sections will agree with me that ultimately you would defeat your aims with this type of legislation. I doubt if you would be strong enough to maintain this legislation, and some of you might not be back here to help its repeal.

Now, gentlemen, the amendment that I would like to propose here is:

For the purpose of this act the term “agricultural labor” includes all employees engaged in the planting, growing, spraying, harvesting, preparing for market, packing, conserving, processing, transporting and marketing of fresh fruits and vegetables and their delivery to storage or their delivery to common carriers.

I heard you question Mr. Fraser if the common carrier is used, but we feel that the farmer or grower should have the right to deliver his goods by labor to the common carrier beyond the control of this act.

Now, with that, gentlemen, I will close, and I hope sincerely that you will give very careful consideration to how deeply you draw agriculture into this matter. You folks who are in the fruit section realize, I think, that it would be absolutely impractical and impossible for a Board to promulgate regulations at picking time of apples, or of peaches, as Mr. Fraser told you. I have handled peaches. They ripen in 24 hours. Now, when the crop is heavy, when the apples are large and the trees are comparatively small, they will make fairly good wages, but when we have an off year, particularly in apples, as

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[PAGE 1121]

you people who are in the apple sections know, and when the trees happen to be large, as they are in some of our orchards in Virginia, when a man goes up on a ladder and lowers the basket on a rope because it is too high and impractical to come down, where you have those conditions then perhaps the same wage on the same box of apples might not apply. There are some years when orchardists who nave been paying by the box find it impractical because the crop is so scattered that the pickers cannot make any money.

We always have sufficient pickers excepting in extremely large crop years. They come back every year. The people up there are glad to come down. They bring the whole family. I have seen them come down, the father and mother and boy and girl. The father and the boy do the work on the top and the mother and the girl on the bottom. They pick a large number of apples a day and they are satisfied. They are anxious for work. They always come back. To put in a uniform scale under those conditions would be impractical. No mail could possibly have the knowledge of picking and harvesting apples unless he has done it for years. These people have done it all their lives on the level land in the Middle West, the mountainous land on the Pacific coast, in the Pacific Northwest, where I have lived, and in the Virginias, and our mountain sections as well as the level lands in the valleys. This is perishable merchandise and must be handled quickly.

So that we have conditions there that cannot possibly be anticipated by the human mind. I believe they are fairly well worked out. At least the pickers are always glad and anxious to come back. We do not have any trouble except in extremely large crop years.

Representative Wood. Mr. Campfield, you said in your opening statement that your association was opposed to several sections of this bill, to say the least.

Mr. Campfield. Yes.

Representative Wood. What did you mean by that? Do you mean to imply that you oppose the whole legislation, the whole bill?

Mr. Campfield. I think I cleared that up. I think I said it certainly would go that far. I am not authorized to go further. They are opposed to agriculture being brought within the provisions of the bill. I think this amendment that I have offered would probably clear that up. I do believe, and I think that I am representing the people fairly in this statement, that this bill is of such grave importance in all of its aspects that it should be given a very careful and thorough and long study, and perhaps should be postponed until another session.

The Chairman. Do you not think that we ought to appoint a commission?

Mr. Campfield. What is that?

The Chairman. Do you not think that we ought to appoint a commission?

Mr. Campfield. Well, commissions bring in some good reports sometimes.

The Chairman. Do you not think it would be better to appoint a commission? That is what most of them have suggested that were against it, that we postpone long consideration and appoint a commission.

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Mr. Campfield. To be perfectly frank, Mr. Chairman, I do not think much of commissions, as a rule. There might be some studies that should well be made, but I think that would be wasting the people’s money. To be perfectly frank, I do not think much of commissions. I think the Senators and Congressmen could study the matter, could talk with their people in industry and agriculture and come back at another term.

Senator Lee. Would you vote for the bill with your amendment in it if you were in my place?

Mr. Campfield. I do not know that I would. Personally, I do not particularly like the bill as it is drawn. I think it is too sweeping in its powers, that is all. I think it is entirely too dictatorial. I think it is going to give labor right much control of the affairs of the country.

Representative Thomas. Mr. Campfield, what is the average daily earning of your apple pickers and how many hours do they put in daily?

Mr. Campfield. Well, that is a very hard question to answer, because it ranges, there is such a variation, but pickers will often make from, I should say, a dollar and a half in our harder times up to $3 and $4 a day. There are piece workers that pick rapidly. We have pickers that pick 125 to 150 boxes in the right type of picking. Some pay by the day and some by the boxes.

Representative Wood. How much is in the box?

Mr. Campfield. Approximately a bushel.

Representative Thomas. Does not industry, in calculating its expense, make certain calculations as to the labor cost? What is the labor cost per box?

Mr. Campfield. Well, it depends on the year and crop. When the crop is small, they naturally pick less. It depends on the crop. It ranges around a dollar and a half to $2.

Representative Thomas. Then he earns about $9 a week?

Mr. Campfield. He earns probably from $9 to $12 a week, and in some instances, of course, the piece laborer earns more.

Representative Thomas. I understand. How many hours a week do they work?

Mr. Campfield. Usually about 8 hours a day. Say about 9 to 10 hours, because some of them have to be transported back and forth. In some cases they are furnished their meals, of course, and their lodging. I know a number of the larger orchardists in our section do.

Representative Thomas. In other words, this labor comes from adjacent farms?

Mr. Campfield. They go home and do their chores, they live at home; yes, sir.

Representative Wood. What is the size of the farm that you operate?

Mr. Campfield. I do not operate any farm at the present time. My whole time is engaged with the Horticulture Society.

Representative Wood. You do not have any farm?

Mr. Campfield. Not at the present time. I was raised on a farm.

Representative Wood. What is your occupation?

Mr. Campfield. Secretary of the Virginia Horticulture Association.

Representative Wood. What did you do before that?

Mr. Campfield. For about 10 years I was connected with the American Fruit Growers, Inc., as their representative in Virginia.

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[PAGE 1123]

Representative Wood. Are you an attorney?

Mr. Campfield. What is that?

Representative Wood. Are you an attorney?

Mr, Campfield. Not at the present time. I studied law when I was a kid, but I reformed.

Representative Wood. Did you ever operate any farm?

Mr. Campfield. Yes; I was raised on a farm, in Winnebago County, III.

Representative Wood. Did you ever operate a fruit farm?

Mr. Campfield. Only for a short time.

Representative Wood. You have?

Mr. Campfield. I have for a short time; yes, sir.

Representative Wood. Do you know anything about the wages in your community where you live? Where do you live?

Mr. Campfield. I live in Staunton, Va., in the Shenandoah Valley.

Representative Wood. That is in the apple center?

Mr. Campfield. Yes.

Representative Wood. Don’t you know the wage that is paid there to any of those apple pickers?

Mr. Campfield. Yes; I just told the gentleman here that it ranges around a dollar and a half to $2 or better.

Representative Wood. Piece work?

Mr. Campfield. A box varies a great deal, I would say from 4 cents to 7 cents, depending on the type of picking. There is a pretty large grower from our section here. I would be glad to have you put him on to testify exactly what he pays his men.

Representative Wood. I am asking you. You represent the association?

Mr. Campfield. Yes, sir.

Representative Wood. You do not know just what they pay per box?

Mr. Campfield. Oh, yes; it ranges from 4 cents, as I say, to 7 cents, depending on whether it is a light crop, scattered, large trees, and so forth. There is a great variation. There cannot be any set figure.

Representative Wood. If it is a light crop, you have to pay more per box?

Mr. Campfield. If the crop is light, we have to pay as high as 7 cents.

Representative Wood. How do you make money out of the light crop?

Mr. Campfield. If the crop is light over the United States, the apples bring more.

Representative Wood. What was the price of apples in the fall of 1932?

Mr. Campfield. I have got the figures back there.

Representative Wood. Do you know anything about them offhand?

Mr. Campfield. I do not attempt to remember them.

Representative Wood. Just give it to us approximately.

Mr. Campfield. I would not attempt to do that. I think you will find these figures are approximately correct. In 1929 the U. S. No. 1 winesaps-----

Representative Wood (interposing). I do not mean 1929; I mean 1932.

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Mr. Campfield. I am going to give yon the figures right straight through from 1929 to 1937. I would say they were approximately $2 per bushel.

Representative Wood. When?

Mr. Campfield. In 1929. In 1930, $1.50; in 1931, which was a very large crop, it dropped down to about $1, in 1933, it was $1.25.

Representative Wood. What was it in 1931?

Mr. Campfield. In 1931 it was $1. That was a large crop year.

Representative Wood. Now, what was it in 1932?

Mr. Campfield. In 1932 it was also $1. The crop was lighter in 1932, but the conditions were poor.

Representative Wood. What was the price in 1933?

Mr. Campfield. $1.25.

Representative Wood. What was the condition of the crop in 1933 as compared to 1932?

Mr. Campfield. The condition of the crop?

Representative Wood. In volume of production.

Mr. Campfield. In 1933 it was probably somewhat better and conditions were correspondingly better. In 1933 we had a very dry session and the crop in Virginia was short.

Representative Wood. The volume of apple production in 1933 was larger than in 1932, was it not?

Mr. Campfield. I would be glad to file those figures. I cannot keep those all in my mind.

Representative Wood. In the face of the fact that the 1933 crop production was larger, they paid 25 cents a bushel more; how do you account for that?

Mr. Campfield. Conditions were better in 1933.

Representative Wood. What kind of conditions?

Mr. Campfield. General business conditions, and the buying power was better.

In 1934, it went back down to $1.15; in 1935, it went down to about $1 on this same scale, and in 1936 it was a very short crop, one of the shortest crops we had since 1931. That averaged about $1.65.

So you will see the fluctuation there. While it is affected by the buying power, it is certainly more immediately affected by the volume Of fruit in the United States.

Here is another point: Our plantings in the entire United States are on the basis of an export outlet that would take from 15 to 20 percent of the United States’ commercial crop.

Representative Wood. Are you quoting the market prices for apples there, or are you quoting the prices that your producers got for apples?

Mr. Campfield. These would be the prices delivered in the market.

Representative Wood. That is the market price?

Mr. Campfield. Yes.

Representative Wood. The market price as it was published at that time?

Mr. Campfield. Yes; approximately the market price at that time. Of course, this market price, you understand, fluctuates throughout the year. In and out of storage makes a difference, but this is a fair picture of the market price.

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Let me tell you about the export situation. We have had the export market reduced materially, probably one-half. We must depend upon some export outlet for surplus apples. We have too many apples in the United States at present for the demand. If the competition in foreign countries, particularly in Europe, where most of our export apples go, is very keen, Europe producing more, and we have competition with the Southern Hemisphere, it reduces our export trade very materially and will further dry up the export market which you men are trying to open up for us by trade agreements, and we are going to further dry that up if we have got to increase our cost of production where we cannot compete with the apples raised in other sections in the foreign markets, and that is going to dump the surplus back into the American market, which, in turn, will have a further depressing effect.

Representative Wood. Is the market price of apples controlled in any way by the world market?

Mr. Campfield. Yes; to this extent: The United States, of course, is the largest producer of apples and we, having overplanted, have a surplus and, if our surplus cannot flow to foreign markets, then it has a depressing effect, and that is one of the causes for this decline that is back here starting in about 1930. In 1928, 1926, 1925, and 1924, we had a very free flow of apples to the foreign markets. When that was markedly cut off by trade restrictions of various kinds, it constantly increased the supply on our home markets.

Representative Ramspeck. Who buys the apples?

Mr. Campfield. What is that?

Representative Ramspeck. Who buys the apples?

Mr. Campfield. I hope all of you do.

Representative Ramspeck. I am asking you. You are in the business. Now, I am not trying to be funny with you.

Mr. Campfield. I understand that, but that is one of our problems. Do you want me to trace it from the grower in Virginia on to the consumer?

?Representative Ramspeck. What I am getting at is this: Is it not true that people who buy apples are people who make good money?

Mr. Campfield. No, sir; that is positively not true.

Representative Ramspeck. Poor people buy apples, people that make less than $1,000 a year?

Mr. Campfield. Excuse me. I misunderstood you. I thought you meant the man who originally bought them from the grower.

Representative Ramspeck. No, no.

Mr. Campfield. The consuming class is the better-paid class. I misunderstood the question.

Representative Ramspeck. Then if we can raise the wage, the earnings of that lower one-third that Mr. Adams was talking about here a while ago, you will not need your foreign market.

Mr. Campfield. If you can do that without upsetting our cost of production, fine; I am with you. That is the only thing.

Senator Lee. Where is our best foreign market?

Mr. Campfield. England has always been. Germany was a good market, but we are practically cut out of there on account of quotas. France is fair. The Scandinavian countries would grade good. Argentina used to be splendid for certain varieties but they are raising

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their own apples now. Our Ben Davis and Delicious used to be fine in the Argentine, but they have an enormous industry in apples there now.

Senator Lee. If they are raising their own apples, it would be impossible to regain their market, would it not?

Mr. Campfield. Yes.

Senator Lee. And in other markets where they are producing their own apples, no matter how low we make the price of our own, it would be difficult to compete?

Mr. Campfield. In certain markets. There are great European centers where they use apples and byproducts very heavily, and we can go in yet to Europe with large quantities of the high-grade apples if we can get over their barriers. We have got $1.50 import duty to England; we have absolutely prohibitive restrictions in Germany, and in several other countries; we have got very serious restrictions in France.

Senator Lee. That would make our wage level almost too low to be a decent living wage, would it not, if we would have to compete with conditions like that?

Mr. Campfield. If we can get the $1.50 taken off of England, that would be fine. We can ship an enormous amount of apples to England.

Senator Lee. That does not have anything to do with the wage scale here at all.

Mr. Campfield. Yes; the $1.50 comes out between the producer and consumer. If there is a duty of $1.50 a barrel, the producer has got to get that much more.

Representative Wood. Wliat was the wage of the apple picker before England put on the $1.50 a barrel?

Mr. Campfield. I expect it would run the same. If we go back earlier, we find that wages were even lower.

Representative Wood. When England was free, you say that the apple pickers got even lower?

Mr. Campfield. The wages were lower. At the present moment, however, the apple industry in the United States is in a right precarious condition financially. I am sure your Federal loan institutions will back the statement up fully. The industry cannot bear any greater burden than it is bearing at the present time in the way of cost of production.

Representative Wood. How do you account for the apple growers in the fall of 1932 leaving the apples in the orchards, turning the hogs in, because they could not get the price to pay for the picking?

Mr. Campfield. There was not nearly as much of that, Senator, as the papers played up.

Representative Wood. I live in an apple section and I know what was done there. You talk about the price in 1932. The horticulturalists in Missouri, in my section of the country, did not get enough for their apples to pay for the picking and they just turned the stock in the orchard and let the stock eat them.

Mr. Campbell. The byproduct plants were overstocked. They had more canned apples, more vinegar, more byproducts of that kind than they could sell. There was no market for large quantities of byproduct.

Representative Wood. And they let a great amount of apples on the trees rot?

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Mr. Campfield. I just told you the byproduct manufacturers were well overstocked, as was every other kind of industry at that time, when the depression came on, and they had to dispose of their canned apples, their cider, vinegar, and various byproducts. Until they did that, they were not willing to buy but very sparingly.

Representative Wood. The reason they did not was because they had unemployment, they had low wages, the workers had no money with which to buy?

Mr. Campfield. Yes, sir.

Representative Wood. Don’t you think if we passed this bill and elevate the wages of our workers to 40 cents an hour, including some of your pickers, it would be a benefit to you?

Mr. Campfield. I will answer that question by saying yes, if you do not disturb our cost of production and raise that to a point where we cannot operate.

Representative Wood. You want everybody else raised but you?

Mr. Campfield. If you raise our cost of labor, our cost of production, it will Just put the orchardists out of business.

Senator Ellender. Mr. Campfield, I am interested in the definition of agricultural labor.

Mr. Campfield. Yes.

Senator Ellender. To what extent would that affect cotton farming? In other words, how far would that definition extend? Would that definition extend to cotton farming?

Mr. Campfield. I would not even attempt to discuss that, because, while I have been in the cotton sections, I do not know anything about that. I am only speaking for apples and peaches. I could only propose this definition to apply to apples, peaches, and pears.

If the other agricultural interests want to enlarge it, that is fine. I would not even attempt to apply it to cotton. I am just asking it for the fruit industry.

The Chairman. We appreciate your coming. I would like to ask you one question because I did not quite get it clearly. When did you live on a farm?

Mr. Campfield. When did I live on a farm?

The Chairman. Yes.

Mr. Campfield. Well, I left the farm at home along about back in 1900.

The Chairman. About 1900, you say?

Mr. Campfield. Yes. I worked on a farm out in Illinois. Then I worked on a farm in the State of Washington. I am older than some of you men, but I still keep in close touch with the agricultural condition.

The Chairman. How old were you the last time you worked on a farm?

Mr. Campfield. How is that?

The Chairman. How old were you the last work you did on the farm?

Mr. Campfield. About along in the forties.

The Chairman. Along in the forties?

Mr. Campfield. Yes.

The Chairman. That was in Illinois?

Mr. Campfield. No, no; I left Illinois a long time ago.

The Chairman. Where was this?

Mr. Campfield. Down in Virginia.

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The Chairman. Did you own the farm?

Mr. Campfield. No; I was operating it, managing it.

The Chairman. Whom for?

Mr. Campfield. It was at that time owned jointly by four of us.

The Chairman. Was it a corporation or a partnership?

Mr. Campfield. A partnership.

The Chairman. How much land did they own?

Mr. Campfield. About 210 acres; about 170 or 180 in fruit.

The Chairman. About how many?

Mr. Campfield. About 170 to 180 in fruit.

The Chairman. And the last work you did on a farm was in 1900?

Mr. Campfield. No, no; I said that was the last work I did there at home on the farm, but the last work I did on the farm was back here about 1922.

The Chairman. You were the operator of a farm?

Mr. Campfield. Yes.

The Chairman. You and three or four others?

Mr. Campfield. Yes.

The Chairman. That was a fruit farm?

Mr. Campfield. Yes.

The Chairman. Did you do the actual farming?

Mr. Campfield. No; I was just managing it, looking after it.

The Chairman. How long since you did any ordinary physical work on a farm?

Mr. Campfield. I did some at that time. I did some out on the Pacific Northwest when I lived there.

The Chairman. When did you leave out there?

Mr. Campfield. I came back from the Pacific Northwest about 1907 or 1908. I worked as a box picker there for a good many years.

The Chairman. Had you already studied law at that time?

Mr. Campfield. I studied law right after I got through high school in Illinois.

The Chairman. Did you practice at all, or did you farm before you practiced?

Mr. Campfield. I practiced about a year.

The Chairman. Where?

Mr. Campfield. Rockford, Ill.

The Chairman. In Illinois?

Mr. Campfield. Yes; in Winnebago County.

The Chairman. And for the last few years you have been secretary of this horticulture association?

Mr. Campfield. Since 1926.

The Chairman. I saw a list of the members of Mr. Fraser’s organization. Do you have a list of the members of yours?

Mr. Campfield. I do not have it with me. I would be glad to send you one. We have a little over 1,000 members at the present time in the Virginia Horticulture Association. That is exclusive of Maryland, West Virginia, and Ohio, which I am also representing.

The Chairman. I may be mistaken, but those members there in the organization that Mr. Fraser represented all seem to be brokers or distributors of farm or vegetable products. Certainly those in Alabama whose names I saw appeared to be.

Mr. Campfield. I am a member of the International Apple Association that has a membership of both shippers and growers. There are a great many growers among that number.

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Of course, in Alabama there are only a few apple orchards in that section, as I happen to know.

The Chairman. Thank you very much. Are there any other apple farmers?

Mr. Campfield. Mr. John D. Neff is here. He can give you some figures.

Representative Fitzgerald. I would like to ask a question. You said that all these apples, pears, and peaches were picked by the box, or was some of it done by the hour?

Mr. Campfield. Some of it is done by the hour, some by the day, and some by the box.

Representative Fitzgerald. What do you pay the employees that pick by the day?

Mr. Campfield. How do we pay them?

Representative Fitzgerald. Yes; how much?

Mr. Campfield. They range from $1.50 to $2.25.

Representative Fitzgerald. $1.50 for 10 hours?

Mr. Campfield. That is in our section.

Representative Fitzgerald. That is about 15 cents an hour. Then you spoke about bringing mother, father, brother, and sister down.

Mr. Campfield. They bring them down.

Representative Fitzgerald. You employ them?

Mr. Campfield. Yes.

Representative Fitzgerald. Do you pay them the same rate, 15 cents an hour?

Mr. Campfield. Usually they like to pick by the box.

Representative Fitzgerald. The ones that pick by the day are the brother and sister?

Mr. Campfield. Very often they do. They come down in certain sections where they are paid by the day.

Representative Fitzgerald. You pay them the same as you pay the father and mother?

Mr. Campfield. If the child is able to work, yes; but, of course, if he is only half as efficient, he does not get as much.

Representative Fitzgerald. How old are they?

Mr. Campfield. I could not say.

Representative Fitzgerald. What are the ages of some of these children? Are they like the tobacco growers back in the East that employ children 9 and 10 years of age and pay them 75 cents a day for 10 hours?

Mr. Campfield. Small children cannot pick apples and peaches. The children might be 16, 17, 18, something of that kind, and older, but if a family wants children to work they will bring them down.

Representative Fitzgerald. You mean by “children” not children under 14?

Mr. Campfield. No, no.

Representative Fitzgerald. You do not employ any children under 14?

Mr. Campfield. Not in the harvesting, because they would not be efficient; they could not be very good at apple picking, as picking is a delicate operation.

Representative Fitzgerald. If they pick fine, do they get the same wages as their parents?

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Mr. Campfield. Pardon me?

Representative Fitzgerald. If they pick fine, do they get the same wages as their parents, about $1.50 a day?

Mr. Campfield. As a rule. I would not say that always prevails, because there might be a person there that is not competent or able to work that fast.

Representative Fitzgerald. Then you pay less than $1.50 to some of them?

Mr. Campfield. Very few.

Representative Fitzgerald. You do to some?

Mr. Campfield. I expect there are cases; yes. It would be very, very few.

Representative Fitzgerald. Then your rate is not $1.50.

Mr. Campfield. On the average I would say it was; yes, sir.

STATEMENT OF JOHN D. NEFF, ORCHABDIST, STAUNTON, VA.

The Chairman. What is your name?

Mr. Neff. John D. Neff, Staunton, Va.

My father and I are apple growers. We own all of these orchards ourselves, and we lease a few orchards in addition. Probably, 33 X percent of our acreage is leased from the owners who have small orchards and do not nave the equipment to cany on the necessaiy work.

The Chairman. How much do you have in all?

Mr. Neff. Around 500 acres of apple orchard. The crop this year is around 40,000 barrels of apples.

The Chairman. Is it a corporation or a partnership?

Mr. Neff. It is a corporation, but only my father, my mother, and myself are in it.

The Chairman. All right, you may proceed.

Mr. Neff. The only statement that I wish to make is from the grower’s standpoint. I can see that if the income and purchasing power of wage earners throughout the country is raised by this bill naturally we will have a larger outlet for our apples, and the only question that comes to my mind would be that we pegged the price of wheat and cotton through the Farm Board and that was a failure.

The Chairman. You mean pegging the price of cotton was a failure?

Mr. Neff. Yes; and also wheat.

The Chairman. Did I understand you to say that was a failure?

Mr. Neff. I am not talking about the present administration; I am talking about the price of cotton, I am talking about the pegging of the price without requiring the growers to reduce their acreage and in some way compensate for it. The original pegging of the price of wheat was, I think, around $1.25. That held up ever so long, and then it collapsed. The same thing happened to rubber and sugar, and other commodities.

Now, the question in my mind, personally, is whether the pegging of the price of labor instead of letting the law of supply and demand follow, as to whether it will work out I do not know. In other words, what is going to be the outcome? If the bill works and we get an increased purchasing power, then I am sure every apple grower in the country will be for the bill, but if it reacts so that the laborers in the final outcome do not get as much as they are getting today, if it upsets

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industry, to that extent then we might not be as well off. Of course, I am not going any further than that.

Now, what we want as growers of apples is to know where we stand. Now, we apply every year to the East Central Fruit Growers Protection Credit Association. It is part of the Farm Credit Administration. It is an organization with which we finance our operations. The other day in applying for the loan I put in an estimate of $1.25 a barrel for picking, packing, and trucking the apples to the railroad station, and, as that was 25 cents more than last year, the inspector asked me why. I told him, “Well, on account of the unsettled labor problem. We do not know what we are going to have to pay for labor.”

As to this bill, we would not know just where we would stand from one time to another, but, as it has been pointed out, if our picking comes under it, or if our packing comes under it, it is going to upset the rest of our labor, and we just would not know where we would stand. We would rather, in fact, although we do not want to be included in the bill, we would rather be in the bill and know where we are than to be excluded under the present conditions and not know where we are.

The Chairman. The apple growers that you speak for would prefer to be left distinctly in the bill by name rather than to have the provision that is now in the bill?

Mr. Neff. The uncertainty.

The Chairman. That gives the Board the right to define whether they are in or not?

Mr. Neff. Yes.

The Chairman. Is the committee to understand that? I want to be sure on that.

Mr. Neff. Of course, I would not speak for any other growers on that, but I would personally myself rather be in it.

The Chairman. I understood the secretary of the association to testify to the same effect.

Mr. Neff. I think that is right.

Senator Lee. I understand you are a grower.

Mr. Neff. Yes.

Senator Lee. As far as I am concerned, I want to vote for something in this bill that is helpful to the United States, and I am just wondering now, if you were in my place and this amendment that has been offered were accepted, would you vote for the bill?

Mr. Neff. I might. I haven’t given it enough study to know whether or not I would vote for the bill.

Senator Lee. We want to be helpful.

Mr. Neff. I am talking from my own standpoint, not from the standpoint of a United States Senator, or Congressman. As I say, I think there are possibilities that this might increase our purchasing power and I would not mind seeing it tried out.

Senator Lee. I think it would. I know enough about farm conditions. I come from a farm country. I know farm operations, and we are interested in protecting the farmers, as far as labor is concerned, in actual farm operations. We know that he is in a different situation than the industrialist, and I just really want to get a fair picture of what the grower thinks. Don’t you think that this effort on our part ought to have your encouragement rather than your

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discouragement, in our effort to raise the general buying power of the public?

Mr. Neff. Well, as I said, if this pegging of the price is, in its final outcome, going to work, then we would certainly be better off. We cannot tell until we try. We tried pegging the price of wheat but it did not work. It might work on labor.

I would say, on the other hand, that probably the employer should be compensated in some way by a freer movement of his goods and less regulation, just the same as if the railroads were today allowed a little bit more freedom they would not have to ask for so much regulation of the trucks. If there is going to be compensation in some way so that this is not going to upset the employer, it might be all right.

Senator Lee. I do not want the representatives of the apple industry to feel that this committee is antagonistic. We want to get your cooperation in this. We want your help. If you are just against it all the way through as growers, why, of course, it is interesting to us to know that.

Every effort that the United States Government has ever made to raise or improve conditions has been met with “well, this might do this and might do that”, and a thousand imaginary evils hav been suggested. We are in dead earnest about this. We are going to take this bill up and talk it over after you go out.

Don’t you feel that we are making a sincere effort here to improve conditions that will react favorably to your industry or your business?

Mr. Neff. I certainly do; yes.

Senator Lee. I thank you. We are doing our best to protect agriculture as such.

Mr. Neff. Yes.

Representative Wood. The prime purpose of this bill, of course, is to create wage standards that will enable the average worker to buy sufficient to maintain himself and family in the ordinary comforts of life and to spread employment. Now, if the enactment of this law would tend to absorb the seven or eight or nine million that are now unemployed, that must be supported by Federal relief through taxation, if the enactment of this bill would absorb that unemployment, give those people a useful employment, their wages would enable them to purchase the necessities of life; if we could do that, don’t you think it would be a great thing?

Mr. Neff. It would be to our benefit, yes, sir.

Representative Wood. I thank you.

Mr. Chairman, at this point I desire to file for the record a statement containing a number of amendments proposed by the National Canners’ Association.

The Chairman. Without objection that will be placed in the record.

(The amendments referred to are as follows:)

Requested Amendments to H. R. 7200 Concerning Perishable Agricultural and Fishery Products by the National Canners Association

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.”

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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, nonseasonal agricultural or fishery products.

Throughout the consideration during the past 5 years or 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 present 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 sees., pp. 34, 51, 432, 455.) 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 marketing 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.

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 day 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 corn 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 by 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

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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 tonnage delivered by farmers, makes 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 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 fisherman 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. R. 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

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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 the public hearing and clearly should be.

Amendment requested.—Section 12 (5), page 26, lines 8 to 9, delete the words “the number of employees employed” in lines 8 to 9, and delete the words “and volume” in line 9.

Comment.—It is submitted that in determining what is an oppressive wage or an oppressive work week, there is no legitimate basis for distinguishing between factories on the basis of the number of employees 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 unrelated to the purposes of the bill and would probably throw grave constitutional doubts upon the validity of its orders.

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 to 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 to 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

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purposes of this act, and the power to require labeling of products should be no broader than is necessary for that purpose.

Representative Welch. I have a telegram from the Ripon Canning Co., Merced, Calif., in support of the proposed amendments, and also a telegram from the Tea Garden Products Co., their principal place of business being San Francisco, who are in support of the amendment, and a letter from the California Canning Peach Association, whose principal place of business is 244 California Street, San Francisco, who favor the amendments.

Also, I would like to have the record show that the Canners League of California, whose principal place of business is 215 Market Street, San Francisco, favor the amendments contained in the statement by the National Canners Association.

The Chairman. Mr. Welch, may I ask whether you wish all those telegrams to go in the printed record, or just the amendment?

Representative Welch. No; you need not embody the telegrams; just the fact that they sent telegrams in support of the amendments by the National Canners Association.

The Chairman. That is what I understood. If it is satisfactory to the committee, we will recess until 2 o’clock.

(Whereupon, at the hour of 1 p. m., a recess was taken until 2 p. m. of the same day.)

AFTERNOON SESSION

The hearing was resumed at 2 p. m., pursuant to the taking of a recess at noon.

The Chairman. The next witness on the list is Mr. Jackson— Gardiner Jackson. Is he here?

(There was no response.)

The Chairman. Mr. Charles M. Hay, Railway Labor Executive’s Association.

STATEMENT OF CHARLES M. HAY, ATTORNEY FOR RAILWAY EXECUTIVES’ ASSOCIATION

Mr. Hay. Mr. Chairman, I appear on behalf of the Railway Labor Executives’ Association, which at present consists of all of the 21 standard railroad labor organizations, with the exception of Railroad Trainmen. They will be represented by Mr. Farquhason. I speak for all of those now in the association with the exception of the Order of Maintenance of Way Employees, who will be represented by Mr. Leo Keller, assistant to the president of that organization.

I am requested and authorized by the association to offer an amendment for the purpose of excluding employees of carriers from the operation of this act. I have undertaken to suggest the particular form of amendment which I think would accomplish that purpose. I would like to submit that for your consideration.

The amendment which I have suggested, Mr. Chairman, is to amend section 2 (a) (6) by striking out the period in line 24, page 3, inserting a comma in lieu thereof, and adding the words “or any person subject to title I of the Interstate Commerce Act.”

Amend section 2 (a) (7) by striking out the period in line 9, page 4, inserting a comma in lieu thereof, and adding the words “or any

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individual employed by a person subject to part I of the Interstate Commerce Act.”

I offer this in order to get before you concretely the proposition that we urge, but we have no brief for this particular form of the amendment if the committee should prefer a different form as better to accomplish that purpose.

The Chairman. May I see if I get your position clear? You represent the railroad brotherhoods with the exception of the Brotherhood of Maintenance of Way Employees and the Railroad Trainmen?

Mr. Hay. And the trainmen; yes, sir. I represent 19.

The Chairman. And you request for them that all of the employees, even the maintenance of way, be excluded from the operation of this bill?

Mr. Hay. Yes, sir; that was the amendment that I was asked to present to the committee, excluding the railroad industry from the operation of the bill.

Now, I want first of all, Mr. Chairman, just as a preface, to make one or two general observations with respect to the bill. I want, on my own behalf, and I am sure in this I speak for all of those whom I represent, to express appreciation for the spirit, the humanitarian spirit, that actuates the introduction and the advocacy of this bill.

I take no stock in the references to “dictatorships” and “fascism” and “communism” and other “isms” which have characterized some of the criticisms of this bill. I find nothing in its objectives or in the responsible leadership back of it to authorize any such criticisms as that. I accord to the committee and to all those who are in any respect responsible for this bill’s introduction and for its prosecution in the Congress the highest motives and a sincere and earnest desire to accomplish a greater measure of social and economic justice for society generally, and to secure for underpaid and overworked workers a fairer wage and fairer working conditions.

I can well sympathize with the problem this committee has before it. I think a presentation of a bill of this kind brings us face to face with the most difficult problem that the Government has to solve; that is, to determine how far government may go in an effort to aid those who need help, and yet not go so far as unduly to hamper and restrain individual initiative and opportunity. I think no candid man can deny that in this day we need much more Government supervision and regulation affecting the industries of the country than in a former time. “That government is best which governs least” is a sound maxim, but it is misleading unless read in the light of the conditions and needs of the times. Certainly we need more government than we needed in Jefferson’s day, but the principle that he announced is applicable in this, that we should not have more government than the needs of the times demand. Now I think that principle is clearly recognized in this bill. I find it recognized in section 5 and in (23) and in section 23. I find that principle recognized in the clear recognition of the right of collective bargaining. I think it must have been in the minds of those who framed this bill that collective bargaining should be encouraged and that government should not intervene except in those instances and in those areas in which collective bargaining is inadequate and ineffective. That is so stated in section 5 (a) with respect to fair wages and in section 5 (b) with respect to hours or workweeks.

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Section 23 (a) clearly recognizes the right of labor to organize and provides in substance that nothing herein shall discourage self-organization, and through that collective bargaining, to promote the interests of labor.

Section 23 (b), as you gentlemen will doubtless recall, protects agreements that are made for minimum wages and maximum hours. That is in respect of wages greater and in respect of maximum hours less than that fixed by the Board. These shall not be affected by any decision of the Board. In other words, the bill as it seems to me, and in that I am in hearty accord, seeks to provide for the intervention of government in those areas and in those cases and with respect to those groups in industry as to whom collective bargaining is inadequate and ineffective.

I think that is a sound principle, both from the standpoint of industry and individuals in industry and from the standpoint of the Government. It is sound, certainly, from the standpoint of individuals, because our fundamental American doctrine is, as all of us, of course, know, that individuals should be interfered with and restrained only so far as is necessary to accord to others equal rights and to protect others against wrong. It is certainly sound from the standpoint of government in this—that government should not be called upon to assume any greater burdens, administrative or otherwise, than are absolutely necessary to accomplish the greatest measure of economic and social justice.

I should think any board set up under this bill would make a survey of the industries of the country to determine to what extent they had duties to perform and would be very happy to find an industry in which collective bargaining had been so far perfected or had so far affected conditions as to make the intervention of government unnecessary.

I think those friends and critics of the bill who have referred to the administrative task that will be imposed are right. There will, of course, be a stupendous administrative task, and those charged with the responsibility of administering the powers fixed by this bill should be happy to find that the railroad industry or any other industry is so far organized, or the employees thereof so far organized, as to be able to protect their situation and secure for themselves approximate justice without the intervention of government. That, I think, is undoubtedly sound.

I do not come here to state my own views of background, but there is one member of the committee who can bear witness to the fact that no one has favored the New Deal program any more ardently than I have favored it. I commend those who are responsible for the introduction of this bill, and I beseech for this committee the sympathetic aid and consideration of all who want to work out in this country a perplexity problem with respect to employment, to wages, to hours, and conditions of employment. You have attacked through this bill, Mr. Chairman and gentlemen, the problem which I think is the most menacing of any problem that confronts the American people, the problem of unemployment, and along with that the problem of wages and conditions of men in employment, particularly those who up to date have not been able to secure the measure of justice they should have in order to earn an honest living. And nothing that I can say here I wish to be construed at all as in any presect disparaging or reflecting on the objectives of this bill.

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I emphasize what I have just said with respect to the desirability, if possible, of eliminating from the operation of this bill those industries in which collective bargaining has created or enabled the employees and management to create tolerable and reasonably fair conditions, because I think that they would conduce to the ultimate success of the law as enacted through the passage of this bill. The simpler you can make the task, the smaller or the lighter the burden to be imposed upon Government and the better it will be.

We come, therefore, to the situation within the railroad industry. Naturally, the question that must arise in the light of what I have said is this: Has the railroad industry, or have the employees in the railroad industry, so far appropriated and practiced the principle of collective bargaining as to justify their exclusion from the operation of this bill? It has been boasted, and it perhaps is true, that the railroad industry is the best organized of any industry in the country. Collective bargaining has been practiced for many years and has come to be well-nigh universal in the railroad industry. It is recognized and has come to be thoroughly established, as you all know, in the Railroad Labor Act. With that act I am sure you are familiar, but to refresh your memories I remind you of its distinctive features:

First, it insures to both parties—that is, to management and to labor—freedom against interference, coercion, or intimidation in the selection of representatives for the purpose of conducting collective bargaining.

Second, it obligates the parties in good faith collectively to bargain.

Third, it provides that no collective agreements shall be made except by the representatives of the majority of the class or craft affected.

And, fourth, it guarantees separation of controversies arising, first, with respect to the making, maintaining, and changing of agreements; and second, with respect to the disputes that arise in the interpretations and application of agreements. That separation is maintained by putting the first class of disputes under the jurisdiction of the National Mediation Board and the second under the jurisdiction of the Adjustment Boards.

Fifth, there is provision for the creation of a Presidential fact-finding commission to make inquiry into conditions when the processes I have just referred to have broken down and when strikes are threatened.

Now, the fundamental and underlying principle of the Railroad Labor Act is the principle of collective bargaining. That is not only recognized by the act, but since the decision in the Virginian Railroad case, is thoroughly established. Men and management are obligated in good faith to bargain and seek to accomplish agreement. I think particularly at this immediate hour that it is due to both men and management of the railroad industry to say that they have in almost all cases in good faith collectively bargained. They have talked collectively and have worked together collectively in an effort not simply to talk, not simply to make a gesture in arriving at agreement, not to quibble over whether an agreement should be oral or signed, but they have in good faith come to agreements. They have perfected agreements with respect to wages and working rights and conditions in the industry covering perhaps 90 percent of the railroad mileage of the country—I do not give the exact percentage, because this is only an estimate—approximately 90 percent, certainly well over 80 percent,

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of the men engaged in the railroad industry of the country are covered by agreements. Those agreements have been made by the sitting around the table of the gentlemen representing the management and the men in good faith endeavoring to make these agreements. That should be noted with emphasis. They have accomplished these agreements during perhaps one of the most critical periods in the railroad history of this country, in the period of prosperity preceding the depression, through the depression, and on up to the present time, as we are rising out of the depression. These agreements have been not only to increase wages, but to decrease wages. They have been accomplished in an effort to adjust the wage structure to the shifting conditions of the railroad industry in this most critical period of the railroad industry.

During all of this time, since particularly the Railroad Labor Act was enacted in 1926, peace has prevailed in the industry, to the gratification not only of men and management but of the entire public. There have been few strikes and those not of great consequence. I emphasize the fact that this is true notwithstanding the critical period through which the industry has gone in the last 10 or 12 years.

In justice to the men and management I should mention also some outstanding achievements of collective bargaining.

You will recall that in May 1936 they made an agreement with respect to dismissal compensation, and at this moment we are reaping the fruits through the Congress by the enactment of the railroad retirement measure of collective bargaining with respect to the great railroad retirement system which the management have fought for several years. These are some of the outstanding achievements of collective bargaining.

Of course, there is another side to that picture, and I would not be fair to this committee or to the men if I did not call your attention to that. I shall not go into details or give you many facts and figures, because Mr. Keller will follow me, representing the maintenance-of- way employees, and will present the facts in fuller detail.

The chairman asked Judge Fletcher when he was before you the other day the number of men in the industry who are getting less than 35 cents an hour. The figures as I recall them—the figure as of October 1936 is something over 72,000, or 6.83 percent. The number who are getting wages of 35.6 cents and less is in round numbers, 200,000, or something over 16 percent of those in the industry.

Congressman Wood asked the number who were getting 40 cents or less. The number is something over 239,000 for that same month that I mentioned, or something like 20 percent of those engaged in the railroad industry.

In addition to the small hourly rate, they are affected by the part-time element that enters into their employment. Mr. Keller will doubtless elaborate upon the fact that in the years 1932 and 1933 there were some 110,000 section men, who, due to low wages and to part time and the 10-percent reduction, were getting only $52 per month. There are others getting most indefensibly low wages. Certainly, looking at the wages alone they appeal to us as not the wages that they ought to be securing in the railroad industry or in any other industry of the country. In addition to that element, this should be taken into consideration, that although wages have not been appreciably changed since 1920 the productivity of the individual

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laborer has greatly increased. Those figures will be given you by Mr. Keller, no doubt. That, in brief, is the other side of the picture.

I have given you, briefly, the bold peak outlines of the achievements which I think are to the credit and the eloquent praise of the principle of collective bargaining as applied to the railroad industry. I have given you the other side of the picture. It is not a perfect picture. The conditions produced by collective bargaining are not ideal. I take it, however, that it is only fair to you gentlemen and to the Congress of the United States for us not to expect that any system that you may think out will not produce ideal results. We are unjust to you and unjust to ourselves if we expect that.

These gentlemen, who understand their problems much better than I, have authorized me to come before you and ask that they be exempted from the operations of this act, and they ask this because they rely upon the principle of collective bargaining. In the face of the record of that which is desirable on the one hand and that which is regrettable on the other, what should be the conclusion of this committee with respect to the inclusion of the railroad industry in this bill? Notwithstanding the untoward conditions, notwithstanding the low wages that are paid, should the railroad industry, or the men in the railroad industry, be left to invoke the principle of collective bargaining unaided by inclusion, or undisturbed, whether aided or not, by inclusion under this bill along with the other industries of the country?

In answering that question we ought to look at it from two standpoints. Let us look at it first from the Government’s standpoint. We have here an industry in which a system of collective bargaining has been not only recognized but thoroughly established in law. It has been fortified by clear enactment and supported in every particular by the Supreme Court of the United States. This industry, or the employees in this industry, therefore, have, thanks to the action of the Congress of the United States, had made available to them that which protects them in an insistence upon their rights to wages and to other conditions affecting their work. Should they be heard—now to come in and say, “We want the Government to go further than that: we want the Government to step in and through some special board look into our situation and prescribe for certain groups at least a plane or a floor below which we cannot go.” I do not know what is going to be the final policy of the Government. I do not think you or I can tell right now what is or must be the policy of the Government ultimately; whether we are going simply to rely upon the principle of collective bargaining and seek to develop that in the various industries of the country and adhere more strictly to what some think is the truer American principle of letting men fight it out for themselves, whether in other words we are going to enact a law more in the nature of the Trade Boards Act in England, which is designed to graduate industries into some such position as the railroad industries are in today, so that by collective bargaining they can take care of themselves, or whether you should by Government intervention go further and seek to provide protection to a greater extent than such a law provides. The latter course imposes burdens upon the Government which are extremely heavy, and you must decide whether the Government should assume them

Let us look at it from the men's standpoint. And I know that the gentleman who will follow me will present a situation with respect to

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a group of men who should have better wages, who should have something done in their interest beyond that which has been accomplished so far. These men have had the right to collective bargaining, but despite that fact they have not as yet secured wages which they feel they are entitled to. At this moment they are bargaining over here in another part of the city about that proposition. If they are as successful as they feel they should be, you will perhaps have not much of a problem with respect to them. Shall we leave them to fight it out further? That is a question that deserves serious consideration. Look at it from the men’s standpoint. They have been able to accomplish great results up to date, tremendous results, and they have not long had the principle of collective bargaining as effectively established as it is now. It is not universal in the railroad industry, but approaching that, and perhaps since the decision in the Virginian Railroad case it will be more effective than it has been thus far.

There is a second thing to be considered, and that is this; and I speak as one not having authority, but as one having had some experience with boards and commissions. You gentlemen may set up a board which will have the spirit of this committee and the spirit prevailing at the present time but it may not always have that spirit. I hope that spirit will always prevail around Congress. There are boards and boards and commissions and commissions. We have sometimes set up commissions to control certain groups, but to our dismay those who should be controlled, came into control of the controller. That is the pathetic part of the whole thing. Our utility commissions are frequently but the lickspittles and the puppets of the utilities of the country. And boards can become controlled. Judge Fletcher reminded you that one of the reasons for overthrowing the old Mediation Board was that the boys were getting a raw deal at the hands of that board.

The Chairman. Mr. Hay, pardon me for interrupting, but this Board, it is impossible for this Board to have that effect, if it should be created, for the reason that it takes away no right of collective bargaining but strengthens it and the men can be left every right they have under collective bargaining.

Mr. Hay. I understand, Senator.

The Chairman. I just want you to get that clear.

Mr. Hay. I understand that. But there is the point I am coming to: This Board you are creating will have some authority to prescribe a certain wage.

The Chairman. A minimum wage.

Mr. Hay. A minimum wage.

The Chairman. But that is not the maximum wage.

Mr. Hay. No; I understand that.

The Chairman. And the men still have the same right to bargain as they have now.

Mr. Hay. Yes, I understand that; but this is what I am coining to, Senator. If your Board prescribes in other industries a minimum, of say 40 cents an hour, I do not think it is going to take our boys very long to negotiate under their collective bargaining practice a fair minimum.

The worst effect a Board could have, as I think, Senator, is a possible adverse effect on the collective bargaining. You have provided that employees may bargain for higher wages than the minimum. But the

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same Board that has the power to fix a 40-cent minimum has the power to fix a 20-cent one.

Senator Pepper. Not if the bill provided to the contrary.

Mr. Hay. That is true if you see fit to write that into it. I would not take issue with you on that proposition. If you are going to put it on the Board to say they can only set wages so low and so high-----

The Chairman (interposing). It could not be lower than 15 cents an hour, and a lot of them are getting that, that is a sure proposition.

Mr. Hay. That is right, Senator. I will say this, whether we are in or out, I hope this Board will do something to help the men get higher wages.

The Chairman. I think I understand your position exactly.

Mr. Hay. You have no doubt that we are looking for better working conditions, more wages, shorter hours, and better pay.

The Chairman. That is right.

Mr. Hay. Of course, we are unusual in that! That is what we want. Everybody wants that except lawyers.

I urge this proposition: That if you are to add anything to the principle of collective bargaining for the benefit of railroad men it ought to be done by an act applicable to that industry alone. The railroad industry has so many distinctive characteristics as to need special consideration. I think that rather than include that industry in this particular bill that if there is to be legislation further than has been enacted in the Railroad Labor Act it should be by a special act applicable to that industry alone. That would be consistent with the history of a long series of years. You have your Wagner Labor Relations Act, and your Railroad Labor Act, the Social Security Act, and the Railroad Retirement Act—a great body of laws applicable to the railroad industry alone. The N. R. A. did not undertake to cover the railroad industry.

Now, the views that I have expressed here, Mr. Chairman, as I indicated in the beginning, I have expressed at the instance of the gentlemen who constitute for the present the leaders of the railroad labor groups of the country, with the exception of the two that I have mentioned, who will speak for themselves.

I want to read to you from the letter of Mr. George M. Harrison, now the chairman of the Railway Labor Executives’ Committee, and the president of the Railroad Clerks’ Brotherhood, this letter following a meeting by the association at Chicago on the 7th of June. When requesting that this amendment be presented, he said:

In submitting the amendment you are authorized to say to the committee that the employees in the railway industry have developed a high state of collective bargaining; wages and hours are generally covered by agreement. And we are of the opinion that in industries where collective bargaining is universally recognized that the Government should not undertake to fix wages; that while we favor a reduction in hours the peculiar characteristics of our industry will not permit of a universal application of a maximum workweek of 40 hours. We think there should be special legislation for industry on the limitation of hours when and if we undertake to reduce the standard of a day’s work.

That is the position these gentlemen take. I understand full well that position is not binding upon you gentlemen. There may be those in the very organizations represented here who entertain a different view, but those are the views of the accredited leaders of railroad labor at this time, and I think I need to cast no encomiums upon George Harrison and the other men associated with him for their loyalty and

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their intelligent consideration of the interests of their men. They feel, as expressed here, that they would prefer, so far as wages are concerned, simply to rely upon the principle of collective bargaining, I am confident that as a result of what you may do with respect to other industries these gentlemen by the use of the agencies they have used so well, will be able, even better than they have done in the past, to protect themselves with respect to wages and working conditions.

I am authorized to say to the committee that after discussing this proposition with Mr. William Green, the head of the American Federation of Labor, he expresses the opinion that employees of the railroad industry should be excluded from the operation of this act.

I understand Miss Perkins was quoted to the same effect. Their views are not binding upon this committee. Our views are not binding, certainly not mine, nor are those of the men who for the time represent the various railroad brotherhoods of the country, but they should be persuasive, and as they represent these men who are directly affected they should be most persuasive in your consideration of the bill.

I thank you so much,

Mr. Chairman. The Chairman. Any questions?

Senator Ellender. Mr. Hay, just this question: Suppose that the committee decides to fix the minimum wage at say 35 cents. I think that is the lowest you are paying your people in your organization, 35 cents an hour?

Mr. Hay. How is that?

Senator Ellender. Thirty-five cents an hour.

Mr. Hay. No; there are some wages under that.

Senator Ellender. Suppose the committee should fix a minimum that corresponds to the minimum now paid to men in your organization and that the hours fixed are not in excess of the ones that your organization are now working under, is it your opinion that this present bill would affect them?

Mr. Hay. You mean adversely affect them?

Senator Ellender. Either way. Are they not in a measure excluded?

Mr. Hay. Yes; I should say if you fixed it at that there would be little occasion or perhaps no occasion for the intervention by the Government or any Board you would set up.

Senator Ellender. But I say, would not that take place under the act if we should fix the minimum wage and the maximum hours per week at a standard that now prevails in your organization? Do you not interpret the act to mean that it will not cover your employees?

Mr. Hay. Yes, I think that would be correct.

The Chairman. Any other questions?

Representative Wood. Yes. Judge Hay, in what way do you think the enactment of this law would be detrimental in any way to the 20 organizations you represent? In what way would it affect their collective bargaining situation now, or in what way would it affect the hours or wages or working conditions? I mean, do your organizations have a higher wage than established by this law?

Mr. Hay. We have this situation, Congressman, we have these organizations and their bargaining agreements, we have a board that supervises all of that and protects them in the rights. Now when you establish or enact this law and establish a board under it to a

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limited extent at least to have some supervision over the men in this industry, I do not know what complications we are going to get into. I think that is a matter of concern.

Representative Wood. As I understand, there are about four labor organizations you represent out of the 20 who have anybody that is receiving less than 40 cents an hour through collective bargaining. What effect would it have on the organization, for instance, the four train-service brotherhoods when all of their collective-bargaining agreements provide for much more than 40 cents an hour?

Mr. Hay. I do not think that so far as they are concerned it would have any effect on them.

Representative Wood. Now, in view of the fact that this law would not in any way affect the relations of the railroad employees in their present status under the Railroad Labor Act, how could it affect them? This law would not in any way interfere with the operation of the Railroad Labor Act.

Mr. Hay. I think as to certain groups that is true. And theoretically you might enact this law and let it run alongside the Railroad Labor Act, but undoubtedly if you include the railroad industry you are going to give to some board set up here some function with respect to the railroad industry. Now, if it is not going to have any function, why include them at all? And What we are going to run into with boards over here and boards over there I do not think any of us can tell. I think the simpler proposition would be to leave it with a board that has to do solely with the railroad industry.

Representative Wood. If this bill should become a law the only effect it would have upon the railroad workers would be the maximum hours and the minimum wages, those that were getting below 40 cents an hour. Can you think of any other way it will affect them?

Mr. Hay. No.

Representative Wood. The Board would not in any wise overlap the Railroad Labor Act. It would not assume any of the duties or the authority now vested in the Railroad Labor Board under the Railroad Labor Act.

Mr. Hay. I agree with you in theory that that is true.

Representative Wood. There is not a member of this committee that wants or intends for the act to be administered in that way.

Mr. Hay. I know you do not intend that.

Representative Wood. No member of this committee intends that.

Mr. Hay. No member of this committee intends that, but what the Board does after it is set up I do not think anybody can tell.

Representative Wood. The only thing the Board is to set up is standards that will create a standard of living under which people can live decently.

Mr. Hay. I understand, Congressman, you are no more zealous for that standard than I am, but I am only undertaking to say that you should not blanket them in here in view of their own set-up.

Representative Wood. I think you said 72,000 were getting less than 35 cents.

Mr. Hay. That was my figure.

Representative Wood. And 200,000 you said received less than 40 cents.

Mr. Hay. Mr. Keller is just chuck full of figures here, and be will give you all the figures you wish.

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Representative Wood. I think you said 295,000 railroad workers were getting less than 30 cents an hour.

Mr. Hay. 239,000, I think,

Mr. Wood, something like that.

Representative Wood. Now, do you think it is proper and right for railroad organizations to want to be exempt from this law as those 239,000 employees under 40 cents an hour?

Mr. Hay. If they wanted to be exempt in order that they might perpetuate that condition, I would say that would be all wrong. The point is they are not content with that. No one wants it understood they are satisfied with that condition. They are over here in another building now, trying to remedy that condition.

Representative Wood. Judge, you are a lawyer. Do you think there is any way we could amend this bill to exclude all railway workers who are receiving more than 40 cents an hour and to include those that are receiving a lower rate than 40 cents an hour?

Mr. Hay. Frankly, I have not studied it closely enough with that thought in mind to want to venture an opinion on it. There was some language here which I read that I thought meant that—I am referring now to a provision over here on page 27. There was some language which as I first read it I thought meant that. But on further consideration, I think it applies to industries under the act. This is the language, “and it shall be the policy of the Board to establish such minimum wage standards as will affect only those employees in need of legislative protection without interfering with the voluntary establishment of appropriate differentials and higher standards for other employees in the occupations to which such standards relate.”

Now, whether it is meant by that to take in part of an industry and exclude the other, I do not know. At first I thought that that was what it meant, but it seems to mean that those industries included might have prescriptions for hours and rates for certain groups, but not as to others.

Representative Wood. I think you testified the law should not cover those who are engaged in selective bargaining now because of the 40-cent minimum. If they were not able to drive a contract that would secure 40 cents an hour they would need to be within the law.

Mr. Hay. I do not recall making just that statement. I have just raised this question so you will determine whether or not you should include an industry that has perfected collective bargaining to the extent the railroad industry has, or whether you should leave it to the railroads and men to work out their relations further.

Representative Wood. In that collective bargaining you spoke of it has been effective in the maintenance-of-way organizations, although there are those who have not reached 40 cents an hour in their agreements even though it was effective collective bargaining, because they brought their wages up from 10 to 12 cents an hour in 1915, from 22 to 43 or 44 cents an hour now. Do you think we do it in this law, vest the Board with authority to set the 40-cent minimum wage for a lesser wage established through collective bargaining?

Mr. Hay. You mean for this industry; you mean for the railroad industry?

Representative Wood. Any industry.

Mr. Hay. The principle that we are standing on is this: We question whether the Government should undertake to prescribe a

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minimum wage for an industry that is as effectively organized as the railroad industry.

Representative Wood. Supposing that organization is effectively organized, the maintenance-of-way organization, and they have not been able to establish a 40-cent minimum, do you not think we ought to, it is our duty, that is, it is the duty of Congress, to establish as a matter of public policy a certain minimum wage below which no employer is allowed to pay his employees?

Mr. Hay. That is the question.

Representative Wood. In other words, the Congress should establish as a matter of public policy that 40 cents an hour, at least $16 a week, is the least any man or woman could work for and maintain themselves in the ordinary comforts of life?

Do you see anything wrong with the enactment of a law establishing as a matter of public policy a certain minimum standard below which no man or woman should work?

Mr. Hay. Frankly, I should like to see that come about in the country. I am not disposed to say that so far as I am personally concerned I would oppose that sort of enactment.

Representative Wood. Do you think that the board should be clothed with the authority to establish a 40-cent minimum in any industry where a lesser wage has been established through collective bargaining in any industry?

Mr. Hay. Oh, yes; I think that undoubtedly would be true. You might have an industry where collective bargain was a mere gesture and even where it is not effective at all.

Representative Wood. Might be a collusion or kind of a conspiracy to defeat the law.

Mr. Hay. Yes.

Representative Wood. If we did not establish a minimum it would be rather a paradox to have millions of workers who were unorganized drawing 40 cents an hour and those who over a space of years had organized, dealt with their employers in collective bargaining, and yet had established a lower wage, although it being far greater than that they received when they first engaged in collective bargaining. The unorganized would be receiving the benefit of the 40 cents an hour and the organized would not be receiving that because they had not had economic strength enough with the employers to drive a bargain to equal the 40 cents an hour.

Mr. Hay. That is true. Of course, I just want to say this, Mr. Chairman, in closing:

I realize you have serious problems before you. The great problem as I view it, is to determine how far government can go really to improve conditions and not lead to complications worse than the evils from which we seek to fly.

Representative Wood. Mr. Hay, Mr. Green did not authorize you to tell this committee that the railroads should be excluded, did he?

Mr. Hay. Do you think I would have made the statement if he had not authorized me to make it?

Representative Wood. I just wanted to know if he authorized you or just told you that.

Mr. Hay. I am not accustomed to making such statements if I am not authorized.

Representative Wood. He did not authorize you, did he?

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Mr. Hay. He did authorize me or I would not have made such a statement.

Representative Wood. I thought that he just slated that in conversation, and conversation is one thing and authorization is another thing.

Mr. Hay. I hope I am not so devoid of a sense of propriety as to come here and say President Green authorized me when he did not so authorize me.

Representative Wood. 1 just wanted to bring that out to show whether or not you were authorized.

Hay. If you want an affidavit I will submit it to the committee.

Representative Wood. I just wanted it to be understood.

The Chairman. Mr. Hay, I would like to make one request, and that is that you prepare another amendment. You only submitted one amendment to the committee, and I wish you would prepare another amendment which would simply eliminate those that you represent who make over $1,200 a year, but would leave in those in the maintenance of way, some of whom make 15 cents an hour, and submit that to us when we take up the bill in executive session. I am sure you can do that and that you will submit it.

Representative Schneider. With reference to bus men, on passenger vehicles, do I understand, to the jurisdiction of some of the organizations you represent? You are in favor,-1 understand, of trucks and busses coming under this bill.

Mr. Hay. Those are covered in title II of the Interstate Commerce Act. I am asking only for those under title I of the Interstate Commerce Act.

Representative Wood. Some of the bus and truck men belong to the trainmen’s organization.

Mr. Hay. Yes; those related to carriers by railroad.

Representative Wood. Judge, how would you eliminate those if they belonged to the same organization and part of them would be eliminated and part of them would not.

Mr. Hay. I do not know whether I can draw this to the satisfaction of the committee or not.

The Chairman. We will appreciate it if you will try.

Mr. Hay. I will do my best.

The Chairman. May I state to the committee that we have eight more witnesses. We can finish those witnesses today if we desire. However, we can ask them all the questions we wish and continue tomorrow; that suits me all right. I am perfectly willing to let it go over until in the morning, but if we want to get through it will be necessary that they be brief in their statements.

Representative Ramspeck. Mr. Chairman, I hope we can get through today.

The Chairman. It suits me.

Representative Ramspeck. Most of us have been neglecting other duties for the last 3 weeks which we would like to get back to for awhile. I will try to do my part to hold down the thing.

The Chairman. I just wanted the committee to decide for itself, because I can meet here tomorrow and it will be perfectly all right but I wanted it understood we have eight more witnesses.

Representative Wood. I would like to get through today if we can.

The Chairman. Mr. Leo Keller. Mr. Keller is with the Railway Brotherhood of Maintenance of Way Employees.

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STATEMENT OF 1. E. KELLER, REPRESENTING BROTHERHOOD OF MAINTENANCE OF WAY EMPLOYEES

Mr. Keller. Detroit, Mich.

The Chairman. Detroit, Mich.

Mr. Keller. Yes, sir. I have reduced, Mr. Chairman, our statement to writing, with the thought that we might be able to state our position in that way a little more concisely and in the shortest possible time.

By way of digression, I might say that while some of the other organizations do not want to be under this bill, I might indicate our position at this moment by saying that nobody appreciates the discomfort of a sore thumb as much as a person who is afflicted with it. That is why we are taking a different position here.

The Chairman. In other words, you are the brotherhood that has the sore thumb of low wages.

Mr. Keller. That is right. I appear before you as a representative of the Brotherhood of Maintenance of Way Employees, one of the standard railroad labor organizations, which embraces employees in the maintenance of way and structures department of the steam railroads where the industry’s most indefensible wages exist.

The president of our organization, Mr. F. H. Fljozdal, is unable to appear before your committee due to the fact that he is tied up at this time representing the interests of our organization in a national conference of great importance.

I desire to say in behalf of our organization that we welcome any assistance that the Government can give us in connecting the indefensible low wages paid to such a substantial number of maintenance of way men. We much prefer, of course, to establish our wages, hours, and working conditions through the process of collective bargaining, to which our organization is committed. We believe the policy of collective bargaining to be more desirable from the viewpoint of the employees and from the country as a whole then legislative regulation. At the same time we believe it to be both right and the duty of the Government to concern itself with unreasonably low wages or unjust working conditions when for any reason, whether it be lack of organization on the part of the men or ineffectiveness of organization, the wage earners find that they are unable to correct such conditions themselves through collective bargaining.

You will understand, of course, that as railway workers we come under the provisions of the Railway Labor Act and have found this act generally satisfactory as a method of establishing and guiding the principles of collective bargaining. We are in full accord with other classes of railway workers in the thought that the machinery set up under the Railway Labor Act should not be disturbed so long as it continues to work as well as it has. Under that law we have the services of the National Mediation Board to assist us when their aid is invoked in our efforts to negotiate agreements with railways covering wages and working conditions. That same Board has served a very useful function in assisting the railways and their employees in disputes arising out of the question of representation. We also have the National Railroad Adjustment Board, where disputes may be taken, commonly referred to in the railroad world as grievances, that arise out of the interpretation or application of existing agreements.

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We do not desire to see this Railway Labor Act machinery disturbed but it is our understanding that the bill now under consideration does not intend to do that and that it deals with oppressive hours and wages in such a way as to operate apart from and without conflict with the machinery of the Railway Labor Act.

It is true, of course, that the results of our collective bargaining with carriers in behalf of maintenance of way men and over a long period of years have not produced what we believe to be a just and reasonable wage nor a sufficient monthly or annual income for our class of employees and this is especially true with respect to that large group commonly referred to as section and extra gang men who do track work. Their low hourly rates of pay and their irregularity and insecurity of employment, as well as low rates, are indefensible. The blame for this, however, lies with the carriers as a result of their refusal to pay a more reasonable wage and to provide more regular work; the fault does not lie with the Railway Labor Act, which establishes adequate machinery for the development of collective bargaining, nor with the employees’ labor organization, which has exhausted every lawful means short of a suspension of work in its effort to persuade the carriers to pay a more decent wage and to provide work schedules that would produce a more adequate weekly, monthly, and annual income.

In indicating our attitude with respect to the pending bill we desire to emphasize the fact that it is the position of our organization that the Railway Labor Act functions in a satisfactory manner insofar as the machinery provided for in that act is permitted to operate in aiding and encouraging collective bargaining, to which we are committed.

At the same time, we understand that this wage and hours bill now under consideration deals with oppressive or substandard wages and hours which are not brought to a reasonable level under collective bargaining and which would, therefore, be dealt with by the proposed law or by a board to be created under the law. It therefore appears to us that there is no conflicting purpose and no overlapping authority to be contemplated between the machinery provided for in this proposed bill and that now existing in the Railway Labor Act. Our organization represents the majority of the low-paid employees in the steam-railroad industry. They are found particularly in the track forces, commonly referred to as section men. According to the Interstate Commerce Commission records, from which average hourly wages may be determined, there are in excess of 200,000 railroad employees at this time with an hourly earnings under 40 cents. According to a recent report of the Federal Coordinator of Railroads, bearing the title The Extent of Low Wages and Long Hours in the Railroad Industry, there were 117,000 in the industry in November 1935 receiving 35 cents an hour or less. Some of these were reported as low as 15 cents an hour. Most of the employees covered m this report were in the maintenance-of-way department.

With the permission of the committee, I desire to file for the record a statement showing the low wages that exist in a substantial number of railroads for which the record is immediately available. This record will indicate minimum and maximum rates paid to section and extra gang men on 98 railroads located in all parts of the United States and covering a very substantial percentage of the entire railroad

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mileage within the country. It will show rates as low as 17 cents an hour and other rates of 20 cents, 21 cents, 22 cents, 23 cents, 24 cents, 25 cents, and on up to a maximum of 45 cents which is received by a relatively small number of trackmen. It will also explode the fallacy that these lowest wages are restricted entirely to the southeastern section of the country. It will show rates of 22 cents and hour on a major railroad system operating throughout the Northwest, 30 cents an hour on another major road in the Northwest, and which are paid in such industrial centers as Chicago, Milwaukee, and the Twin Cities. It will present an indefensible wage policy on the part of the class 1 carriers in this country which exists today after our organization has exhausted every lawful means in its efforts to correct them short of calling a strike, which wisely or unwisely we have so far avoided.

(The statement referred to by Mr. L. E. Keller is as follows:)

Page 1151 Railroad Wages

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[PAGE 1152]

Page 1152 Railroad Wages

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[PAGE 1153]

Page 1153 Railroad Wages

Mr. Keller. We have negotiated at length with these carriers on many occasions. We took our disputes to the Kailroad Labor Board during the period that it existed from 1920 to 1926. We have invoked the aid of the National Mediation Board from time to time during

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[PAGE 1154]

the past 10 years when that tribunal has existed. When we found that we were unable to improve these wages through collective bargaining and through direct negotiations with our employers and when we were unable to obtain relief through the aid and assistance of the National Mediation Board, we have agreed to arbitrate them on a number of occasions, with the carriers refusing to arbitrate. Mr. Fletcher, the other day when he appeared before your committee, made the statement that insofar as he knew no railroad under the Railroad Labor Act had refused to arbitrate. Mr. Fletcher, of course, is a man of very high standing, and he was just simply dealing with a matter he was not familiar with, because the fact of the matter is there have been many instances of railroads refusing to arbitrate. It is in the light of this long record of organized activities and collective bargaining that these indefensible wage rates still exist today in the railroad industry. As a result of this record, and with the understanding that the present proposed bill does not remove us from any of the provisions of the Railroad Labor Act, and with the further understanding on our part that the machinery provided for in this proposed bill does not overlap with or disturb the machinery provided under the Railway Labor Act, we must necessarily approve the humane fundamental intent and purpose of this proposed bill. While we do not desire to appear as being in conflict with any of the other standard railroad labor organizations who have other views in the matter, we feel that we must necessarily go on record as being in favor of at least having our classes of employees covered by the bill. In making this statement committing our organization to the bill, we desire to have you understand, however, that there are other features of the bill that we would like to qualify our position on. We refer particularly to the arbitrary reduction in hours.

We are not in favor of a reduction of maintenance-of-way employees hours from 48 to 40 a week if this is to be accompanied by a proportionate reduction in weekly pay, because the wages received by the majority of those in the maintenance-of-way group are so low that such a reduction of hours, if accompanied by a proportionate reduction of income, would further lower the living standards that are already intolerable. We also question the economic wisdom of reducing hours and wages proportionately.

Of course, we recognize the fact, that the displacement of men by machines, that greater efficiency, that greater and higher productivity, and other technological advancements have created a large and growing army of idle men who appear to be constituting a permanent army of unemployed. We know that the Government cannot continue indefinitely to feed, clothe, and shelter these millions of our people. We know that there must be drastic basic changes made in our economic system if we are to provide work in this machine age for all those able to work and dependent upon work and wages for a livelihood. We are convinced that a reduction of hours is desirable and necessary as a step in the direction of correcting this wasteful, antisocial, and dangerous condition that we find ourselves faced with. We are unable, however, to see how a proper balance between production and consumption can be reached under any plan that reduces purchasing power at a time when our capacity to produce is steadily increasing.

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It is our understanding that we consume ninety-odd percent in this country of all that we produce in normal times and that in recent years this percentage of home consumption has been still higher. The wage earners constitute a vast percentage of our national purchasing power. We are, therefore, our own best customers, and our large army of wage earners represents a substantial portion of our national purchasing power. We must maintain and increase our purchasing power if we are to be able to consume what we produce and if we are to be able to restore the unemployed to gainful occupations. We simply cannot see how this can be done through any process that reduces weekly wages, which means purchasing power, of our best and biggest customer, the wage earner.

Some of the hours required in railroad service are just as indefensible as are some of the wages heretofore referred to. In 1936 class I railroads employed an average of 16,148 crossing watchmen and gatemen. These are largely men who have worn themselves out in the industry while engaging in more strenuous occupations when they had the strength to do so. Some of them are also men who have been physically incapacitated as a result of injuries received while in service. Most of these men work 7 days a week and many of them in excess of 8 hours a day. According to Interstate Commerce Commission records, during the year 1936 they worked an average of 288 hours per month. This is equivalent to 9.6 hours per day for 30 days per month. Their average monthly earnings were $74, and their average hourly earnings were 26 cents. We have attempted to correct this situation in many of our negotiations with the railways.

A year or so ago we conferred with the railroads generally throughout the country with the view of reducing the hours of these 16,000 men to not more than 8 hours per day and the days to not more than 6 per week. The railroads, however, refused to make the reduction in the work period without a proportionate reduction in pay. At their average hourly rate of 26 cents, a reduction to 48 hours would have provided them with an average weekly income of $12.48. And that would have been 8 hours a day and 6 days a week. Faced with this unhappy choice, the men preferred to work 9, 10, and 11 hours a day and 7 days a week rather than to have their earnings reduced to that starvation level. They just could not live on that little, even with the experience in the direction of inconceivable economy that they had acquired with their $74 a month income; and so as a result of economic necessity they are still working on this oppressive schedule of 7 days a week, 8, 9, and 10 hours a day.

These conditions, of course, cannot be sustained nor justified by any humane standards, and they should be corrected. We cannot, however, support any method that would correct the hours and at the same time reduce the weekly income to miserably inadequate levels.

Our position with respect to a reduction of weekly hours of employment is just this: We favor it, and we regard it as an economic necessity, but it should be brought about without a reduction in weekly income. Otherwise, it merely becomes a system or method under which the living standards of all workers are substantially reduced and under which the low-paid workers are required to starve on the job.

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While we realize the need for a general reduction in hours worked, and our people have had a vast experience under railroad employment along that line in the past 6 or 7 years, we feel nevertheless that the peculiar circumstances and requirements surrounding the steam-railroad industry are sufficient to justify separate and distinct legislation for our industry. The character and requirements of service differ from those in other major industries. Much has already been done in the way of investigating the effect of a shorter workday for those in railroad service. Under a congressional resolution, the Interstate Commerce Commission held lengthy hearings something like this 3 years ago as to the effect on railroad operation, service, and expense. The hearing was based upon a 6-hour day without reduction in the present daily pay. In reporting to Congress, the Interstate Commerce Commission stated that from the viewpoint of operation and service the contemplated shorter workday schedule could be applied and that the primary question was that of expense. I am not authorized in making this appearance before your committee to speak in any way whatsoever for any of the other standard railway labor organizations other than the one with which I am associated, but it is a matter of record that the railroad labor organizations have sponsored a 6-hour-day bill to cover the railroad industry separately and that they have proposed this readjustment of hours without reduction in compensation. If and when there is to be legislative limiting or restricting of hours in the railroad industry, we believe it should be handled under a separate bill. There is nothing new or unusual in dealing with our industry separately. On the other hand, that is the usual practice on the part of Congress, as the record will show.

With the understanding of the proposed bill as already indicated by us and with the indefensible conditions existing in the railroad industry affecting the men whom we represent, we fail to see how we could justify ourselves in taking any position in opposition to the bill. It was for this reason that we did not authorize Judge Hay to speak for us when he appeared before your committee as the representative of other standard railway labor organizations, and it is for these reasons and as a result of these conditions that we appear to give our approval of the bill.

In closing this statement we desire to refer momentarily to testimony presented on June 10 by Judge R. V. Fletcher, counsel for the Association of American Railroads. Mr. Fletcher is a gentleman of high standing and an exceptionally brilliant lawyer, but his testimony before your committee indicated a lack of familiarity with certain facts in the industry relating to labor. He indicated that the low wages in the maintenance-of-way department were restricted to the South. The record of wages paid that we have filed with your committee will indicate that low wages are likewise paid in the East, the North, and the West. He stated, as indicated on page 17116 of the record, that he did not know of any case so far where the railroad companies had refused arbitration. We have had a substantial number of instances of the railroads refusing to arbitrate. In the list of roads that we have filed to show the existing low wages will be found one road paying a minimum of 27 cents an hour for extra gangmen and 28 cents for section men. This road refused to arbitrate the question of wages with us when we had failed to reach an agreement with them in negotiations and when we had again failed to effect a settlement with

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the aid of a member of the National Mediation Board who spent some 2 or 3 weeks with us on that one job.

Mr. Fletcher also stated that he did not know of any case where any railroad company had refused to follow the recommendation of an emergency commission. I have before me at the moment a 26- page brief dealing with the difficulties that various railroad labor organizations have had with one railroad, and this brief will show that that one road has refused on three different occasions to abide by the recommendations of an emergency board appointed by the President under the Railway Labor Act. One of these emergency boards was appointed by President Hoover, and the other two were appointed by President Roosevelt. Our records are not available in Washington with which to enable us to indicate just how many roads have refused to abide by findings of emergency boards; but there are other cases, which we prefer not to mention in the absence of our records, since this invites too much opportunity on our own part for error.

Mr. Fletcher also left the impression with your committee that the organization that I am now representing, namely, the Brotherhood of Maintenance of Way Employees, desired to be exempt from the provisions of this bill. We wish that our negotiations with the railroads, and that through the process of collective bargaining, we had been able to create sufficiently satisfactory standards of wages and working conditions to permit us to say that we desire to be exempt from this bill. The unwillingness of the carriers, however, to establish more reasonable wages and hours has compelled us, in fairness to those whom we represent, to say to your committee that we desire to be covered by this bill.

In making these corrections in the testimony given by Judge Fletcher, we have no desire nor intention of implying that he has deliberately misstated the facts. Our regard for him is too high to permit any thought of that kind on our part. He was simply led into a discussion of matters that he was not familiar with.

Now, I would like just briefly to indicate some of the wage rates that exist in this country at this time and that are available in this present record.

First, let me say that we do have records, not with us at the moment, which show wages below 15 cents an hour, and there are conditions on small roads where trackmen are paid as little as 10 cents an hour, or $1 a day for a 10-hour day.

We have other conditions where the regular section men are put on 2, 3, and 4 days a week, while extra or seasonal forces are brought in and worked 10 hours a day and 7 days a week, with the result that our employment is so irregular and uncertain that these men, in addition to the low pay they receive, do not know from one day to another or from one week to another whether they will have a job or not or what number of days per week they will work if they do have a job.

Here is the Atlantic Coast Line, a very outstanding railroad, paying $1.70 a day, or 21 cents an hour.

Here is the Burlington Railroad, operating in the northwest section of the country, that pays as little at the minimum as 22 cents an hour.

Here is the Central of Georgia paying a minimum of 21 cents an hour.

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I am only skipping now through this record to give you an indication of all these rates. Your many duties and obligations might make it impossible for you to read the full record later.

Representative Thomas. Do you have some from Texas and the Southwest?

Mr. Keller. Yes; I think the Missouri-Pacific passes through a good part of Texas.

Representative Thomas. That is right.

Mr. Keller. The Missouri-Pacific pays a minimum of 17 cents an hour. That is paid on the Gulf Coast Lines. International- Great Northern and on the Missouri-Pacific Line itself, so that takes care of that Texas situation pretty well. And the Texas and Pacific pays 27 cents an hour.

Representative Thomas. 27

Mr. Keller. 27; pardon me.

The Southern Railway pays a minimum of 23 cents an hour. The Fort Worth and Denver City, 28 cents an hour.

The same rate prevails on the Wichita Valley, the Yazoo and Mississippi Valley, which is part of the Illinois Central, which pays 25 cents an hour as a minimum. And so they go.

It is entirely erroneous to jump at the conclusion that these low railroad rates for the men are restricted to the Southwest section of the country. They do predominate there very largely, but there are low rates, as the record here indicates, in all parts of the country.

That is the fix here after we have spent a great many years in our efforts to correct that situation through the highly desirable processes of collective bargaining.

Our organization is celebrating its fiftieth anniversary this year. We were first started in 1887. We were not a national organization in fact up until the days of Federal control back in 1918 and 1919. Since then we have been national in fact as well as in name.

We have met repeatedly with these railroads through our negotiating committees. We have spent days and weeks pleading for these people. Regardless of the prosperity of the country, we were always met with the plea of poverty on the part of the railroads. We invoked the aid of the National Mediation Board in the past 10 years when it has existed. Prior thereto we took our cases to the National Railroad Labor Board. We have done everything short of going on a strike to correct this condition, and there it is, 10 cents an hour on some of these small railroads, and 15 cents an hour.

According to Mr. Eastman’s report, the Federal Coordinator, there are 117,000 of those employees receiving under 35 cents. It is for that reason that we come before you and tell you that we are in accord and that we desire to be included under it. We regard that the conditions make it necessary for us to do that. We concur in all the virtues of collective bargaining as described by Judge Hay. We have attempted to practice that. The record shows it and the railroads will not dispute it. But in spite of all that, we find that collective bargaining has not been sufficient to correct these conditions, and here they are before us as I have described them to you.

So I see only one of two ways left unless there is a change of heart on the part of the railroads, and that is to have the rates increased by the railroads under Federal legislation, or have the organization adopt a more aggressive attitude in our strength which is something we have

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not heretofore done, and which has been something which we did not want to do.

The Chairman. We appreciate your appearing before us. I saw Mr. Hay on the outside and I suggested to him in drawing up the amendment he consider the evidence which you gave, preserving the rights of your members, and those under $1,200 a year under the other railroad laws, so that all rights will be preserved under that.

I might also suggest that the railroads have requested that they be exempted and that the railroads and the employees be exempted. Of course, if they would agree with you gentlemen, upon a fair rate of pay which would be somewhat in line with the minimum rate of pay, there would be no reason to put you under the act.

Mr. Keller. There is no real rate which is a minimum rate of pay for our people in the industry. You can find just any kind of a rate, depending upon where you go. We have rates, as I have shown you, from 15 cents to 35 cents an hour. That embraces most of the men. There is no uniformity of rates. Each railroad pays what it pleases, and apparently pays the lowest it can possibly get away with. There is no uniformity of regions and no uniformity on the road itself. We have one road for example that has five or six different rates for the same men working on it. You cannot find anything in the way of a minimum in our industry. You have to pick out one and call it a minimum if you want one. But this entire bill I think has been considered by the entire people of the country in the light of 40 cents an hour.

The Chairman. Is this your organization that I see here in the paper under an Associated Press dispatch [reading]:

Representatives of the five operating railroad brotherhoods cast ballots today on authorization of a strike vote to force railroad companies to negotiate demands for a 20 percent wage increase.

Mr. Keller. No. Those five organizations are men covered by the train and service groups. My organization has not participated in a strike of any significance since 1921. I mention that either wisely or unwisely from a strike standpoint, but we have paid a terrible price of course, as the record here in wages will show.

Representative Wood. You are not taking any strike vote now?

Mr. Keller. No; we are not taking any strike vote now. That is another group of railroad employees.

The Chairman. I want to say to you for myself I would be vigorously opposed to eliminating the railroad men from the benefits of a measure of this kind when all of those around them might have a minimum wage far in excess of what they are receiving. They might have me hauling goods for people who come right there to the railroads and are getting two or three times what your employees are getting and they are bringing the shipments to you. As far as I am personally concerned, I do not permit any such thing to exist. I hope an agreement can be reached between you and the railroads which will not make such a tiling necessary.

Mr. Keller. We certainly hope an agreement can be reached with the railroads which will not make such a thing necessary, and we shall be available to them at any time they will indicate by a properly authorized committee representing the roads who want to discuss that matter with us.

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Representative Schneider. The men you represent here perform a very important work in connection with the maintenance of railroads and the building of railroads, do they not?

Mr. Keller. That is correct.

Representative Schneider. Are there any skilled mechanics among them?

Mr. Keller. Yes. There is a mistaken idea on the part of many that section men are totally unskilled laborers. Nothing could be further from the truth. At different times of the day some of our section men or track forces are out flagging trains to protect some obstruction to the regular flow of traffic, and doing at times exactly the same work the train and engine service men perform. They are protecting by the flagging processes prescribed by the railroads.

Our people also much go out and make adjustments to switch points, for example, where if they were incompetent and should leave a switch point improperly adjusted to the extent of half an inch they could very readily lead to a wreck with possible destruction of fife and property.

There is a question of gaging track where a quarter of an inch is important.

There is the elevation of the rail and a great many of the things which are done are of equal importance. It is utterly ridiculous to say that these section men are totally unskilled men. But for that matter the railroads do not contend it except in wage negotiations. Through the American Railroad Association and other authorities of that kind the railroads themselves through their best spokesmen have adopted resolutions which clearly set forth the fact that the track men are experienced workmen and that they are not unskilled labor, but of course we are not able to persuade the railroads to recall those facts to mind when we negotiate or attempt to negotiate a reasonable rate of pay for them.

Representative Schneider. There are many of your people who are very skilled but getting common laborer’s rates of pay; is that not a fact?

Mr. Keller. We have mechanics in the maintenance-of-way department who get less than unskilled labor in other industries. For example, we have been hearing of 50 and 75 cents an hour fixed in the automobile industry through aggressive action on the part of the organized men there. That is the rate for totally unskilled labor in that industry. That is far above the rates that are received by our skilled bridge and building mechanics in the maintenance-of-way department. And the average rate for mechanics in building bridges and structures, for those who can read blueprints and are equipped with carpenter’s tools, and mechanics who measure up in every sense to high-class mechanics is about 60 cents an hour, on the average, in our industry.

Representative Wood. Mr. Keller, you are a member of the maintenance of way department, are you not?

Mr. Keller. Yes; I have been a member since 1918 or 1919.

Representative Wood. What position do you hold now? Are you the statistician?

Mr. Keller. That is the title I carry. It was given to me in 1922. I do not do a great deal of statistical work. I am a sort of handy man to assist the president in whatever may arise in the organization to be done. But I still carry that title.

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The Chairman. All right. Thank you very much.

Mr. J. A. Farquharson.

STATEMENT OF J. A. FARQUHARSON, REPRESENTING THE RAILWAY BROTHERHOODS

Mr. Farquharson. Mr. Chairman and gentlemen of the committee, my name is J. A. Farquharson, and I am the national legislative representative of the Brotherhood of Railroad Trainmen. My office is located here in the city of Washington at No. 10 Independence Avenue SW.

The brotherhood I have the honor to represent, the Brotherhood of Railroad Trainmen, has a membership of approximately 150,000 members and represents the men in tram and yard service. About 40,000 members of our brotherhood are employed in what we term “yard service.” We have been organized since September 1883 and at the moment we enjoy contractual relationships with all of the class I railroads in the country, none excepted, and with most of the class II and some of the smaller railroads.

We do not represent anybody that is getting less than 62 cents an hour or $5 a day. That man is our passenger brakeman who has a daily earning minimum guarantee of $5 for each day of 8 hours or less. With this one exception that in short turnaround passenger service suburban service and the like of that, the 8 hours is within a spread of 10 hours, so as to meet the peak service in the mornings and in the evenings and taking care of the commuters in that way, but that 2 hours is not deductible unless the man is off duty more than 60 minutes at one time.

The rates of pay then run on up to the car retarder, who gets $1.01 an hour. A car retarder-operator and that is the man who works in the towers in the yards where we have several cars with electrical appliances, who throws the switches, regulates their speed, and everything of that sort.

Now, we have contracts on all of these railroads and throughout the country we have these lodges. And I mention the contracts to lead up to this point of our ability to police our contract. In each lodge we have a local committee and in the district we may have two or three local committees under the jurisdiction of an individual lodge.

So that when a member feels that he is aggrieved in any manner, or he feels that he has been unjustly disciplined, or he has not been properly paid, he can go to our lodge and the local committee adjusts the matter and that expense is borne by a pro-rata assessment upon all of the members coming under the jurisdiction of that committee.

Now, if the local committee fails to adjust the matter, they can then refer the matter to the general committee made up of all the local chairmen on the system of the railroad. That constitutes the general committee.

And that grievance is then carried on to the highest ranking officer on the railroad, or to one designated by the highest ranking officer to speak for him.

If we fail to adjust there, we then have the opportunity to go to the National Adjustment Board, set up under the Railroad Labor Act. So that our relationships over this long period of time and our very thorough system of policing our agreements has reduced our

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troubles on the railroad so far as our contractual relationship is concerned.

And the fulfillment of our agreements, too, I would say, have been about the minimum that could be expected under such a large institution in regard to failure of carrying out those agreements on our American railroads.

Now, I do not care to say anything about the Railroad Labor Act that has been so well covered by Judge Hay and Brother Keller.

We, however, feel that there would possibly be a danger, a conflict of jurisdiction, if the transportation group were included under this bill because of the reason that the men in train service are all piece workers. We are called for service, except on our assigned passenger runs, and on some assigned through freight runs, or assigned local or work trains, whenever the business is tendered to us. The greatest portion of our business is handled by what we call extra trains; that is, an extra freight train is called when there is a train ready to move. And we have no regular hours, we have no guaranty in that service, and we are paid only for the miles that we move. But we have a dual method of computing time which I think is important that you should understand. One hundred miles or less, 8 hours or less, constitutes a day’s work for the men that I represent in road service. Now, we may only run 5 miles and come back and we get paid a day, but we go to the bottom of the list and work our turn up on that list of crews again until we are first out. And the 100 miles is the maximum of a day’s work, and the 8 hours is the maximum of a day’s work And if we do not make a speed of 12 miles an hour on a freight train, then we get a time-and-a-half rate. And we run from a given point to another given point. And therefore one day we may go over the route in 5 hours, and the next day we may have 12 or more hours. That would depend upon the character of service that we were performing, the opportunities that we had to make a straightaway movement, or wrecks, washouts, delays, or anything of that sort may tie us up. And I do not believe that there could be any more equitable method of the payment of train-service employees and engine-service employees than under this dual method.

Now, I think, and I offer this only as a suggestion, that this sort of an amendment may take care of that group, and I would suggest that it be added as a new sentence or paragraph, or rather, make it paragraph D; A, B, C, D.

The Chairman. What page?

Mr. Farquharson. I have got this fixed so that I cannot get to the page. It will be on the last part, should it be added, of section 2, just ahead of part 3, which is captioned “Unfair goods.” I will try and get the page number later.

The Chairman. That is all right. It will be in the record and you just read it to us and we can get the idea.

Mr. Farquharson. Yes, sir. [Reading]:

The provisions of this Act with respect to wages and hours shall not apply to employees whose disputes with their employers are subject to investigation and adjustment by the First Division of the National Board of Adjustment provided for under section 3 (h) of the Railroad Labor Act.

Now, that would exclude those in the transportation group.

But, before I close I want to say this to you, that I hope that those that are not getting 40 cents an hour can be protected under this bill,

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or that the railroads will reach an agreement with them so that it will not make it necessary that they get under the bill, because the men that are getting that rate of pay are deserving of a great deal more. And every one of us, whether we work upon the railroads or are just passengers occasionally, may be overlooking what we owe the man that walks the track at night, or the man that repairs the track during the daytime.

We do not get all we want in the classes that I represent, and we are trying to get more, but I do hope that some way will be found to take care of those men that Mr. Keller has just spoken for, and any others that may be found in the railroad group that are getting less than that proposed minimum.

The Chairman. Now, may I ask you this: Your amendment would limit the exclusion to the train-----

Mr. Farquhason (interposing). Train and engine service employees.

The Chairman. That is, the brotherhoods that already have excellent working conditions?

Mr. Farquhason. Yes, sir.

The Chairman. And that would leave in the bill the men who are making under the $1,200 a year?

Mr. Farquhason. Yes, sir.

The Chairman. And who are now not working under proper labor conditions.

Mr. Farquhason. That is true.

The Chairman. And your men do not feel they should be left out of the protection if other employees of the Nation are getting it.

Mr. Farquhason. No; we do not. We would like to see those fellows protected.

The Chairman. Those are the men who fix up the tracks and decide whether we have tracks to support the trains, do they not?

Mr. Farquhason. Yes, sir.

1 do not want to leave the impression that every man I represent makes $1,200 a year. You know, all of you, that we have a lot of seasonal business on the railroad. For example, I suppose the most clearly defined seasonal business in the country may be found in the iron-ore range. And that does not operate—at least those roads do not operate to their capacity—once navigation closes on the Great Lakes, and they are tied up until navigation opens again. And they may close up a little bit before the Great Lakes are closed up; if we have a good supply at the lower end of the lake and there is a good rate on grain, a great many of the ore ships will go into grain traffic, because they have to move grain out of the Lakes in order to take care of the crop because of the lack of granaries. Back in the great Wheat Belt those men get about 5 or 6 months a year and then they are gone. They make good money in those months, but then they are out of a job.

Then, in the South we have our cotton rush. Over in Louisiana we have our sugarcane and cotton. And out in the Northwest we have wheat, and out in California we have our citrus crops, so that we do have a lot of men that are laid off, but we do try to distribute that work and not abuse seniority. This is our understanding of what seniority means, that the oldest has the right to take a choice of the work, but he has not got the right to sit as a dog in the manger and

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do all the work on that run. When that work produces sufficient hours to support two men, we have two men to do that job.

So we are trying to work this thing out. And I want to say just in conclusion, as one who has passed by the middle of my life, that I am not so much worried about the man of my age or the men close to it, but I am worried about the children of the men on relief and those trying to raise a family on less than 40 cents an hour in this country, and of the inferiority complex that grows up in that child or those children.

And I hope that something can be done here and while I may not be able to be of any assistance to this committee, I want you to know now that if there is anything that I can do I will be glad to do it at anytime.

1 thank you.

The Chairman. We certainly appreciate your testimony. That is a very excellent statement.

Mr. Langdale, president of the American Turpentine Farmers Association, Valdosta, Ga.

STATEMENT OF HARLEY LANGDALE, PRESIDENT, AMERICAN TURPENTINE FARMERS ASSOCIATION, VALDOSTA, GA.

Mr. Langdale. Mr. Chairman and members of the joint committee, I, as president of the American Turpentine Farmers Association, which association represents in its membership about 80 percent by volume of the entire production of turpentine gum—oleoresin—gum turpentine, and gum rosin in the United States, wish to call your attention to the fact that these products have for years been classified as agricultural products, said products being commonly referred to as gum naval stores.

Our past experiences have taught us that the business of producers of gum naval stores is little known and not understood throughout the country, and particularly is this true outside of the naval stores belt; 95.98 percent of the entire production of gum naval stores in the United States occurs in the States of Georgia, Florida, Alabama, and Mississippi, while as a matter of fact the consumption of naval stores within said States is very small. The principal consumers are in foreign countries and States other than those in which the said products are produced.

The Black-Connery bill, S. 2475, in paragraph 7 of section 2 (a) of definitions reads that said bill—

shall not include any person employed in an executive, administrative, supervisory, or professional capacity, or as an agricultural laborer, as such terms are defined and delimited by regulations of the Board.

In order that there may be no confusion or misunderstanding, the American Turpentine Farmers Association urges that the following amendment be definitely written into said bill:

Amendment to S. 2475:

On page 9, between lines 14 and 15, insert the following:

No provision of this Act shall apply to any person while, and to the extent that, such person is engaged in or employed as an employer or employee, or otherwise, in or in connection with the planting, cultivating, or preparation of trees for the extraction of crude oleoresin, or in connection with the production, processing, or packaging of gum spirits of turpentine and gum rosin, as defined in the Naval Stores Act, approved March 3, 1923, and crude gum (oleoresin). No provision of this Act shall apply to any of such commodities.

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The further reason the association insists that said amendment be written into the bill is that it is quite probable that the members of the Board to be created by said bill will not be at all familiar with the details and methods of production of gum naval stores, which experiences we have had with Government departments, bureaus, and boards, all of which misunderstandings and delays, and the expenses incident thereto, have been entirely unnecessary.

Of the entire world production of gum naval stores, the United States produces 55.68 percent, France produces 14.20 percent, Russia produces 7.95 percent, Portugal produces 7.39 percent, Spain 4.77 percent, Greece produces 3.30 percent, Mexico produces 3.18 percent, and other countries produce the small remainder.

During the naval stores year ended March 31, 1937, the production of gum turpentine in the United States amounted to 482,787 barrels, and the production of gum rosin was 1,565,240 barrels. During the same year, the exports of gum turpentine from the United States amounted to 237,875 barrels, being approximately 49 percent of the entire production; and the exportation of gum rosin was 786,156 barrels, being approximately 51 percent of the entire production in the United States. It must, therefore, be not overlooked that the producers of gum naval stores in the United States are dependent upon consumers in foreign countries for a market for approximately one-half of their production; moreover, that foreign countries produce nearly 45 percent of all the gum naval stores produced in the world.

So it is, that the American Turpentine Farmers’ Association does most urgently ask that the amendment as requested be written into said bill.

The American Turpentine Farmers’ Association respectfully submits that labor employed in growing, harvesting, processing, packing, and transporting to market of gum naval stores—turpentine gum— oleoresin—gum turpentine and gum rosin—is agricultural labor, which position is correct in view of the following:

1. THE NAVAL STORES ACT

The Naval Stores Act was approved March 3, 1923. By this act the Secretary of Agriculture was empowered to establish standard grades of naval stores. Section 2, paragraph (e), of said act states “gum spirits of turpentine means spirits of turpentine made from gum (oleoresin) from a living tree”, and “gum rosin means rosin remaining after the distillation of gum spirits of turpentine.”

2. AMENDMENT TO THE MARKETING ACT

An act of Congress, Public, No. 867, approved March 4, 1931, provides, in part, as follows:

Sec. 3. That section 15 of the Agricultural Marketing Act, approved June 15, 1929, is amended by adding at the end thereof a new subdivision to read as follows:

“(g) As used in this Act, the terms ‘agricultural commodity’ includes, in addition to other agricultural commodities, crude gum (oleoresin) from a living tree, and the following products as processed by the original producer of the crude gum (oleoresin) from which derived; gum spirits of turpentine and gum rosin, as defined hi the Naval Stores Act, approved March 3, 1923.”

So generally was this classification recognized that there was no opposition to the passage of this amendment when presented to

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Congress by Senator George, of Georgia. The Agricultural Marketing Act was specifically designed to assist producers of agricultural products in the orderly marketing of their agricultural commodities. Before granting such assistance in the form of loans, the Federal Farm Board in 1931 made an investigation as to the eligibility of the m naval stores farmers for such loans. Among the facts developed by this investigation and contained in a report made to the Federal Farm Board by its investigator, were—

1. The general class of producer is a farmer in the full sense of that word, in that—

2. Ninety percent of the turpentine farmers also produce one or more, or all, of the following: Cotton, corn, tobacco, peanuts, pecans, potatoes.

3. It was found that weather conditions affected the production of turpentine in the manner similar to the effect of weather conditions upon any other agricultural commodities. An invariable answer to this question was: “A good cotton year is a good turpentine year”, or vice versa.

4. It was found that the major portion of the producers owned a substantial amount of their land and that 90 percent of the lessors from whom they rent were other farmers, such as cotton, tobacco, corn, potatoes, and other vegetable-crop growers.

It was on the basis of these findings that the Federal Farm Loan Board made available loans by the Federal Intermediate Credit Bank of Columbia, S. C., to turpentine farmers through their association.

3. AGRICULTURAL ADJUSTMENT ACT

Upon the approval of the Agricultural Adjustment Act, Public, No. 10, on May 12, 1933, gum naval stores producers applied to the Secretary of Agriculture for a marketing agreement pursuant to the provisions of said act. It was necessary to determine the classification of such naval stores as an agricultural commodity. The following question was submitted to the office of the solicitor of the Department of Agriculture:

May the Secretary enter into a marketing agreement with an association of producers of gum turpentine and gum rosin?

After a careful investigation by the Solicitor’s office, the following opinion in answer to this question was rendered:

Gum turpentine is an “agricultural commodity” within the meaning of section 8 (3), and the Secretary may accordingly enter into a marketing agreement with those engaged in the handling of gum turpentine in the current of interstate commerce.

On February 20, 1934, the marketing agreement was approved by the Secretary of Agriculture and was in operation during the producing seasons of 1934 and 1935. Supplementing the operation of the marketing agreement, loans were made in the years 1934 and 1935 on gum rosin and gum turpentine by the Commodity Credit Corporation, a governmental agency set up to make loans on agricultural commodities.

4. AMENDMENT TO AGRICULTURAL ADJUSTMENT ACT

Again, Congress recognized naval stores to be an agricultural commodity through the passage of the amendment to the Agricultural Adjustment Act, approved August 27, 1935, as indicated by the following excerpts from said amendment:

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Sec. 8. c (2) Orders issued pursuant to this section shall be applicable only to the following agricultural commodities and the products thereof (except products of naval stores), or to any regional or market classification of any such commodity or product: Milk fruits (including pecans and walnuts, but not including apples, and not including fruits, other than olives, for canning), tobacco, vegetables (not including vegetables, other than asparagus, for canning), soybeans and naval stores as included in the Naval Stores Act and standards established thereunder (including refined or partially refined oleoresin).

* * * * * * *

(6) In the case of fruits (including pecans and walnuts but not including apples and not including fruits, other than olives, for canning) and their products, vegetables (not including vegetables, other than asparagus, for canning), and their products, soybeans and their products, and naval stores as included in the Naval Stores Act and standards established thereunder (including refined or partially refined oleoresin), orders issued pursuant to this section shall contain one or more of the following terms and conditions, and (except as provided in subsection (7) no others).

5. SOIL CONSERVATION AND DOMESTIC ALLOTMENT ACT

As further evidence of the recognition by the Federal Government of gum naval stores as an agricultural commodity, and the producers thereof as farmers, a program offering benefit payments to producers of crude gum (oleoresin), gum turpentine, and gum rosin was promulgated by the Secretary of Agriculture on July 6, 1936, under provisions of the Soil Conservation and Domestic Allotment Act, Public, No. 461, approved February 29, 1936; and a similar program for the benefit of gum, naval stores farmers for 1937 was approved by the Secretary of Agriculture on December 28, 1936, it having been found by the Secretary that this class of farmers were eligible to such benefits under the provisions of 7 (a) of said Soil Conservation and Domestic Allotment Act, which reads as follows:

* * * (1) preservation and improvement of soil fertility; (2) promotion of the economic use and conservation of land; (3) diminution of exploitation and wasteful and unscientific use of national soil resources; (4) the protection of rivers and harbors against the results of soil erosion in aid to maintaining the navigability of waters and watercourses, and in aid of flood control.

6. AGRICULTURAL STATISTICS

The United States Department of Agriculture publishes annually a book, Agricultural Statistics, the purpose of which, as stated in "the book, is “to bring together what seem from experience to be the most important agricultural statistics of the United States.” There is included in this book, with other agricultural statistics, data on production of gum turpentine and gum rosin.

7. STATE LAWS

That gum naval stores producers are farmers and that crude gum (oleoresin), gum turpentine, and gum rosin are agricultural commodities has been given official recognition by several of the States within the naval-stores belt. The following statutes, enacted by the legislatures of Georgia, Florida, Mississippi, and Alabama, within which States is produced more than 95 percent of all American naval stores, are quoted for your information:

Georgia Code, 1933.—5-1617, “Agricultural products”, etc., include oleoresin and turpentine: Except wherein the law expressly otherwise provides, the terms “agricultural commodities”, “agricultural products”, and “farm products” shall

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include and embrace crude gum (oleoresin) from a living tree or trees and spirits of turpentine as processed by the original producer of the crude gum (oleoresin) from which derived (acts 1933, p. 282.) 67-1107, “Crops” and "growing crops” defined: The words “crops” and "growing crops”, as used in statutes relating to bills of sale, mortgages, and liens to secure debt, shall include and embrace the fruits and products of all such plants, trees, and shrubs, whether the same be annual or perennial plants, trees, and shrubs, and shall also include crude gum (oleoresin) from a living tree (acts 1933, p. 128).

State of Florida, Session Acts, 1933, Chapter 16297, Senate bill no. 173.—An act relating to and classifying “crude turpentine gum” (oleoresin), and “gum spirits of turpentine” and “gum rosin” as processed therefrom, as agricultural commodities, agricultural products, and farm products:

Be it enacted by the Legislature of the Stale of Florida:

Section 1. That “crude turpentine gum” (oleoresin), the product of a living tree, or trees, of the pine species, and “gum spirits of turpentine” and “gum rosin”, as processed therefrom, are hereby classified and declared to be agricultural commodities and farm products.

Sec. 2. All laws add parts of laws in conflict herewith are hereby repealed.

Sec. 3. This act shall take effect upon its passage and approval by the Governor, or upon its becoming a law without such approval. Approved May 27, 1933.

General Laws of the State of Mississippi, Chapter 801, House bill no. 584.—An act to classify crude turpentine gum (oleoresin), and gum spirits of turpentine and gum rosin as processed therefrom, as agricultural commodities, agricultural products, and farm products:

Sec. 1. Be it enacted by the Legislature of the State of Mississippi, That "crude turpentine gum” (oleoresin), the product of a living tree, or trees, of the pine species, and “gum spirits of turpentine" and “gum rosin”, as processed therefrom, are hereby classified and declared to be agricultural commodities, agricultural products, and farm products.

Sec. 2. That this act shall take effect and be in force from and after its passage.

Approved March 31,1934.

STATE OF ALABAMA, SESSION ACTS 1888. (H. 58, HENSON)

AN ACT To define turpentine gum (oleoresin) end the products as processed therefrom by the original producer as agricultural commodities and agricultural farm products

Be it enacted by the Legislature of Alabama:

Section 1. That from and after the passage of this act, the terms “agricultural commodities”, "agricultural products”, and “farm products” shall include and embrace crude turpentine gum (oleoresin) from a living tree, or trees, of the pine species, and the following products as processed by or from the account of the original producer of the crude turpentine gum (oleoresin) from which derived, viz, gum spirits of turpentine and gum resin.

Sec. 2. All law’s or parts of laws in conflict with this act are hereby repealed.

Sec. 3. This act shall take effect upon its passage and approval by the Governor, or upon its becoming law without such approval.

Approved April 9,1936.

As shown by the 1936-37 Annual Naval Stores Report issued June 1, 1937, by the Bureau of Chemistry and Soils, United States Department of Agriculture, the said four States produced during the naval-stores season 1936-37, 95.98 percent of all the gum naval stores in the United States, the production in the said four States being as follows:

(By Percentage)

Page 1168 Gum Naval Stores

I would like to say in addition to the Federal legislation and the recognition by the various governmental agencies that gum turpentine and gum rosin was an agricultural commodity that the States of Georgia, Alabama, Mississippi, and Florida have all passed laws

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defining gum turpentine and gum rosin to be an agricultural commodity.

The Chairman. It undoubtedly has been treated as an agricultural commodity.

Mr. Langdale. Those four States produce approximately 95 percent of all the gum turpentine produced in the United States. Your State produces almost 11 percent.

Representative Schneider. Mr. Chairman, I would like to ask the witness just how the naval stores leaves the farm. How does the product leave the farm? In what shape?

Mr. Langdale. It leaves it in different ways. In other words, sometimes the gum is processed and sometimes it is not. The crude gum, the oleoresin is extracted from the trees and is usually processed into gum turpentine and gum rosin and shipped away in packages or in tanks.

Representative Schneider. It is processed right on the farm by the farmer himself?

Mr. Langdale. Yes, sir.

Representative Schneider. Is it exported in that condition?

Mr. Langdale. Yes, sir.

Representative Schneider. What percentage of it is processed on the farm?

Mr. Langdale. What percentage of it?

Representative Schneider. Yes.

Mr. Langdale. Well, I presume now 90 percent, and up until the last year, why, it was all processed on the farm, practically.

The Chairman. Explain how it is processed.

Representative Schneider. Our concern is as to whether going to the tree and collecting the gum would be called processing it on the farm.

The Chairman. That is what I thought. That is why I asked him if he would explain just how it was processed to those who are not familiar with the processing.

Mr. Langdale. Yes, sir. You are just getting a little ahead of my story. In other words, we do not want to be left up to some board that might be appointed here to say whether or not we are agriculture, or, if we are agriculture, whether or not we ought to be included in it for the reason that the very nature of the production of gum turpentine does not make it possible to operate under a bill such as you have here. For this reason: It is all piece work. In other words it is cropped off. They have laborers for a certain crop. The average crop covers several hundred acres and they work separately as a usual proposition, and for that reason there is no regulation by the owners or the laborers, or anybody else, about the number of hours that they work. In other words, he is paid by the piece. He works himself. Sometimes he works on Monday and sometimes he does not start to work until Tuesday.

Now, these containers are placed on the trees. You have to chip the trees. He uses a tub either of clay, metal, aluminum, or zinc. After those cups are put on the trees you streak them to flow the gum. Those streaks are customarily put on the trees once a week, and then every 3 or 4 weeks that crude gum is collected and placed in barrels and harried to a rather crude outfit that separates the gum turpentine and gum rosin through a distillation process.

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Representative Ramspeck. You call that a still?

Mr. Langdale. We call it a still.

Representative Schneider. What percentage of the time of a laborer would it require to do that processing?

Mr. Langdale. That is a very small part of the whole set-up. In other words, a still, say, with 10 crops—that is above the average-size location—one man or two men at a still there would possibly be busy half or two-thirds of their time. Two men in the operation there would represent 35 or 40 men, maybe, on the entire turpentine farm. In other words, the processing is a very small part of the entire operation.

Representative Wood. Thirty-five or forty men on how large a farm?

Mr. Langdale. A 10-crop farm.

Representative Wood. What is that?

Mr. Langdale. A crop is 10,000 faces; 10,000 turpentine faces on the trees.

Representative Ramspeck. Ten thousand trees?

Mr. Langdale. That is considered a crop.

The Chairman. What you do is to go into a pine forest and trim off the bark and make a face on the tree, then install a cup at the bottom of that face so it will catch the fluid that comes from the tree?

Mr. Langdale. Yes, sir.

The Chairman. And you put certain streaks on the tree so that the fluid will come out?

Mr. Langdale. That is right.

The Chairman. Then you gather that up once a week?

Mr. Langdale. No, sir; it takes usually about 3 or 4 weeks after chopping before a cup will get sufficiently full to collect, it.

The Chairman. I understood you to say you collected it about once a week. I thought that was rather unusual.

Mr. Langdale. No, sir; it is about 3 or 4 weeks. It takes 3 or 4 streaks.

The Chairman. In what period during the year do you gather up that fluid, that liquid? How long does it flow from the tree?

Mr. Langdale. Sixty percent, I imagine, is produced in about 4 months.

The Chairman. About 4 months?

Mr. Langdale. Yes.

The Chairman. Then you gather that and collect that and put it in barrels and take it to your still?

Mr. Langdale. Yes, sir.

The Chairman. Then what do you do at the still after you have collected the liquid from the trees?

Mr. Langdale. You distill it.

The Chairman. You distill it?

Mr. Langdale. Yes, sir.

The Chairman. How do you do that?

Mr. Langdale. You have got a regular copper kettle outfit. You put your crude gum in it and distill it into rosin, through a distillation process.

The Chairman. How many people do you usually employ up at the still?

Mr. Langdale. Two; but not full time, unless it is a large still.

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The Chairman. Then, after you get it distilled, what do you do with it?

Mr. Langdale. It depends on your contracts. You usually ship it to the port.

The Chairman. You put it in barrels?

Mr. Langdale. You put your rosin in barrels, either in wooden barrels or in galvanized barrels, and your turpentine you usually put in barrels.

The Chairman. And the chief employment of the men is in what part of that procedure?

Mr. Langdale. It is in the woods, in the forest, on the farms.

The Chairman. It is in cutting off the facing on the tree?

Mr. Langdale. Chopping the trees and collecting the gum.

The Chairman. Yes.

Mr. Langdale. In other words, that is the principal outlay that you have there and the principal job on the average turpentine farm is chopping the trees and collecting the gum and bringing it in.

Representative Schneider. I take it that these are rather large operations?

Mr. Langdale. No, sir; the reverse is now true. In other words I think maybe the average operation now is something like six crops. That is a very small operation.

Representative Schneider. Six?

Mr. Langdale. Six crops.

Representative Schneider. How many men would that involve?

Mr. Lang dale. Usually about four to the crop. That would be 24.

Representative Schneider. Those men do not usually own the land upon which these trees are grown; do they?

Mr. Langdale. Well, sir, lots of them do. A good many producers are on the land and some of them lease it.

Representative Schneider. What do the workers in this industry who are employed by large owners under various circumstances do when they are not gathering the turpentine?

Mr. Langdale. Of course, as I say, the height of the warm season is when the gum flows more freely and it makes more turpentine. We start chopping, say, the early part of March, and the 1st of April, and it usually goes on until the 1st of November. For that period they are chopping and dipping. For the other periods, we have some installation work, that is, putting on your aprons, your gutters and cups, protecting it from fire and stuff like that. There is one thing about it, our turpentine man has never been known to fire any labor.

Representative Schneider. They never fire them?

Mr. Langdale. Nobody has ever been fired.

Representative Schneider. He would be a rather rare bird if he has never fired anybody.

Mr. Langdale. That is it. Even in the depression of 1931 and 1932 the average turpentine laborer still stayed on the place and he got along somewhere around the farm there.

Representative "Wood. What is the capacity of a still that is handled by two men? How many barrels a day capacity does that still have?

Mr. Langdale. If you employed two men they could distill from 40 to 50 barrels of crude gum a day.

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Representative Wood. How large are those barrels?

Mr. Langdale. Well, they hold about 50 gallons.

Representative Wood. Fifty?

Mr. Langdale. Yes, sir. Of course, the average place does not have that much to distill. In other words, he probably would have one 1 day and two the next. In other words, he would not probably distill but about 10 barrels of crude gum and maybe 20 barrels of crude gum tomorrow. He would have to have a much bigger operation to keep the still in operation all the time. He could run four or five charges a day, provided he could get the crude gum, but you have to have 20 or 25 crops for that.

Representative Wood. Taking the capacity of a still employing two men, what do they pay those men a day?

Mr. Langdale. They pay some of them by the piece, so much a charge. Then he does other work in the meantime.

Representative Wood. What is the average wage of the men working at the still as a daily wage?

Mr. Langdale. The average daily wage of one of those men, I would say, is possibly $10 a week.

Representative Wood. $10 a week?

Mr. Langdale. Yes, sir. Now, he does other work. For instance, the average place does not have enough of distilling for him to do, and he does other work. In other words, he can run a charge in 2 hours—10 barrels. As he has got but one charge, he does not work but 2 hours at the still that day, maybe.

Representative Wood. He does not make a full day’s pay then?

Mr. Langdale. He would have to have one man to do that, you know, around the place. Sometimes, of course, with bigger operations, he is paid by the month or by the week; sometimes he is paid by the charge. You pay him a dollar or a dollar and a quarter a charge, and then he does other work.

Representative Wood. What do you pay these children of 10, 12, and 14 years of age that gather the turpentine?

Mr. Langdale. They are all paid by the piece.

Representative Wood. There are quite a few children employed in gathering the turpentine, are there not?

Mr. Langdale. I would not say; not that young. There are some of the children, of course, some under 16, but not many; I would not say.

Representative Wood. Any 12 years of age?

Mr. Langdale. Not many 12 years of age. He cannot do much turpentining when he is 10 years of age.

Representative Wood. Do you have any employed at 10 years of age

Mr. Langdale. I do not think so; not at 10 years of age.

Representative Wood. How long do they work a day? How many hours do they put in?

Mr. Langdale. Well, as I say, they work by the piece, and there is no way of estimating how much work they do.

Representative Wood. Well, you know about how many hours a day they work, do you not?

Mr. Langdale. Well, sir, they work different hours. There are some who work 33 hours a week, some work 40 hours, and once in a while some work 50 hours.

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Representative Wood. Do any work 10 hours a day?

Mr. Langdale. Some work 10 hours a day; yes, sir.

Representative Wood. Do any work 11 hours a day?

Mr. Langdale. Well, I have known of them when they worked 11 hours.

Representative Wood. Children 10 years of age?

Mr. Langdale. Not children 10, but the older men would.

Representative Wood. I am talking about these children.

Mr. Langdale. Yes, sir.

Representative Wood. How long do they work? Is it not a fact that you have children working in the pine forests gathering gum at 10,12, or 14 years of age?

Mr. Langdale. I would say there are some 12 and some 14 that work spasmodically.

Representative Wood. None of them 10 years of age?

Mr. Langdale. I would not say so. There might be, but I do not think so. I would not say that there were not.

Representative Wood. Do you know?

Mr. Langdale. I just do not happen to recall any at 10 years of age working there.

Representative Wood. Would you say there are not any?

Mr. Langdale. I would not say that there are not; there might be.

Representative Wood. Would you say there are children working at 12 years of age?

Mr. Langdale. There are some children working at 12 years of age.

Representative Wood. How many hours do they work a day?

Mr. Langdale. As I say, there is no regularity about it.

Representative Wood. You say it is piece work. How much do they make a day?

Mr. Langdale. He usually works with his father or somebody like that, and he gets so much a barrel for his dipping.

Representative Wood. How much do these children make a day? Do you know anything about their wages?

Mr. Langdale. Some of those children make a dollar a day, and some of them will make more.

Representative Wood. Some of them make a quarter?

Mr. Langdale. No, sir; I do not think any oi them make as little as a quarter.

Representative Wood. Do any of them make 50 cents a day?

Mr. Langdale. How is that?

Representative Wood. Do any of them make 50 cents a day?

Mr. Langdale. I doubt it.

Representative Wood. How much do you get for one of these barrels of turpentine or gum? What is the market price?

Mr. Langdale. We usually denote it as a unit. Our unit is one barrel of turpentine to three and one-third barrels of rosin. That brings about $57 a unit at the present time.

Representative Wood. You do want these children exempted from this bill, from this law?

Mr. Langdale. Well, I do not think that the law ought to apply at all to any of us, any more than it should to any other agricultural commodities.

Representative Wood. You just do not want to be disturbed at all. Now, these children working are not the sons and daughters of the owners of the land at all; they are wage earners, are they not?

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Mr. Langdale. They are just like any other agricultural commodity that we have in the South. They work the same as in any other agricultural commodity in the South.

Representative Wood. They are wage earners, are they not?

Mr. Langdale. Some of the owners of a small operation, why, the children work just the same as they do in cotton, tobacco, and other agricultural commodities.

Representative Wood. These children working are not the sons and daughters of the owners of the land, are they?

Mr. Langdale. Some of them are.

Representative Wood. Or the processors of the turpentine?

Mr. Langdale. Some of them are.

Representative Wood. I mean, generally speaking.

Mr. Langdale. Well, I would say generally they are.

Representative Wood. If a man has a daughter and a son, he has them gather turpentine, does he?

Mr. Langdale. There are some of these folks that do not do the distilling, that only produce the gum, sell the crude gum, you see.

Representative Wood. Now, you have some people down there in this gathering period, gathering turpentine there, what are termed as tenants and casual wage earners in one period of the year, and in another period of the year they do something else, they perform another kind of farming work for somebody, for some other person or for the same person. They do anything around the place off season. What do these turpentine gatherers do in the season when they are not employed? What is their avocation?

Mr. Langdale. Well, as I say, there is some work to do all the time, and they do not do as much in the winter time.

Representative Wood. You have some that live down there that just depend upon this turpentine gathering and doing the odd jobs that they can find; they live from hand to mouth, do they not?

Mr. Langdale. Well, I would say that they are living pretty good.

Representative Wood. You would say that they are living pretty good?

Mr. Lang dale. Yes, sir.

Representative Wood. In what section?

Mr. Langdale. In Georgia and Florida.

Representative Wood. Would you think that they lived pretty good on a dollar a day?

Mr. Langdale. Well, where they work, where the men work down there, they are making much more than a dollar a day.

Representative Wood. Some of them make a dollar and a half, you say?

Mr. Langdale. I would say they make that, and then in addition to that, the houses are furnished to them and they have their wood and water, and they have gardens.

Representative Wood. How good do you suppose they can live on a dollar and a half a day? Do you think they can buy champagne and things like that, or buy an automobile?

Mr. Langdale. Lots of them own automobiles.

Representative Wood. What kind?

Mr. Langdale. Well, they are usually Fords or Chevrolets, but they own lots of cars.

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Representative Wood. They buy one for $15 or $20 and pay for it in 20 months—if they can.

Mr. Langdale. There are lots of automobiles there now. There were not a few years ago, but there are lots of them now.

Representative Wood. You want to be exempt entirely from the law?

Mr. Langdale. Absolutely.

Representative Wood. Was your business in 1932 good, or in 1931?

Mr. Langdale. Our business was bad.

Representative Wood. Bad?

Mr. Langdale. Bad.

Representative Wood. What was the reason for that?

Mr. Langdale. Well, it was on account of the world depression and accumulation.

Representative Wood. On account of the depression in this country. Just leave out the world; the depression in this country.

Mr. Langdale. We depend on foreign markets. This country cannot consume all the stuff that we make.

Representative Wood. How much do you export?

Mr. Langdale. We export about 50 percent of all that is produced.

Representative Wood. Was your trade in this country good in 1931 and 1932?

Mr. Langdale. It was not good; no, sir.

Representative Wood. It was not good?

Mr. Langdale. No, sir.

Representative Wood. It was not good because people did not have the money to buy?

Mr. Langdale. That was one of the reasons; yes, sir, and then we had an accumulation of stocks. You know people do not buy when everybody wants to sell.

Representative Wood. If people do not get wages, they cannot buy, can they?

Mr. Langdale. No, sir. Representative Wood. How much do you suppose these dollar and dollar and a half people would buy? Supposing everybody would work for a dollar and a half a day in all lines of occupation, how much turpentine do you suppose you could sell?

Mr. Langdale. You could not sell very much, but a dollar and a half a day in one place might amount to as much as $3 a day in another place.

Representative Wood. It all depends on the standard of living, does it not?

Mr. Langdale. It depends on the cost of living and the standard, I would say.

Representative Wood. You mean to say that there would be a difference in the cost of living, that a man can live for a dollar and a half in one section as well as for $3 in another section, wear the same kind of clothes, live in the same kind of house, send his children to school, give them the same amount of education? In what sections can they do that?

Mr. Langdale. It would require a different kind of house in some sections of the country than in others on account of climatic conditions.

Representative Wood. Well, they could not work on very large ranches on a dollar and a half a day, could they?

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Mr. Langdale. These turpentine laborers that are working are making more than a dollar, or more than a dollar and a half a day.

Representative Wood. You just said a while ago that they were making a dollar and a half a day in your own testimony.

Mr. Langdale. I say, they make a dollar and a half, some of them do. That is probably the average.

Representative Wood. That is what I am talking about.

Mr. Langdale. I have got laborers on my place making $25 a week.

Representative Wood. Then you must have a great many making far below a dollar a day, because if you say a dollar and a half is the average and you have any number of men making $25 a week, you must have a number of men, women, and children working for 50 or 75 cents a day. If a dollar and a half is the average, you could not have many above that average unless you had a great many below the average. You must admit then that some of your folks are getting far below a dollar and a half a day.

Mr. Langdale. When I say they are not getting less than a dollar and a half a day, the point I am getting at is this, that if they are brought within the provisions of this law it will mean that it will put the turpentine business absolutely out of business. We will be out of business. We have got to compete with foreign production, and we have got to compete with other processes. We will be put out of business if we are forced to pay, or forced to observe, a weekly wage, because it is impossible to do it. Here is a fellow with 10 crops. He has got a man chopping here, six or seven hundred acres, and you have to have a foreman with each man in order to keep up with the time. In other words, there is no practical way whereby you can fix a minimum number or hours, or the wages for the turpentine laborer.

Representative Wood. Would you suggest that we prohibit the employment of children under 16 years of age in your industry? Would you agree to that? Would you favor that portion of the bill?

Mr. Langdale. No, sir: I would not be in favor of that.

Representative Wood. You would not be in favor of that? You would think that it was necessary that children work at less than 12, 13, or 14 years of age in order for the business to survive, would you?

Mr. Langdale. When children are not in school, they do a little work around the turpentine farm, just like they do in the other southern farm commodities. I do not see any material objection to it. It is out in the open, the conditions are good, it is healthy. It is not like staying in some shop, or some place else.

Senator Pepper. Mr. Langdale, I was interested in the suggestion you made about the effect that it might have upon the industry. Is there anything further you care to say about that?

Mr. Langdale. I would just like to say this, that from the very nature of the business the turpentine producers could not operate when they would be required to pay some minimum wages or work the labor some hours, for the simple reason that there is no way to keep up with it. It is all done by piecework.

Senator Pepper. Is the profit so small that they could not pay a minimum of, say, 40 cents an hour?

Mr. Langdale. Absolutely. If they are required to pay 40 cents an hour, it would mean that they would be absolutely out of business.

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[PAGE 1177]

Senator Pepper, With what other commodity or product does turpentine compete, if any? Are you in competition with any other product of a comparable character?

Mr. Langdale. You mean as far as cost of production is concerned?

Senator Pepper. No. Is there any other substitute for turpentine that people might resort to if the cost of turpentine would have to be raised?

Mr. Langdale. Absolutely. Turpentine now is the lowest that it has been in 30 years.

Senator Pepper, I am asking you as to whether there is any other substitute.

Mr. Langdale. Absolutely.

Senator Pepper, What is it?

Mr. Langdale. Mineral spirits, kerosene, gasoline.

Senator Pepper. For what is turpentine principally used?

Mr. Langdale. For paints and varnishes.

Senator Pepper. That consumes the major portion?

Mr. Langdale. A large part of it; yes, sir.

Senator Pepper. Now, what other commodities compete in the same market with turpentine? You mentioned kerosene.

Mr. Langdale. Well, kerosene, gasoline, mineral spirits that are used in thinners, and by reason of the great use of those substitutes today, turpentine is cheaper than it has been in 30 years. It is cheaper, Mr. Wood, than it was in 1932. If we had to pay 40 cents an hour or work 30 or 40 hours a week, it would mean absolutely put out of business every gum turpentine producer, and, of course these other competing products would come in and take the business.

Senator Lee. What is your best foreign market?

Mr. Langdale. The best foreign market?

Senator Lee. Yes.

Mr. Langdale. I do not know. Mr. Speh is here and can give you that information from the Bureau of Chemistry and Soils.

Senator Pepper. Mr. Langdale, in what manner does the industry propose, gradually, if at all, to better the conditions of its employees? Is there any process that is going on toward the betterment of the working conditions?

Mr. Langdale. Yes, sir. We are trying to extend the consumption of our product so we can get a better price, so that we can pay our labor more money. We cannot do it now. According to the figures now, it is bringing that $57 a unit, and it is costing now around $60 a unit, where you are buying the land now to produce it. In other words, gum producers are losing money today. We are doing some research work now. We are going to try to extend the uses of gum, turpentine, and gum rosin, so we can create a greater demand for it, so that we can get a better price, so that we can pay labor more, and everybody else that is engaged in it. That is one of the things that our association is trying to do now. We are putting up a laboratory in Savannah, Ga., and hiring a good chemist.

Senator Pepper. There is just one more question: Have you any estimate to give us to about what the average return on the dollar that is invested in the turpentine industry yields, or is? I mean, what the people that are running the turpentine industry are making, as to whether they are making a lot of money on it.

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[PAGE 1178]

Mr. Langdale. They are losing money.

Senator Pepper. In normal times, is it a business which yields a large income on the investment?

Mr. Langdale. Well, at one time, I would say prior to 1929, there was considerable money made in the turpentine business. There has not been, in my opinion, any money made since then. Prices have been such until they have not made any money.

Senator Lee. These competing substitutes; are they produced mostly in this country?

Mr. Langdale. Well, some of it is produced in this country and some of it is not. The two main channels that rosin flows in is soaps and paper sizing. That consumes practically all the rosin. Of course, tats are in competition with rosin on certain soaps.

Senator Lee. Did you say that you furnish the houses for these people?

Mr. Langdale. Yes, sir.

Senator Lee. About a four-room house?

Mr. Langdale. Three- or four-room houses, sometimes five; three to five, depending on the size of the family.

Senator Lee. I was through Georgia not long ago. I saw several of these turpentine farms. I saw some very dilapidated houses and I just wondered. Your kind are probably the good houses.

Mr. Langdale. Some of them are better than others. Some are good, some better, and some not so good.

Senator Lee. I got some pictures in a book that was put out of some of those homes in Georgia where some of those folks live, and they sure look sorry.

Mr. Langdale. The average house that is used by the turpentine laborer in Georgia and Florida is much superior to the cabins that they have in the other sections of the South, like South Carolina and North Carolina, up there along the coast. You say they are sorry houses. We average much better houses in Georgia and Florida in the turpentine belt down there than they have up in North and South Carolina.

Senator Lee. You are losing money now, you say, and most businesses now are making money?

Mr. Langdale. Yes, sir.

Senator Lee. What outlet do you see? What do you see in the future for your business?

Mr. Langdale. Now, I want to explain just one proposition. The fellow that bought his stuff back in 1932, his timber and other stuff, he probably is not losing any money now, but the man who is going on the market, who bought his equipment last winter, according to the figures, he is not making any money.

Senator Lee. How do you propose to ever make anything?

Mr. Langdale. We live in hope or die in despair. You know, we figure it is going to get better.

Senator Lee. On what ground?

Mr. Langdale. As I say, we are going to extend the uses. We have got a product there that has got a lot of merit in it.

Senator Lee. Do you believe that we, as representatives, ought to continue to allow people to beat down the wages of the workers in order to compete with foreign markets?

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Or, should we try to protect, as much as we can, our home market, and raise the buying power of the workers so that they can become consumers of our products?

Mr. Langdale. Of course, in some industrial centers, that is a different proposition, but most of the turpentine labor comes from fathers and grandfathers. In other words, they and the generations before them for the last 100 years or the last 50 years have been working in turpentine. They would not be satisfied anywhere else. Here is one of the old businesses, producing turpentine gum and rosin in our section, and our fathers and our grandfathers were engaged in that line of business.

Senator Lee. But you admit you are heading for bankruptcy now?

Mr. Langdale. I know.

Senator Lee. And yet you oppose our creating an increased buying power of your commodity?

Mr. Lang dale. Well, not necessarily.

Senator Lee. If you increase the use of turpentine, what is going to prevent these other commodities that are in competition with you from likewise being in equal competition? If you are losing money now at the rate of $3 a unit, it looks to me like you will be interested in legislation that would help do something about it. It is a cinch that you are going broke like it is. How could you be any worse off?

Mr. Langdale. We would be worse off in this way: If we are brought within the provision of this law we are out of business right now, we and all these folks that are responsible, we are out of business right now. If you leave us alone we are going to try to work out our own salvation.

Senator Lee. By reducing the wages of the folks working for you?

Mr. Langdale. No; by increasing the demand for our commodity.

Senator Lee. That is what we are trying to do.

Mr. Langdale. I know; but I think that is the wrong way to do it in our commodity.

Senator Lee. No matter how much people needed to paint their houses they could not paint their houses unless they had money to pay for the paint.

Mr. Langdale. That is true.

The Chairman. All right; thank you very much.

Mr. Langdale. I would like to say that I do not think there is any question about it, that we produce an agricultural commodity, and the only thing we insist on is we want this spelled out. We, of course, want to come within the provisions of the act so there will not be any hereafter about it

Representative Wood. Do you know anything about the turpentine business in Florida? Do you represent them too?

Mr. Langdale. Yes; I represent them through the belt.

Representative Wood. I understood they took the Negroes off the train there and arrested them for vagrancy and forced them to work on the turpentine farm. Do you know anything about that?

Mr. Langdale. No, sir; I do not know that. As I say, my association represents the producers over the entire belt.

Representative Wood. Do you know of any practice like that?

Mr. Langdale. No, sir.

Representative Wood. Do you know of it ever having been done?

Mr. Langdale. In Florida?

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Representative Wood. Take the Negro and white men sometimes off the train, arrest them for vagrancy, and force them to work on the turpentine farm?

Mr. Langdale. I am sure that is not done, because if they are convicted they would be sent to the penitentiary, or some place, and they would have to work on the roads.

Representative Wood. This is just vagrancy, they are not going to the penitentiary for vagrancy.

Mr. Langdale. No, sir; they could not do that in Florida. I know that is not done in Florida.

Representative Wood. You do not know anything about that?

Mr. Langdale. I am sure that is not done, though.

Senator Lee. How many people are altogether engaged in your industry?

Mr. Langdale. Fifty thousand.

The Chairman. All right, thank you. Mr. Rountree.

STATEMENT OF J. LEONARD ROUNTREE, TURPENTINE PRODUCER, SUMMIT, GA.

The Chairman. Will you state your name?

Mr. Rountree. J. Leonard Rountree, Summit, Ga. I am on a farm, I live on the farm, I sleep in the room I was bom in. I have never been able to get away.

I am in the turpentine business, gentlemen, and have been for 30 years. Mr. Langdale, Judge Langdale, has explained to you how this product is made. It is a chopping process with a crooked U-shaped tool, very sharp, it is chopped on this side and that side, leaving it in the shape of a letter “M.”

I will just go back a little bit to explain just what we want and what we are driving at.

The Chairman. What you want is to be exempted clearly on the ground that it is an agricultural product?

Mr. Rountree. Yes.

The Chairman. I think we understand that.

Mr. Rountree. I just want to give a little bit of an explanation as to that, as to why it was. I took this up with the present Secretary of Agriculture’s father, Mr Wallace, in 1920, in President Harding’s administration, and he classed us as farmers. At that time we were trying to get some money from the Cooperative Marketing Association, and we were neither fish nor fowl. We sometimes are classed as manufacturers, but to clarify this has required a good deal of missionary work, to declare them as farmers, so we had the amendment passed by Senator George and Representative Larsen of our district clarifying us as farmers, from a national law standpoint, and they subsequently passed the same legislation in the Georgia Legislature, and other Southern States.

We did not operate under the N. R. A. during the administration of the codes.

I have been in the turpentine business 30 years. I would like to impress that on the committee. I have never made turpentine as cheaply as I made it this year and last year.

In 1934 we were taken over under the gum-processing license of the Government. I was a member of that committee. There were nine of us at Jacksonville.

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In January 1934 turpentine was selling at 58 to 60 cents, when we were taken over by this Government agency.

I do not know what is the cause of the present decline.

The price of every commodity, every farm product in the United States, has advanced except this one. This is an exception to the rule. I want you to realize fully that turpentine today is $1.99 a gallon cheaper than it was in 1920, when it was at the peak of high prices that 1 have known in my 30 years’ experience.

Contrary to the questions asked by the gentlemen here, I want to say this publicly, for the whole industry and for the whole United States, that the turpentine people in the South are the highest class of citizens that we have got. We do not oppress our labor. Personally I have taken care, in my county, during the depression, of more men than any man in the business. We feed them through the winter months, we furnish them houses, we furnish them wood and we furnish them water, we get them doctors if they are sick, we buy them medicine, and we bury them when they are dead. We take care of our turpentine laborers.

Representative Ramspeck. Mr. Rountree, how does the labor on the turpentine farm compare with the labor on the cotton farm in Georgia?

Mr. Rountree. We pay a high scale of wages, which is higher in the turpentine, industry than it is on the cotton farms.

Representative Ramspeck. In reference to the general situation, do they live on the farm?

Mr. Rountree. Yes, sir; they live on the place.

Representative Ramspeck. Like the tenants on the cotton farms?

Mr. Rountree. My turpentine still is immediately in front of my house.

This case of a good many people talking about the work, we put this out on mostly piecework.

Talking about the wages that they get, that they work for, it is on a cooperative basis. We work very few of them by the day, because this stuff probably is gathered sometimes over an area of 10, 12, 15, or 20 miles, and a crop, as he just said, might cover a thousand acres of land. There might be 10 boxes or cups per acre on this land. So they have to do a great deal of work in chipping over these crops. It takes an average of 3 or 4 weeks for the cup to get full enough to do what we call dip, and this in turn is hauled to the still and there put in the copper kettle. It is like any other whisky still. I presume you are more familiar with them. That product there oxidizes and the rosin and turpentine separates. The turpentine, which is more volatile, rests on the top of the water. It all comes out in a steam of water. It is put in the barrel.

We are no more industrial than the cotton people are, the sugar people in Louisiana, or the beet-sugar people, or any of those people.

You asked a question this morning, which was very pertinent, about the dividing line between a manufacturer and a farmer. Well, all farmers’ products have to be processed, and the same thing happens in our particular product. We take this raw gum and we bring it to this turpentine still, as we call it, and we run it through this copper kettle and we separate the turpentine from the rosin, just as the cotton farmer carries his cotton to the gin and there separates it from the lint and from the seed, but that does not make him, if he owns the gin, it does not keep him from operating a farm, or from being a farmer.

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The same thing about the evaporator in Louisiana as he goes through the process of changing the sugarcane juice to syrup and then boils down the syrup.

Senator Lee. Has there ever been a decision of a court, or anything official on this question, as to determining whether or not your industry was farming?

Mr. Rountree. No. I will be frank to tell you as to what brought this about.

Senator Lee. You said something about the N. R. A. a while ago.

Mr. Rountree. We did not operate under the N. R. A.

Senator Lee. You were exempted because you were classed as farmers?

Mr. Rountree. We were exempted because we were classed as farmers, but what brought about this particular trouble that is now in anticipation is the Internal Revenue Department. Mr. Helvering ruled that we are subject to the Social Security tax. We are not kicking on the Social Security tax, the payment thereof, inasmuch as it refers to, but all industries in the United States have been benefited by the program of price raising and ours is the only exception that I know of.

In 1934 turpentine was 59 and 60 cents a gallon and now the turpentine is 33 cents a gallon, and we just positively cannot adjust our prices to that condition.

In the meantime the prices of the things that go into the manufacture of this product, in the use of this product, have risen. We have to use sometimes some hoop iron to put on our barrels, we have to buy the tools to chop with, we have to buy the gutter streak, the cups, all of those things, and they have advanced in price, and advanced very heavily.

The timber is getting scarcer year by year, and if we do not own the timber we try to rent it, the same as any other farmer tries to rent the land.

Senator Black, we have attempted to give $300 a thousand for timber, and we cannot work it out to save our lives. We are up here asking you to help us to save our industry, because frankness compels me to say that we cannot survive a minimum-wage system because of the way we work.

Talking about your wages, I want to give you this illustration. I had two employees two Saturdays ago that dipped what we call 10 barrels of gum a day. They got $6, or $3 apiece a day. They get whatever they work for. They do not average working over 30 hours a week. It is piecework, it is cooperative. It is not exactly like the sharecrop system, but it is the same type of work.

Representative Ramspeck. How do you pay a man picking cotton?

Mr. Rountree. You pay them by the hundred pounds. The sharecropper gathers his own stuff, that is his family, the man, woman, and children. Just like you asked awhile ago about the children in the work. Personally, in my job I do not know of a single solitary child under 16 years of age that is working in my woods.

Representative Ramspeck. We have got a sirup industry in South Georgia. Is that classified as an industrial operation? Frankly, I do not know, but my presumption is it is not, that it is a farming operation.

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Senator Lee. What would happen to these people that work for you if your industry had to fold up?

Mr. Rountree. Had to fold up?

Senator Lee. Yes; had to close.

Mr. Rountree. Well, I do not know. They could not be absorbed in other lines of work; they would have to be taken care of on relief.

Senator Lee. Is there a reasonable amount of trees on the land owned by those individuals that do not belong to an association, that drain out their gum and then sell it to some of the larger processors?

Mr. Rountree. Some farmers work their own timber and sell the crude gum to these processers. There are different methods of working, you know, like any other farm. Some farmer rents land. We rent timber sometimes, if we do not have enough of our own. If a neighbor wants to rent his timber we rent it from him.

Senator Lee. Are you the gentleman that he referred to as knowing about the export trade?

Mr. Rountree. No; that is Mr. Speh, the Government statistician. The amount exported normally is 50 percent. It used to be 65 percent.

Senator Lee. Of course, where we export to a nation we cannot protect much on the imports. Do you know where there are substitutes or imports that we could protect your industry from by a readjustment of the tariff schedule?

Mr. Rountree. No; I do not. When you are talking about competition I will tell you one of the greatest sources of competition that we have. Of course, the mineral substitutes made by the largest oil industries, I understand, in the country are our greatest drawback right now. The greatest competition that concerns us is the distillation of the stump by the Hercules Powder Co., who are highly industrialized. They have such a plant at Brunswick, Ga. They make 20 or 25 percent of all the turpentine consumed in the world, or the United States.

You understand there is a difference between the gum spirits of turpentine and wood spirits of turpentine.

Senator Lee. You find yourself in competition with the wood turpentine?

Mr. Roundtree. Very much so.

Senator Lee. When you tap a tree does that destroy the tree for timber?

Mr. Roundtree. No, sir; it does not.

Senator Lee. After it has been used for turpentine for awhile does it cease then to be any good?

Mr. Roundtree. No. sir. I have known them to be worked a lifetime, but it is just like anything else. It lives by the veins that go up it, and if you overcup it, if you put so many cups on the tree until it cuts the vein in two you will kill it. No good operator would do that.

I was in the Georgia Legislature, and I myself introduced a bill to prohibit cupping under 10 inches in diameter. That same rule had been adopted by a department of the United States Government.

Senator Lee. If you took the trees and sold them for lumber would you be a farmer?

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Mr. Roundtree. No. sir; that would go through a different process. The sawmill people are probably manufacturers. I am not disputing that point.

Senator Lee. It is a very fine point.

Mr. Rountree. That is the reason I brought it out, because I appreciate you are trying to get to the dividing as between manufacture and farming.

Representative Wood. Can you use that still during slack time?

Mr. Rountree. Yes, sir; we can make moonshine liquor in it.

Representative Wood. Do you raise corn?

Mr. Rountree. Yes, sir; we raise corn.

Representative Wood. Could you use corn in the stills?

Mr. Rountree. Mostly down South in Georgia we use sirup. In North Georgia, I believe, where Representative Ramspeck comes from, they make corn liquor. We do not drink it in South Georgia.

Senator Pepper. You mentioned Mr. Speh. Is Mr. Speh here?

Mr. Rountree. I want to say that Mr. Speh is with the Bureau of Chemistry and Soils, and he knows everything about the stuff. In fact he knows more about it than anybody else.

Senator Pepper. We will hear Mr. Speh.

STATEMENT OF C. F. SPEH, BUREAU OF CHEMISTRY AND SOILS, DEPARTMENT OF AGRICULTURE

Senator Pepper. Just go ahead with whatever information you have, Mr. Speh.

Senator Lee. Tell us who you are.

Mr. Speh. I am senior technologist, Naval Stores Division, Bureau of Chemistry and Soils, United States Department of Agriculture.

Senator Lee. You are a Government official?

Mr. Speh. I am a Government official; yes, sir.

Senator Lee. If you will refer to my question go ahead and answer that, on the exports.

Mr. Speh. I thought that was where I was drawn into it.

Senator Lee. Yes.

Mr. Speh. Great Britain is our principal foreign customer on both turpentine and rosin.

Senator Lee. Do we pay them a tariff?

Mr. Speh. We pay a tax in Great Britain on turpentine and nothing on rosin. I do not know what they call it. It is not an industrial tax but it is some form of tax that is levied against turpentine and all paint thinners.

Senator Lee. Do you know about how much that is?

Mr. Speh. No, I do not. I did at the time when it was passed about 5 years ago, but I just haven’t followed it up.

There has been considerable discussion about trying to have it removed, but every time the naval stores trade make that attempt England says that they need that source of revenue.

The biggest consumption of turpentine in England is in the shoe-polish industry, contrary to that which we have in this country, where the biggest consumption is as paint and varnish thinner.

Along that line you asked about competition. The main competitor of turpentine is the mineral-oil substitute. Turpentine finds its chief use as a paint and varnish thinner, both in the manufacture

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of it and in the application. So there turpentine competes with probably a 15- or 30-cent-a-gallon product. The average mineral-oil thinner sells for about 15 cents a gallon.

Senator Lee. You mean the mineral-oil spirits can be sold profitably at 15 cents a gallon?

Mr. Speh. I mean he cannot sell it in competition with the mineral oil.

Senator Lee. Do they sell it for that?

Mr. Speh. Yes, sir. It is one of the cuts in the production of gasoline and other mineral oils.

Senator Lee. Does it produce an inferior result in goods like paint, as a thinner?

Mr. Speh. It is generally believed that for durability turpentine as a thinner provides a better film.

Senator Lee. The point I am driving at is if there are other things that, serve the same purpose and may be produced cheaper at a profit then is it possible to keep this industry alive?

Mr. Speh. Well, there is this, that the master painter, the applying painter will state to you that as far as the question of durability is concerned, where you want a good film protection on paints, you should thin with turpentine.

Senator Lee. Do you think this is a farming enterprise?

Mr. Speh. I do;yes, sir.

Senator Lee. That is all.

Representative Wood. One question, Mr. Speh. You said you were an official of the Department of Agriculture.

Mr. Speh. Senior technologist in the Naval Stores Division of the Department of Agriculture.

Representative Wood. Are you here at the instigation of the Department of Agriculture?

Mr. Speh. I am here at the request of the committee to avail itself of my services. I am here at the disposal of anyone. Your committee, I think, wrote to Dr. Knight.

Representative Wood. That is all.

Senator Lee. Evidently there has been a discussion on this subject in the Department. Have you any information that you can give us as to whether this is an agricultural activity or not?

Mr. Speh. Well, I started this naval stores work with the Bureau of Chemistry and Soils quite a number of years ago. I left to go into the industry, with the idea of furthering some of my, we will put it, dreams. I have always felt that I could contribute, in a small way, to the rehabilitation of this industry in the way of conservation of timber, improved operations in the woods, and generally raising the whole standard of the industry in developing new’ products and better products, extending its uses. So I left the Government and went into the industry. I was with the industry until just about a year ago, when I returned to the Government.

Senator Lee. Were you in the gum-producing end of it or the spirits-producing end of it?

Mr. Speh. I was in the gum-producing end of it.

Senator Lee. The spirits-producing activity is operated by a larger organization?

Mr. Speh. You mean the wood turpentine?

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Senator Lee. Yes.

Mr. Speh. Yes; there are about six of them, two of which have produced 80 percent of the total production.

Senator Lee. Eight percent?

Mr. Speh. Eighty percent of the total production of the distilled turpentine, that is, the steam-distilled turpentine produced by two companies.

Senator Lee. Would you say that is agricultural?

Mr. Speh. No, sir; I would not. If I may elaborate on that——

Senator Lee (interposing). Yes; I would be glad to have you. I am interested.

Mr. Speh. The raw material for this wood-turpentine industry is the stump, the dead downwood. It is brought to the plant and there it has to go through several very complicated processes, the first being, we will say chewing it up, hogging it, or shredding it; than it is put into a digester and steam blown through it which carries off the turpentine. Then the solvent is put in, and the rosin is extracted by the solvent. That has to be purified by various methods all of which are patented by these various companies. Then they evaporate the solvent. The turpentine has to be fractionated, because it is not only turpentine as we recognize it, but it includes a lot of pine oil. That has to be separated by fractionation, and by treatment. The steam-solvent plant, for instance, markets not only spirits of turpentine and wood rosin, but it markers pinon, dipentene, pine oil as such, or the fractions of pine oil, or turpino.

Senator Lee. Do the two turpentines serve the same purpose?

Mr. Speh. As they are now refining it, with improved methods of steam distillation, the wood spirits will serve every purpose that gum spirits or turpentine will serve, with the exception of certain pharmaceutical uses, and its yield on synthetic camphor is not as great.

Senator Lee. One is produced agriculturally and the other is produced industrially?

Mr. Speh. Yes, sir.

Senator Lee. One constitutes agriculture and the other does not?

Mr. Speh. Yes, sir.

Senator Lee. That is a very fine point, is it not?

Mr. Speh. No; not if you are familiar with the industry itself. Now, the gum spirits of turpentine, that is, we will say, more akin to the maple sugar, with this one qualification, that in the maple- sugar case the sap is in the tree, you merely open the reservoir and gather the sap, and in this case you have to create-----

Senator Lee (interposing). Pardon me. Has that sugar ever been classified as purely agricultural?

Mr. Speh. That, I am sure, I do not know.

Mr. Rountree. For your information, when Secretary Wallace defined turpentine or naval stores as farming, he said, “You are the same class as the maple-sirup people”, and they are farmers. He said, “You should be classed the same with the maple-sirup people.”

Mr. Speh. If you gentlemen have driven through the woods and run the hub against the pine tree you noticed that it immediately sets up a flow of gum, with the idea of healing that wound. That is what we do. We run against the tree with a tool every week with the idea of setting up that flow of gum, in other words, aggravating the tree to flow. That gum is loaded into a cup and that cup is emptied

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into a barrel, the barrel hauled to a still, and then it becomes merely a physical separation of the turpentine and rosin. There is no chemical added, there is no change in the composition of the two. The turpentine is condensed and the rosin is strained and put into a barrel.

Senator Pepper. Let us take the analogy of a stalk of cotton, that is the natural product of the stock, the seed and the cotton in the boll. Then you take that out. That is the physical separation of the cotton, the seed from the boll and the boll from the stalk on which it grew; then you haul it to the gin and the gin makes a physical separation of the lint, and the seed of the cotton. Is not that analogous exactly with what is done with the gum turpentine?

Mr. Speh. With this exception, Senator Pepper: I believe in the cotton gin there is another hand, another organization, another company set up; it is another enterprise.

Senator Pepper. What I meant was, of course, the grower of the cotton as an agriculture, whereas the same principle should be applied to the gum-turpentine producer.

Mr. Speh. Yes.

Senator Pepper. May I ask one more question? Is not the Government of the United States carrying on an extensive experimental activity with respect to the uses of gum turpentine?

Mr. Speh. Yes, sir. I believe one of the gentlemen asked what is being done and what is the future of the industry. If I may make this statement, I do not suppose anyone is concerned more with that very question than I am. Some years ago I made a study and I found that the industry as a whole, including the interest on its investment, depreciation of timber, and so forth, was absorbing about $10,000,000 a year more than it was creating. That was a bad condition, it was a condition that could not go on. Now, then, we are trying to remedy that, we are trying to remedy it by an adjustment of the land use in the South.

In other words, here is an acre of land, submarginal type of land growing a fifth, or a sixth, or an eighth bale of cotton an acre. Under those conditions you are never going to have a high wage scale in the South, so we have got to find a use for that land which is going to be productive of greater wealth at a lower cost, and we found that this land adapts itself very easily to growing pine trees. You are growing more than pine; you are growing cellulose. These trees will very readily, in a comparatively few years, obtain a size where you can produce turpentine. Instead of working over the large area that these gentlemen mentioned, where they work 15 trees to the acre throughout the belt, we have every reason to believe, and the forest survey recently made would indicate that you can work 50 trees to the acre. That means, a lower cost of production, it means more efficient operation, it means higher wages in the South, because they can pay more, because a larger percentage of the cost of production can go to wages than now goes there.

Today, I believe, on an average 60 percent of the cost of production goes to wages. A good part of the remainder goes to timber rent and buying the tools, and so forth.

We are trying to increase the yield; we are trying to standardize the methods of production there. We realize, in spite of everything you do, whether you shut down this industry or whether this industry is continued, there is going to be the growth of those trees, there is

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going to be this gum industry on the basis of about 8,000 units a year, it is going to be there just the same, somebody is going to operate it. It is going to be just a question of whether it be operated in a logical, systematic way, or whether it is simply a haphazard way and a further destruction of the timber.

Now, we have been investigating new uses. With increased efficiency in the yields, a lowered cost of production, improved methods of distillation, the object is to find new uses, and we have chemists who work on that, trying to find out just what are the shortcomings of rosin, how we can improve rosin.

Rosin is the cheapest organic acid available today, and we have every reason to believe that with the proper number of research chemists being placed on the problem we can develop new uses, plastics, synthetic rosins, various other uses, improved types of soaps, and so forth. That is what we are trying to do.

Senator Lee. The stump rosin is made almost entirely by machinery?

Mr. Speh. The extraction of these chips, these hog chips is by machinery. That has to be purified in order to remove the waste.

Senator Lee. By comparison of the two methods what method gives employment to more people, the gum rosin or the stump rosin method?

Mr. Speh. For each unit produced in the gum rosin it gives employment to over three times the number of people engaged in the wood production.

Senator Ellender. How would you classify the labor that is employed in pulling up the stumps and bringing them to the mill?

Mr. Speh. I am only expressing an opinion now. If this was a farmer that was doing it as a land-clearing proposition, or one of the products that he was selling off of his land, his farm, it would be farming, but if, on the other hand, it was done on a contract with a big wood distillation company I would hesitate to classify it as a farming industry.

Senator Ellender. You would hesitate?

Mr. Speh. Yes, sir.

Senator Ellender. Would you put it in the manufacturing class?

Mr. Speh. I would be inclined to put it in the manufacturing class. I am only expressing a personal opinion on that.

Senator Pepper. That is like taking ore out of the ground and refining it, or any other substance.

Mr. Speh. Yes, sir. There is one more point, gentlemen. There is another condition that is developing very rapidly, and that is this gum selling. More and more of these timberlands are broken down into smaller ownerships and you find that the people themselves are engaged in the production of gum. Now, they are not producing gum to be used in the turpentine business, but they are producing purely gum and they want to find a market for that agricultural product, which they sell to various people. You have in Georgia alone, I would say, about 20,000 people who are producing gum, just a few barrels, which they are selling. They work probably 500 or 600 trees on their land. So you have that problem to contend with.

Senator Pepper, Thank you. Is Mr. Ward here?

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STATEMENT OF JAY WARD, DEPARTMENT OF AGRICULTURE

Senator Pepper. Your name is what?

Mr. Ward. Jay Ward. I am with the Department of Agriculture and I am here at the request of the committee, as I understand it, to answer any questions that you might want to ask.

Senator Pepper. Have you anything to say in addition to the statements which have been made?

Mr. Ward. I do not believe I have, other than to say that under the Department of Agriculture I was appointed by the Secretary as his agent to administer the marketing agreement which was referred to in Judge Langdale’s testimony, and that was during 1934 and 1935. Turpentine, under that agreement, was treated as an agricultural commodity.

Senator Pepper. Is it your opinion that this industry should be classed as agriculture?

Mr. Ward. We have so considered it in all of our work and investigation in the Department of Agriculture, so far as I know.

Senator Lee. Have you ever distinguished between the two kinds of turpentine?

Mr. Ward. Beg pardon?

Senator Lee. Have you ever distinguished between the two kinds of turpentine?

Mr. Ward. Yes; we have. In the marketing agreement, which was made effective in February 1934, there was a provision that the Secretary might license competing commodities, and we did place a license upon them, but we could not enter into a marketing agreement with that branch of the industry because it was looked upon and considered as an industry rather than agriculture.

Senator Pepper. What you have just said relates to the stump turpentine?

Mr. Ward. Yes; that is the wood-turpentine industry, that is the stump distilled.

Senator Ellender. Do you agree with Mr. Speh’s distinction between the two methods of extracting the turpentine, one being manufacture and the other farming?

Mr. Ward. Yes; and I thoroughly and heartily agree with all he said.

Senator Ellender. With reference to gathering the stumps, hauling them, would you consider that manufacture?

Mr. Ward. I would consider that manufacture if it was done by one of the large concerns. They have crews that go out with these pullers and pull up these stumps. If that was done by this big company I would call that manufacture, but if it were done by the man that leased the land for the purpose of removing the stumps I would say it was agriculture.

In a good many cases I understand they do buy from the farmer at so much per ton this stump wood, and in many cases the farmer himself does the work on his own farm, brings the stumps in and delivers them to the mill. In that case I would say that that is agricultural labor. I would be inclined to say that.

Senator Ellender. How about the class of people who, we will say, own a truck and will gather from a large acreage pieces of this timber, the dead down wood, how would you classify them?

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Mr. Ward. If it were done by the farmer himself?

Senator Ellender. No. You have people engaged in gathering that, who do it by contract. For instance, they may have a truck and they may employ a few men to get this downtimber and cut it in lengths and then it is in turn gathered and placed on a truck and brought to a distiller; how would you classify those people?

Mr. Ward. It would be a little difficult to classify those. My inclination would be if they were employed by the farmer who owned the land that they were in the agricultural business, but if they were employed by a large distiller they would probably be industry.

Senator Ellender. You appreciate our difficulty, do you?

Mr. Ward. I certainly do.

Senator Lee. Would you vote for this bill if you were in my place?

Mr. Ward. For the bill?

Senator Lee. Yes.

Mr. Ward. I think I would; yes, sir. I think, however, that the amendment that has been offered by this committee does bring up the point, and they are anxious to be either declared as one of them has already said, either fish or fowl. They want to know whether they are agriculture or industry. They are so treated in every other way and now they do not want to be taxed or burdened by the things that are put on the industry generally.

Senator Pepper. Thank you, Mr. Ward. Is there anybody else for the turpentine industry?

Mr. Rountree. Senator Pepper, just to elucidate our position, I want it strictly understood we are not opposing this bill but we want to be clearly designated as agriculture.

Senator Pepper. We understand that. Is Mr. Steinmetz here?

STATEMENT OF WILLIAM STEINMETZ, MASTER BAKER, BROOKLYN, N. Y.

Mr. Steinmetz. Mr. Chairman, I am representing the retail baking industry. It is one of the industries which has kept people in their positions during the machine age.

We feel if the hours provisions are enforced on the retail baker that they will go out of existence.

During the last few years, during the N. R. A., 11 percent of the retail bakers went out of business. In the larger cities the N. R. A. could not be enforced and we had 48 hours working week.

Senator Ellender. What is your definition of a retail baker?

Mr. Steinmetz. The handcraft shop operators, without time-saving machinery.

Senator Ellender. Don’t you sell most of your bread locally?

Mr. Steinmetz. Yes; we sell it all locally, with the exception of the Western States. There are a great many States where the retail baker sells over the boundary line into another State. In the State of New York we have a great amount of bread at the present time coming in from Canada in competition with American bakers.

Now, the differential between the handcraft shop operators-----

Senator Ellender (interposing). What is that operation?

Mr. Steinmetz. It is a bakery which works just like the housewife, it makes the dough by hand, and the baker bakes it in his own store. It is a small retail baker, a neighborhood retail baker who has no distribution through automobiles, and so forth, no routes.

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As an industry in the United States there are about 25,000 of them, employing an average between 10 and 15 people in their shops.

The differential between the handcraft shop and the machine shop, and the chain operators is that the cost of production of the machine operators is 3 percent whereby the retail baker, the handcraft shop operator’s cost of production is 25 to 30 percent.

Therefore, it would be impossible, if there would be one universal hour distributed or given by the Government to the machine-shop operator and the handcraft-shop operator we absolutely could not compete with the machine-shop operators, and therefore I would ask if there could not be an amendment in there that handcraft-shop operators who manufacture perishable food would be excluded in the hours provision.

Senator Ellender. How many people are engaged in your industry?

Mr. Steinmetz. About 300,000 in the country.

Senator Ellender. What is the average rate of pay?

Mr. Steinmetz. The average wage is very high, between $35 and $50 a week.

Senator Ellender. Between $35 and $50 a week. How about the hours a week?

Mr. Steinmetz. They average 48 hours.

Senator Lee. How would this hurt you then? How would this bill affect you?

Mr. Steinmetz. During the last 2 years, during the N. R. A., I will make the statement that 11 percent of the retail bakers went out of business because they were forced out on the hours provision. They could not compete with the machine shop.

During the last 2 years the retail bakers were penalized through the Social Security and the Unemployment Insurance Act, for the reason that they employ labor with high wages.

Senator Ellender. Does it take a specially trained man?

Mr. Steinmetz. Yes; the retail bakers only employ skilled labor.

Senator Ellender. You would be exempt under this bill.

Representative Wood. The machine shops now work an average of 40 to 44 hours a week.

Mr. Steinmetz. Yes, sir.

Representative Wood. None of them work more than 44 hours that I know of in any city. You have not ever been able to compete with them in the last 20 years, have you?

Mr. Steinmetz. Well, we try our best.

Representative Wood. What difference would this slight rearrangement of hours make? How would that effect you?

Mr. Steinmetz. Eight hours a week?

Representative Wood. Yes.

Mr. Steinmetz. If the 40 hours a week would be enforced it would be impossible for us to compete with the machine. The machine operator can work for one-half the time and could exist, could undersell the retail merchant at any time.

Representative Wood. The majority of your retail shops are strictly intrastate. You do not have a very high percentage of retail shops doing interstate business, do you?

Mr. Steinmetz. That is what I would like to bring out here. I am coming from New York, from Brooklyn. I am representing the organization of the Eastern States. We have in New York City high taxes, high rents, very high labor, and we have got bread coming

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from the State of New Jersey, Pennsylvania, Massachusetts, and it is coming even from as far as Canada. Canada ships bread down to New York which competes with every baker in the metropolitan city.

Senator Pepper. You do not ship your bread over the State, though?

Mr. Steinmetz. No.

Representative Wood. If they ship their bread in interstate commerce they would have to comply with the maximum hours and minimum wages provision in this bill, but you would not have to do it as you are strictly in an intrastate business. If they ship from other States to compete with you they would be under this law but you would not.

Mr. Steinmetz. But still the 40-hour workweek would not affect the machine-shop operators by no means. Five hours on the machine is worse than 10 hours in a shop like ours. Five hours on the machine is 10 times worse than 8 hours work in a shop like mine.

Representative Wood. It would take 4 hours a week at least off of the workweek of the employees in the machine shop. They work 44 hours a week in most places and this law would take 4 hours off of their day’s work. It would increase their cost of production. You are doing an entirely intrastate business. You would not have to comply with the 40-hour week, you could still work 48 hours a week. How could they come more sharply in competition with you than they do now?

Mr. Steinmetz. With the machine.

Representative Wood. It seems to me it would be an advantage to you to compel the machine shop to reduce the hours 4 hours per week, because that would increase their cost of production.

Mr. Steinmetz. Certainly they could undersell us, we could not compete by no means with them, because they are not paying any taxes on their machines.

Representative Wood. Well, you are competing with them now.

Mr. Steinmetz. We are competing at the present time with a variety of home products, cakes, pies, and pastry, but the bread industry has been taken away from the retail manufacturer in the last 25 years up to 75 percent.

Representative Wood. Now, if the machine shop would have their hours reduced to 40 hours a week then for every 10 men that they employ they would have to employ an extra man, if this law were passed, but you being in intrastate commerce could still work your 48 hours a week or 8 hours a day.

Mr. Steinmetz. Theoretically you are right but practically you are wrong. All that they would do is put one more machine in there and put 10 men out, and still undersell us. Lots of manufacturers do not employ skilled labor. They have in their big plants one, or at most two skilled laborers and they are not paid a fair price, whereas the retail baker has all skilled labor in his bakery.

Senator Ellender. If you employ skilled labor as you say you do, you would not come within the purview of this act.

Mr. Steinmetz. We would get hurt through interstate commerce. The bakery in the State of New Jersey could ship in their product which are manufactured for far less than we could manufacture them in New York City, and they could take our business away.

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Senator Ellender. If this bill goes through it is going to make their costs go up.

Mr. Steinmetz. This bill would interfere with the machine shop operator by no means.

Senator Lee. As it stands now, Mr. Steinmetz, does not that shop come in competition with you?

Mr. Steinmetz. Yes, sir; they do.

Senator Lee. How would this bill change it?

Mr. Steinmetz. I do not think it will change it.

Senator Lee. Then what is your objection to the bill?

Mr. Steinmetz. My objection is that any bill that Congress puts up a State will adopt it, and for that reason I am here to represent the retail baking industry, because I am sure that when Congress adopts this bill the New York State Legislature will follow, will adopt the same kind of a bill.

The Chairman. You mean they will adopt the minimum wage and the maximum hours?

Mr. Steinmetz. Yes, sir.

The Chairman. That is fine. That is what I have always thought.

Mr. Steinmetz. It will drive the retail bakers out of business entirely.

Senator Lee. That would help you. You say the competitors would put in a machine and lay off their men. Why do not they do it now, if it would lower the cost of production?

Mr. Steinmetz. That causes the unemployment, because of the machines in their shops. Bakers are only employed in handcraft shops, not machine shops, except as helpers where they get low wages.

Senator Lee. I think you are hollering before you are hurt.

The Chairman. All right, thank you very much. We are going to try to give you some customers who will be able to buy your bread.

I have a statement here which I have been requested to place in the record of Mr. Donald Richbeig. It came to me a few minutes ago. I will ask the stenographer to place it is the record.(

The statement referred to is as follows:)

Statement or Donald R. Richberq

This statement will express only my own opinions. I do not make it as the representative of any other person or group of persons. But, because I was one of those deeply concerned with the drafting and administration of the Railway Labor Act and the National Industrial Recovery Act, and because as a lawyer in private practice and in public service I have had an exceptionally long and intensive experience in the adjustment of labor relations, I hope that my suggestions may have some constructive value.

The primary purpose of the Black-Connery bill is, I assume, to eliminate starvation wages, intolerable hours of work, and injurious child labor, in all employments subject to Federal regulation.

A large part of this bill has been very shrewdly drafted to accomplish these objectives, with which I am thoroughly in sympathy and which are widely supported by public opinion. For this very reason I believe that this major effort ought not to be weakened by undertaking at the same time to achieve other objectives which command much less general support, which are much more difficult to achieve, and some of which, although theoretically beneficent, may prove to be in fact undesirable.

Therefore, while strongly supporting much of the pending bill, I would urge the revision or exclusion of certain provisions, which in my opinion will weaken and seriously impair the effectiveness of the legislation.

Before discussing the bill in detail, let me point out that the N. R. A. furnished to Congress and the nation a very forceful example of the danger of overloading

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an administrative body with too many tasks of great complexity and vesting in it too much discretion in their performance. The inevitable result was an increasing pressure from many sides to do the impossible and an increasing resistance from many sides to regulations which lacked the essential support of well-informed public approval. The N. R. A. was squeezed to death between these counter forces which were developed by the law of its creation.

To avoid a repetition of such a tragedy in a law having many similar objectives, it is necessary, first, to limit legal requirements to those which are assured of general public support, and, second, to write those legal requirements clearly into the statute. The lawmakers should not attempt to transfer their personal responsibility by simply declaring a public policy and then directing administrators to enforce it by such methods and through regulations of such a character and extent as they may think wise.

The grant of too much discretionary' power will embarrass the Board, not only because of legal questions as to the extent and validity of such delegations of legislative power, but even more because of a continuing pressure upon the Board to extend its authority and to use its broad powers for the correction of such a multitude of evils that careful, cautious progress in a field of political experimentation will be made practically impossible. The Board will be not only overwhelmed with work but also discredited by its inability to meet the demands of many seeking aid which it cannot render, and by the opposition of those upon whom it will impose requirements of doubtful legislative sanction. The unhappy experience of the N. R. A. indicates clearly the wisdom of giving to an administrative board the protections of a clear mandate to perform a practical task within a definitely limited jurisdiction.

In applying these principles to the pending bill time will be saved by considering primarily the labor standards which are established in board terms and will be definitely fixed by the decisions of the board. The problems and methods of enforcement all depend on the initial determination of what standards should be established, on the assumption that they are generally accepted as desirable and that, as a practical matter, they can be enforced.

PRIMARY STANDARDS

The bill first seeks to outlaw "oppressive” wages and hours of work. But even if a definite minimum wage and a definite maximum workweek are written into the completed bill, the board is given such a broad power to vary these standards upward and downward, as to all employees or classes of employees, that the bill might just as well simply give to the board the power to fix a minimum hourly wage and a maximum workweek. Unfortunately the bill provides no clear and adequate limitations or standards for the exercise of such a large administrative discretion.

To strengthen these provisions, I would suggest that the bill declare an amount, such as 40 cents per hour, as "prima facie a reasonable minimum wage standard”, and then authorize the board to increase or to reduce such standard for specific employments to an extent not exceeding such an amount as 10 cents per hour, but only after a finding that such a variation is necessary to effectuate the policy defined in the act. In declaring this legislative policy the bill should set forth a definite list of factors to be considered in fixing a minimum wage standard; such, for example, as the cost of living, the reasonable value of services rendered, and comparable payments under fair competitive conditions.

In like manner, the bill might declare a number such as 40 hours per week to be “prima facie a reasonable workweek standard”, and then authorize the Board to increase or to reduce the number of hours to an extent not exceeding such a number as 8 hours per week, but only after finding that such a variation is necessary to effectuate the policy of the act. The bill should then set forth the factors to be considered in fixing a reasonable workweek; such as the effect of hours of work on health and efficiency, comparable hours under fair competitive conditions, and the number of persons available for employment.

Another primary standard established in the bill is that of "oppressive child labor” which is in part clearly defined. There is, however, a power of further definition given to the Chief of the Children’s Bureau in the Department of Labor, whereas it would seem that such a definition of “hazardous” and "detrimental” occupations for children between the ages of 16 and 18 years should be made by the Board itself after a hearing in which the findings of the Department of Labor might be taken as prima facie correct.

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SECONDARY STANDARDS

The bill next proceeds to provide for the fixing of a “minimum fair wage” and a “maximum reasonable workweek.” In this effort it seems to me that a policy of most dubious wisdom is projected; and that an intolerable and undesirable administrative burden is laid upon the board. If, under the proposed law, “oppressive labor conditions” can be outlawed, so that an oppressive wage, an oppressive workweek and oppressive child labor can be eliminated, a great advance will be made in the improvement of industrial conditions; and one which will require the full energies of the proposed board and call for the strong backing of public opinion.

The establishment of the standards of “oppressive labor conditions”, and their enforcement, will be in itself a very large undertaking. If this is successful, there will be a sound basis established for any further advance in this field which may then appear to be desirable and practical. But if the additional, heavy burden of trying to establish “reasonable” wages and hours is to be imposed upon this Board, guided only by difficult and vague legislative standards, it is certain that from the start the Board will be overwhelmed with the prodigious task of establishing “reasonable” standards and that its work will be subjected to increasing discredit because of the practical impossibility of policing and enforcing such requirements.

Let me recall that a similar effort was a major cause of discrediting the heroic efforts of the N. R. A. to eradicate unfair labor competition. We found it difficult enough to eliminate indefensible wages and hours—wages that did not provide subsistence, hours that impaired health and assured inefficiency. Yet, in this effort we had the support of a prevailing public opinion, of all organized labor, and of a majority of employers. But when we were pressed to go beyond the prevention of admittedly evil conditions, we found that controversies multiplied, support dwindled, and the enforcement of standards that had to be compulsorily and arbitrarily established became impossible without the aid of powerful labor organization.

As the result of this intensive experience, I became convinced that only through collective bargaining, and standardization of the terms and conditions of employment through adequate labor organization, would it be possible to establish reasonable wages and hours of work so generally as to eliminate unfair labor competition—in a competitive industrial system. Clearly, the Government, assuming its legal authority, can outlaw intolerable and oppressive labor conditions. Such conditions can be defined with reasonable accuracy and their elimination will be supported by public opinion. The field of competition is thereby somewhat restricted, just as it is restricted by laws against fraud and duress. But when we undertake by law to fix and enforce reasonable wages we must assume a responsibility also for fixing directly or indirectly reasonable prices.

Now, it may be that, to maintain a fair competition in modern industry and trade, and to protect employers and workers against unfair labor competition, our Government will be forced eventually into exerting further controls over wages and prices. But when we do go beyond the prevention of what is clearly wrong, into the establishment of what we think would be right, we will assume responsibility not simply for the fairness of competition but for the fairness of the results. That means not merely regulating competition but eliminating competition as the regulator of wages for the worker and prices for the consumer.

The political economic issues of the modern world are too complex to justify any arrogance of opinion; but one can always make a choice between responsive law, whereby legal rights and obligations are rewritten under the pressure of changing social and economic conditions, and dogmatic law whereby we seek to change social and economic conditions by writing new legal rights and obligations. Responsive lawmaking is evident today in the associated efforts of the Government to eliminate oppressive labor conditions and to support the use of collective bargaining to establish higher labor standards.

We have not yet had sufficient experience in the effectiveness of these efforts to know whether they will enable us to adjust conflicts of interest in an industrial civilization by democratic processes. But we have ample evidence from the experience of other nations that, if such evolutionary democratic methods do not succeed and we empower the Government to fix wages and hours of work, and thereby necessarily to fix prices, we shall find that democratic government is an inefficient instrument for the making and enforcement of dogmatic laws.

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Before moving in this direction it seems to me that we should at least attempt further efforts at a more democratic solution. To meet the need for a fairer labor competition we can undertake by voluntary agreements between representative employers and employees in any trade or industry to establish fair labor standards for all employed. If, as we learned often in the N. R. A., a small minority of employers are able to break down such standards by unfair competition, we can undertake to outlaw such competition and seek to enforce not wage and hour rules more or less arbitrarily fixed by Government, but those standards of fair competition which have been determined by the agreement of those most concerned and proved by experience to be practical.

If it is here objected that I am proposing a revival of the N. R. A., let me offer two answers:

First, the N. R. A. accomplished a great deal of good; and it would not be difficult to avoid a repetition of those errors in lawmaking and administration as to which we are well informed.

Second, the provisions of the present bill which I have criticized offer, and indeed invite, a repetition of practically all the errors of the N. R. A. in the matter of fixing and enforcing reasonable wages And hours, without providing some of the safeguards which were provided for the administration of the N. R. A. If we have learned so little from the N. R. A. that we are ready to authorize a repetition of its demonstrated errors, how can we expect that another effort in the same direction will succeed?

It might divert attention from the main issue to proceed at this time with detailed suggestions for the further improvement of this bill. The vices to which I have referred, in the way of indefinite standards, uncontrolled discretion, undesirable extent of authority, and resulting difficulties of enforcement can be easily identified and eradicated by anyone who may agree with my fundamental criticism. But, in conclusion, let me again make it clear that it is just because the primary purposes and objectives of the bill seem to me so absolutely sound and desirable, that I do most earnestly urge that this legislation should be devoted solely to their accomplishment.

It is not necessary in this bill to deal with “unfair labor practices’’, which lie within the field of the National Labor Relations Board. It is not necessary in this bill to deal with reasonable wages and hours, which should be the product of collective bargaining. If we desire now to prevent wage-cutting employers from breaking down an established, reasonable level of wages, we should enact legislation specially and appropriately designed to outlaw such unfair competition. This bill is neither appropriate nor adequate for that purpose.

But if we have now reached the time when the Federal Government is ready and able, without fear of judicial restraint, to go forward to eliminate oppressive wages, oppressive hours, and oppressive child labor from all employments subject to Federal control, then, in the name of humanity, let us do that job, let us do it promptly and effectively, unhampered by the burden of trying to do several well-nigh impossible jobs at the same time by the same board.

The Chairman. Mr. Gardner Jackson.

STATEMENT OF GARDNER JACKSON, CHAIRMAN OF THE NATIONAL COMMITTEE ON RURAL AND SOCIAL PLANNING

The Chairman. Will you state your name?

Mr. Jackson. Gardner Jackson.

Representative Wood. Whom do you represent?

Mr. Jackson. I am chairman of the National Committee on Rural and Social Planning, which is an organization of college professors, social workers, trade unionists, farm laborers, and sharecroppers. It has one Senator and several Congressmen on it. Its purpose has been to try to investigate and give voice here in Washington to the problems of the agricultural workers and the sharecroppers.

I may say that I became interested in this problem during my 2 years in the triple A as assistant consumers’ counsel. Since I have been out I have been trying to help give voice to the needs of these 3,000,000 agricultural laborers in this country who are the most shamefully disregarded section of our working population. I am

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strongly of the opinion that in no field is political judgment founded upon less basis of fact.

No purpose can be served by beating around the bush. You, Mr. Chairman, and all your associates on this committee know as well as I do that agricultural laborers have been explicitly excluded from participation in any of the benefits of New Deal legislation, from the late (but not greatly lamented) N. R. A., down through the A. A. A., the Wagner-Connery Labor Relations Act and the Social Security Act, for the simple and effective reason that it has been deemed politically certain that their inclusion would have spelled death of the legislation in Congress. And now, in this proposed Black- Connery wages and hours bill, agricultural laborers are again explicitly excluded.

I am under no illusions as to the possibility that anything I may say will suddenly undo the convincing myth which the agricultural lobby has, over the decades, built so systematically that it has all the appearance of reality. But I wish to recite for the record a few facts and figures indicating with some degree of persuasiveness, in my judgment, that this carefully developed fear of facing the agricultural labor problem in the United States is now, in very fact, based upon a. mythical picture—is a bugaboo conjured into existence for political reasons (much as the red bogey is conjured by those holding financial and industrial sway who cannot bear to see their power challenged or in danger of slipping from them).

When our committee called a conference of sharecroppers and agricultural laborers a little over a year ago and persuaded the triple A to open a Government conference room for us and permit us to invite officials of various departments to hear our complaints—the first time, incidentally, the Federal Government had ever granted official sanction to such a gathering—it was not surprising to me to have Mr. Wallace, Secretary of Agriculture, in his opening remarks, declare:

The situation with regard to agricultural labor, I think, is the most baffling thing in our whole economic structure. I mean it is a "no man's land."

He concluded with the observation:

I feel that the situation is a little bit loaded with dynamite, and I suppose you know it is too.

I agreed with him but didn’t then have the chance of telling him that I thought the dynamite—political in nature primarily—could be rendered no more dangerous than Fourth of July firecrackers (or orations) if the Government would only seriously investigate the facts and report them. Such an investigation has not yet been made but from some of the information being turned up now by various Government agencies, we are gradually beginning to get a tentative outline of the dimensions of the problem. Before citing some of the figures coming to light—unofficially as yet—in these several inquiries, it is germane to state a few basic over-all facts.

In the first place, of the six million and a half farmers of all sorts in this country only about three million produce something around 86 percent of the farm products—these farmers are, by and large, the owning farmers, the big and middle-sized operators. They are the Producers represented here by the agricultural lobby—the American 'arm Bureau Federation, the Cooperative Council, the Grange, and so forth—which has been instrumental in blocking any attention to

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agricultural laborers. The other three million or more farmers produce only about 14 percent of the country’s products. In this group are the tenants of all degrees (including share tenants and sharecroppers), the small fellows holding on by the skin of their teeth, and 40,000 of them a year sliding down the ladder into outright tenancy, and the tenants slipping into farm laborer classifications.

I cite these two major groups to bring forward the obvious deduction that the latter 3,000,000 clearly are not employers of hired agricultural laborers on any scale worth worrying about politically or otherwise. If you add to these three million or more little fellows to whom wages for agricultural laborers cannot reasonably be a bugaboo, the 3,000,000 agricultural laborers themselves, you have a total of 6,000,000—a population of anywhere from twenty-four to thirty millions—as against the 3,000,000 top crust of farmers who turn out so vast a preponderance of the country’s farm products. Now, looked at as a matter of sheer politics, are not the 6 million potentially more significant?

But when the agricultural laborer figures are broken down further the bugaboo becomes even more apparent. As of January 1935 there were listed by the United States Bureau of the Census 6,812,350 farms in this country. At that time, admittedly a low season of agricultural labor employment, 967,594 farms reported hiring 1 or more laborers. That is between 13 and 14 percent of the total number of farms. (These figures, I must repeat, are purely tentative, as are all subsequent ones I give, but they are from sources of conscientious research and give a definite indication of the problem.)

In that January of 1935 only 107,279 farms in the United States reported 3 or more hired laborers. This is 11.1 percent of all farms reporting hired labor and only 1.6 percent of all farms. These figures and especially the last one, Mr. Chairman and members of the committee, are, I submit, rather persuasive evidence that the agricultural laborer problem is not one warranting—from a statistical point of view—the political jitters which mere mention of it invariably engenders. Going down the table of these January 1935 census tabulations we find 16,840 farms reporting 8 or more hired laborers. Expressed in terms of numbers of agricultural laborers the farms reporting 2 or more accounted for 922,957 laborers, or 56.1 percent of the total number, and those reporting 3 or more accounted for 647,617 laborers or 39.4 percent of the total number. As I have said before, these figures are taken in a low period of agricultural labor employment. For a peak period—August, for instance—they would be upped considerably, particularly in number of laborers employed. But they serve to bring out the point I am trying to make—that the agricultural labor problem, in the typical employer-employee relationship (where two or three or more are hired on a fairly prolonged noncasual basis) is limited to a relatively small proportion of the farms—small enough so that it presents no insurmountable obstacles as an administrative problem as far as minimum wage regulation or control goes.

In a season of peak agricultural labor employment the number of farms reporting hired laborers would probably jump from the 967,000 out of the total of 6,812,000 in the country to roughly a million and a half, with the average for a year being somewhere around a million and a quarter. The number of laborers, in turn, would jump from the approximately one million and three-quarters listed at the bottom

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employment period to somewhere around three million as an average for the year. This, you can see, gentlemen, is no inconsiderable proportion, with their families, of that third of our population which the President has repeatedly described as “ill-clad, ill-housed, and ill- nourished”, and concerning which he has proclaimed his administration must do something.

If to that three million total of agricultural laborers you add the three quarters of a million or a million bottom layer of sharecroppers, a term which has come to be applied too loosely to cover all degrees of tenancy in the cotton South, the total segment of our population involved is even more impressive. Incidentally, the States of Arkansas, Georgia, and South Carolina class sharecroppers for all legal purposes in those States as wage laborers. From both a theoretical and practical point of view such a classification is sound because “absence on the part of wage earners, of ownership of equipment for production is commonly recognized as a prime condition underlying wage earners’ insecurity. In the absence of such ownership, wage earners are, under conventional contractual relations between employer and employee, subject to the will of the owners with respect to the privilege of working with the equipment necessary for production. The wage earner must purchase this privilege with a short- time, insecure wage contract.”

Your true sharecropper, without any tools or work stock or other production equipment, as contrasted with the share tenant, is definitely in that wage-earner category. There is probably no need for me to go into elaborate detail attempting to portray to you the living conditions and standards of these agricultural laborers. Much has been written and said in the past 2 years on the subject, especially from the sharecropper angle. I commend to your attention for descriptive value two recent novels by Steinbeck, In Dubious Battle and Of Mice and Men, which tell of conditions among the workers in the great specialty and other crops on the Pacific coast, the fruit and citron pickers, lettuce pickers, bean and pea pickers, the “bundle stiffs.”

Charges of exaggeration have been made against those of us who have spoken and written about this problem. I honestly believe it is hardly possible to exaggerate. As Secretary Wallace has said several times, conditions among many people working our farms are worse than those of the most degraded peasantry in Europe. Looked at as a mere matter of wages, agricultural laborers average on the whole somewhere between two and four hundred dollars per year cash income. They get their perquisites—food and shelter for the time they’re working—as well. In a study of a small sample of noncasual hired laborers some years ago by J. C. Folsom, of the Bureau of Agricultural Economics, it is indicated that at that time (1926) 39.5 percent of the total remuneration of agricultural laborers was in the form of perquisites and 60.5 percent in wages. Based upon the Bureau of Agricultural Economics reports from farms reporting hired labor, the average annual wage for farm laborers for 1935, the last year for which completed figures are available, was $589.56, including perquisites. The Brookings Institution, which can scarcely be considered a dangerously radical organization, in its study, America’s Capacity to Consume, classifies any family or individual income under $1,000 per year as a “poverty and minimum subsistence” income.

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The studies made by Dr. Stiebling, of the Bureau of Home Economics, for the Department of Agriculture, on diets shows that between $400 and $500 a year for a family of five is required for a bare subsistence diet—a diet which is injurious to health if continued over a long period of time. The pitiful wage picture of these farm workers could be spun out in shocking particulars. For instance, a W. P. A. study on Landlord and Tenant on the Cotton Plantation, published last winter, showed an average income for agricultural wage workers in the sample study—I believe it was South Carolina—was $180 per family in 1934. In a recent California migratory agricultural labor survey over half the white families and a quarter of the Mexican families interviewed reported earnings of less than $350 for the period July 1934 to June 1935. The average earnings per family for the group was about $490. The average number of workers per family was somewhat over two and the average number of days worked per year was 145.

The sugar-beet-field workers in my home State of Colorado get an annual income of between $200 and $300 and work on an average of only 6 months. The 1934 earnings of Ohio onion field workers were almost as low—more than 75 percent of the families earning less than $250 and 98 percent less than $500. Two-thirds of these families had at least two members working in the fields. Incidentally, in this connection of families working in the fields—and, of course, it is notorious that child labor is more prevalent in agriculture than in any other industry—it is interesting to note that, the Handbook of Labor Statistics for 1936, issued by the Department of Labor, stated that “the earnings of families did not rise greatly as the number of workers in the family increases.”

Enough has been said by now to give a picture of the bleak living of these farm laborers from a wage point of view. The recent report of the President’s Farm Tenancy Committee dwells somewhat upon this problem. You may not deny the verity of this picture, in fact, you probably will agree with it, but then you will say, “But what can we do about it? Where can we make a beginning on this mass of farm workers, a majority of them employed for not more than half the year in the fields and the remainder of the time trying to keep alive by working in canneries, through odd jobs or on relief? “Every farmer in our constituency”, you’ll assert, “will be on our necks if we touch this problem.”

Mr. Chairman, the statistics I’ve cited ought to make you understand that we do not approach this matter with any idea that the projected wages and hours board should step right away into the hired hand situation on the family-sized or smaller farm or into the question of the individual laborer or two whom the small farmer hires at the peak of the season. You’ll also doubtless raise the queries Secretary Wallace raised at our conference last year as to the effect of farm laborer wage increases upon commodity prices. I’ll have some reference on that a moment later in connection with Great Britain’s experience. But, Mr. Chairman, we are concerned at the outset primarily with the large-scale operation—much of it absentee ownership, a veritable corporation set-up, as in the onion fields, or the great cooperative marketing associations on the Pacific coast—the operation where three or more laborers are employed.

There is mighty little difference in the relationships between employer and employee in such undertakings from the relationships in

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our urban industry. Or take the beet workers in my home State of Colorado—there are roughly 150,000 beet workers in the country— in their contractual relations to the beet growers. It has few dissimilarities from an industrial relationship. The Federal Government did step into that picture for a brief while under the Jones-Costigan Sugar Act, with its clauses on minimum wage and child labor. Evidence adduced at our conference last year indicated it was not too successful on the minimum-wage side, but did help greatly in reducing child labor. Now, of course, the Jones-Costigan Act is out of the picture and conditions have reverted badly. Our contention is that in these great specialty crops the wage-labor costs are really fractional in deciding final commodity prices to consumers. The market and commodity exchanges are far more a factor. And your food processors and distributors are the greatest factor of all. The trouble is that too often the growers play too closely with the great processors and distributors with the result that the growers do not get enough to pay decent wages to their labor. Take the sugar industry, for example— the President recently had something to say about the greed of the sugar processors and their lobby here. The American public is paying $350,000,000 a year gravy to the sugar refiners under the quota system. None of that gravy has dripped down to the beet workers—that’s certain—and not too much of it has dripped to the growers.

A glance at the profit sheets of the food processors and distributors during the depression tells the story. They were hit the least of any industry. And during the last 2 years their profits have been skyrocketing. Recent Federal Trade Commission investigations show that and how it is done. To the $6,000,000,000 the farmers get annually for their food products there is added another six billion by the time the products reach the consumers’ tables.

Surely there is ample leeway here to force a return to the farmer adequate to enable him to pay something approaching a decent wage to his labor. Mr. Chairman and gentlemen, we can and do earnestly argue from several points of view the proposition that farm laborers, at least in operations where three or more are hired, be included in the minimum wage provision of this measure. We are not prepared to argue on the hours problem, because we do not see an answer to that at present in agriculture.

In the first place, the wages of this vast body of workers cannot fail to have a direct and profound influence on the wages of the industrial workers in their areas. So true is this that various chambers of commerce in the South, in extending invitations to northern industry to locate in their regions, have cited the large supply of cheap farm labor upon which to draw, labor which the chambers of commerce say cannot be organized. The American Cotton and Wool Reporter, magazine of the industry, in a recent issue frankly proclaimed this, as it appeared to the editors, fundamental and incontrovertible fact in the course of hopefully hinting at the failure of the union organization drive in the textile industry.

In the second place, as a matter of sheer economics, looking at the Nation as a whole, this sizable farm-laborer segment, if given something like adequate purchasing power, would have a marked influence on general conditions, including those of the farmers themselves. The farm bankruptcies and foreclosures in the past decade have not

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been primarily among the farmers employing labor. They have been largely among the family-sized farms of the Middle West—Secretary Wallace’s region—and have been caused in part by low commodity prices which, in turn, were caused partially by low mass purchasing power (including that of the three million farm laborers) and by the lower production costs of large-scale operations based in a measure at least upon low wages to farm labor, a situation giving the large-scale fellows a competitive advantage on the market.

In the third place, we might play the sentimental notes harder than we do the notes on the human tragedy of these farm-labor people. Finally, we do repeat our argument advanced earlier than the problem of minimum wages for farm laborers involves no impossible hurdles administratively. The statistics we have cited show that at most only one out of five farmers in the country hires farm laborers even at the peak season. For experience to guide us let us look at certain European countries which have faced this problem.

Now, I do not want to go into any detail on those foreign countries. If I could submit for the record afterwards a little record on Great Britain's experience, which has been eminently successful, I would appreciate it.

The Chairman. We will be very glad to have it.

Mr. Jackson. And Mexico, and several other countries.

The Chairman. You may put that in the record.

(The matter referred to is as follows:)

ENGLAND AND WALES

A. Agriculture Wages (Regulation) Act of 1924 1

1. Summary: Includes dairy farming, use of land as grazing, pasture or meadowland, orchard or ozier land, market gardens or nursery grounds.

Machinery: Minister of Agriculture and Fisheries. Agricultural wage committee for each county: Equal numbers of employers and workers, two impartial members appointed by Minister, and chairman appointed by committee. Central Agricultural Wages Board.

Wages committee is required to fix minimum rates for time work, and may fix minimum piece rates. Committee may be requested by the Minister to determine in cash the value of a cottage, board and lodging, and other payments in kind. Pages 77-79.

B. Results 2

During the second wage-board period the normal wages rose in the summer of 1925 to a figure 75 percent (76 percent in 1926: Great Britain, Minister of Agriculture and Fisheries. Report of Proceedings Under the Agricultural Wages (Regulation) Act, 1924, for the Year Ending Sept. 30, 1936. London, 1927 over that of 1914, while the cost of living was 73 percent over the prewar figures. The real wages were again at the same level as before the war. They were distinctly higher than in the period preceding the reestablishment of the wage board. Thus in both the first and second wage-board periods the real wages of the agricultural workers increased, while these wages decreased in the intermediate period. The effect of the wage-board system in the increase of real wages seems thereby to be clearly established. Pages 90-100.

* * * The general fear that minimum wages deprive workers of their jobs and increase unemployment has not been realized. The fact is doubly significant for Great Britain, with its great industrial unemployment (p. 100).

* * * There does not seem to have been any influence by minimum wages on agricultural prices, and thereby on the welfare of the general population * * * (P- 100).

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1 International Labor Office, Minimum Wage-fixing Machinery, Geneva, 1927,156 pp.

2 Reference is here made to British Agricultural Wages Act, 1824, in- U. S. Department of Labor. Bureau of Labor Statistics, Minimum Wage Legislation in Various Countries, by Rudolph Broda. Washington, December 1928

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C. Relation to Standard of Living 3

By January 1926 minimum wage rates had been fixed by the wage committees in every county, * * * * . Three-fourths of the county rates, * * * were 30, 31, and 32 shillings per week. These rates, while still less than Rowntree’s poverty-line wage, which at the cost-of-living level of this date was 39 shillings, amounted to a 20- or 30-percent increase in wages for farm laborers.

In January 1931, with a decrease of about 7 percent in the cost of living, the rates had been slightly increased in Norfolk and Berkshire.

* * * The continued presence of an * * * uncomfortable number of unemployed in Britain—from three-fourths to one million—between 1925 and 1930 rising to almost 2,000,000 in 1931, has not encouraged, a revision of rates (p. 85).

D. Determination of the minimum rates of wages 4

* * * After a long spell of stability the minimum rates, consequent upon the intensification of the agricultural depression, were somewhat reduced by many of the agricultural wage committees during the period June 1931 to June 1933. As a result, however, of the subsequent improvement in various branches of the industry and the restoration of a measure of confidence, the wages committees generally have restored the cuts, and the minimum wage for ordinary male workers in England and Wales at the end of the period under review had risen to an average of 31 shillings 10 pence as compared with 30 shillings 6 pence when the maximum effect of the cuts was in operation, and with 31 shillings 8 pence before the cuts were made.

URUGUAY

A. Agricultural Minimum Wage Ad (Feb. 15, 1923) 4

1. Regulatory decrees issued April 8 and June 20, 1924 (p. 115).

2. Summary: Includes workers over 16 years of age in agricultural or cattle- breeding undertakings, on estates assessed for purposes of the real-estate tax at more than 20,000 pesos in all [approximately $10,000] (p. 115). Minimum rates fixed by decree, with special provisions for persons 16 to 18, and over 55 years of age (p. 116). Records required to be kept by employer, examined by inspectors, routine on complaint. Penalties (pp. 116-117).

B. Review 5

From personal observation by one of them on some large agricultural enterprises in Uruguay, Percy A. Martin and Earl W. Smith conclude that the law has proved a distinct success (Monthly Labor Review, Labor Legislation in Uruguay, by Percy A. Martin and Earl W. Smith, October 1927, p. 14) (p. 102). The average wage of agricultural workers has gradually risen to 18 pesos a month, the amount fixed by the law as the minimum for medium-sized enterprises. The general objective of the law therefore seems to have been attained (p. 102).

MEXICO

A. Review of minimum-wage law 6

Minimum-wage rates may be fixed for agricultural workers in Mexico by definite processes outlined in the Federal Labor Act of 1931. Wage commissions are composed of an equal number of representatives of workers and employers, presided over by a representative of the municipal government of the locality. In fixing minimum rates for agricultural workers, consideration is to be given to the facilities provided by employers which reduce the workers’ living costs, such as lodging, farming privileges, firewood, etc. (p. 79). (This review is based on V. S. Bureau of Labor Statistics Bulletin No. 569: Labor Legislation in Mexico (p. 20), Washington, 1932.)

Mr. Jackson. I might interpolate, and I will try to be very brief about it, that when I was in Europe summer before last I talked to

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3 Armstrong, Barbara Nachtrieb, Insuring the Essentials. New York: the Macmillan Co., 1P32; 717 pp.

4 International Labor Office, Minimum Wage-Fixing Machinery, Geneva, 1927.

5 U. S. Department of Labor, Bureau of Labor Statistics, Minimum Wage Legislation in Various Countries. by Rudolph Broda, Washington, December 1928.

6 Monthly Labor Review, Collective Bargaining by Agricultural Workers in Various Countries, vol. 42, no. 1, January 1936.

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all the land workers’ organization people I could find in Europe; and among the most interesting of those with whom I talked was the chief of the Land Workers Union in Germany, who had escaped with his life, to Copenhagen, while 20 of his associates were murdered in cold blood by the Hitler ruffians. This land-worker official was convinced, in retrospect, it may have been wish thinking backward, that had his union paid more attention to its really trade-union organizational basis and gone after the rural communities to make them understand the need of giving this mass of wage workers in the fields an adequate living, they might have been able to block the Hitler regime in Germany. He cited as one piece of evidence the fact that Hitler’s first aid in this instance was from the large landowners in Bavaria. That is where his first real financial backing came from.

Now, I haven’t touched upon the problem of what has happened to agricultural labor when they tried to organize, the brutal tactics that have been used against them—the Associated Farmers of California and their vigilante drives, the experience that we had with our Southern Tenant Farmers Union in Arkansas, and all the rest of such ruthless violations of the farm workers constitutional rights. I hope eventually the La Follette committee will look into those matters.

Nor have I gone into a very careful analysis of the discriminations against agricultural labor and social legislation the country over, both as to child labor, workmen’s compensation laws, minimum wages, and our laws for women, the safety laws, and so forth, prepared by Leif Dahl, head of a farm laborer’s A. F. of L. union in New Jersey, published in the American Federationist.

It is literally true that in almost all States, certainly the States that have been surveyed, statutes governing child labor specifically exempt agriculture. The same applies to minimum wages and hours for women, and so forth.

Now, there is one point I should like to bring out, that some of the previous witnesses have mentioned. Your previous turpentine testimony was most interesting to me. The point I want to bring out is the question of definition of agricultural or farm laborer. I have talked with various of the counsel over at the Bureau of Internal Revenue who were having this trouble of defining farm labor as a matter of taxes in regard to the social security law, and they say that industries that really are not agricultural at all are bringing enormous pressure to bear upon them to include their employees in some form of agricultural labor definition, I think that is inevitably going to be the pressure as time goes on.

Now, there is one final word that I should like to say, and that is, that as a strict labor problem it is conceivable that these agricultural laborers are going to organize themselves and be organized on a very much more extensive scale than they have heretofore been organized. Potentially a very large number of workers will be organized. I think the play is very likely to be, and it is obvious that it is the only play that can be made that the agricultural workers in unions will work together with a union or unions of the small farmers, so that you will get your 3,000,000 agricultural laborers in combination with those 3,000,000 small farmers really working out some sort of a pressure, some sort of activity to try to increase their standard of living if, under this act, the thing cannot be done by the Government. I hope it can be done by the Government.

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The Chairman. Thank you very much.

I have been requested by Ernest H. Daniel, chairman of the dairy industry committee, to place in the record a statement in behalf of the dairy industry committee.

(The statement referred to is as follows:)

Statement of Ernest H. Daniel, Chairman, the Dairy Industry Committee, Washington, D. C.

The Dairy Industry Committee, after careful study of the provisions of H. R. 7200 and S. 2475 and their application to the dairy industry, find that there are specific phases of the proposed legislation which we are convinced merit the careful consideration of your committee and that of the Congress.

These are, in summary:

1. The handling of dairy products made from milk which is produced on farms where child labor may be employed.

2. The effect of the bill upon 6,000,000 producers of milk for whom this industry provides the marketing facilities.

3. Enforcement in an industry comprised of thousands of units.

4. Farmers and consumers’ interest should receive consideration as well as the possibility of “unreasonable curtailment of opportunities for employment.”

5. The status of salesmen who are not under direct management supervision.

6. The relation between seasonal or part-time employment and the minimum annual wage of $1,200.

7. The maintenance of regulated wages and hours against the competition of farmers’ direct marketing and against lower wages in other methods of marketing service.

8. Handling the most perishable of all products in conformity with Federal, State, and municipal regulations.

9. Clarification of the definition of "employer.”

10. Ambiguity with regard to regulations and orders.

11. Equitable treatment of employees in the same industry.

Without undue elaboration, we respectfully submit the following comments relative to the subjects just enumerated.

CHILD LABOR ON FARMS

Section 7 (a) would make it unlawful for any person to transport "unfair goods” in interstate commerce. “Unfair goods” means “goods in the production of which employees have been employed in any occupation under any substandard labor condition.” An “agricultural laborer” is excluded from the definition of "employee”; but such laborers are exempt from the operation of the act only to the extent that the Board defines and delimits the term. The term “delimit”, referred to in the recital of the Board’s authority, means to fix, mark the limits of, to demarcate, or to bound. Thus in reference to agricultural labor, the Board is given broad authority. Are we to assume that the relation of agricultural child labor to the proposed legislation rests with the Board’s authority to define and delimit the term “agricultural laborer”? We submit that the bill contains no clear explanation of the manner in which the Board may treat the problem of child labor on the farm. The question becomes more vexing when it is noted that the term "employee’ is defined to include “any individual employed.” "Employed” contemplates engagement by an employer who is “one who employs, especially for wages or salary.’ It is not necessary that one, to be employed, must be employed for wages or salary. This bill in its reference to “employee”, “employed”, and “employment” does not state whether the employment is for gain. It refers to “employed” presumably in its broad sense, which includes one whose services are engaged, whether gainfully or otherwise.

Can we assume that a person in our industry is not in violation of this section when he manufactures or processes and transports milk or milk products made from milk in the production of which child labor may have been engaged on the farm? We believe the bill should expressly provide that the handling in interstate commerce of milk and milk produced on farms where child labor is engaged does not constitute a violation of section 7 (a).

Section 7 (b) makes it unlawful for any person directly or indirectly to transport or cause to be transported in interstate commerce or to aid or assist in transporting, etc., any unfair goods or any goods produced by employees under the age of 18 years into any State where such goods are in violation of any law of such State.

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In case one State might prohibit child labor on farms within its jurisdiction a person in this industry handling milk or a product thereof which may originate from a farm where child labor is engaged would be guilty of violation of this act. This would reach into the interstate movement of cheese, butter, ice cream, evaporated milk, and other forms of milk products.

Does this legislation intend that the processor and distributor should be held responsible when he has no control over the use of child labor on the farms from which he may purchase his milk?

The effect of the legislation upon the 6,000,000 producers of milk for whom this industry provides the marketing facilities has two aspects.

RELATIONSHIP TO AGRICULTURAL ENTERPRISE

The dairy manufacturing, processing, and distributing industry affords the marketing facilities for most of the 6,000,000 farmers who milk 25,000,000 cows every day of the year. The marketing, which involves processing, affords employment in varying degrees to agricultural labor in many relationships. In many cities a considerable proportion of fluid milk is directly marketed by the producer who owns and milks the cows. In many rural communities one or more farmers may own small cheese or butter manufacturing units.

Marketing and manufacturing in a large segment of the dairy industry is so close to the grass roots of production that it is often impossible to find a line of demarcation separating the two functions. For this reason it is also difficult to define the sphere in which the middleman, as such, operates. It is also true that even the larger units of the dairy industry do not concentrate thousands of employees under a single roof as do the steel, automobile, textile, and similar industries.

In the course of this industry’s providing the marketing facilities for dairy farmers it is subject to seasonal fluctuations as great as 100 percent in the volume of milk which it may be called upon to handle. This is brought about by seasonal conditions with which you are familiar. You know that spring brings grass and warm weather when cows produce much more milk than they do during the winter periods, as a general rule. Because of this great fluctuation the industry is compelled to provide facilities and employment schedules adequate to handle milk and cream of continuously varying volume. Each day’s receipts of milk must be processed whether the farmer delivers 1 pound or a thousand pounds. If these elastic handling facilities were not provided, it would result in great loss to the dairyman and to the industry. This is true because milk and cream are the most perishable of all products.

The farmer who produces cream for butter manufacture customarily delivers his product at his own convenience. Saturday, which is market day for farmers brings tremendously larger receipts of cream than other days of the week We doubt that Congress can or should try to meet this irregularity or undertake to level out deliveries, because it would create greater inconvenience for the agricultural producer.

COMPETITION OF FOREIGN PRODUCTS

Imports of dairy products from foreign countries are increasing. This fact is disclosed in the following table based upon United States Department of Agriculture reports:

Page 1206 Competition of Foreign Products

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It will be seen that imports of cheese were 25 percent, or approximately 12 million pounds, greater in 1936 than in the preceding 3 years. During the first 4 months of 1937, these imports were 26 percent, or 4 million pounds, greater than in the same period of 1936.

The figures disclose that while 1936 butter imports were less than half as much as in 1935, they were nine times greater than they were in the years immediately preceding 1935. The imports during the first 4 months of this year have been more than twice the volume recorded for the same period of 1936 and almost equal to the imports for the whole year off 1936.

Although imports of casein and dry milk thus far are less than they were for the corresponding period of last year, it will be noted that approximately the same amount of each product has been imported during the first quarter of this year as was imported during the entire year of 1935.

These increasing imports reflect the disparity between prices in this country and in the principal foreign nations producing these products.

Moreover, the volume of goods imported does not adequately reflect the far- reaching effect these imports exert upon the price which the American farmer receives for his milk and cream.

The growing volume of dairy imports confronts American dairy farmers with a grave problem which will not be resolved until tariff adjustments which recognize the disparity between labor standards here and abroad are enacted for the protection of the American producer. This disparity would be still further widened by the higher wage costs contemplated in these bills.

LARGE NUMBER OF SMALL UNITS----ENFORCEMENT

Section 6 (a) page 16 (H. R. 7200), would in effect provide an exemption for an employer employing less than — employees.

The dairy industry is composed of a large number of small units of manufacture and distribution. Records indicate there are 8,500 fluid milk units, 4,100 wholesale ice cream units, 3,500 cheese units, and 4,500 butter units. Frequently one or more units are located in the same plant. A plant may handle butter and ice cream or fluid milk and butter, or perhaps three various units. Plants of these types are scattered throughout the United States. In these plants the number of employees ranges from 2 or 3 to more than 100, but the number of plants in the latter group is relatively’ small.

Because of the shortage of time we have not undertaken to obtain an analysis of the number of employees in the dairy industry. We do submit, however, two illustrations:

Page 1207 Ice cream industry

The above analysis refers to wholesale ice cream plants. In addition there are over 10,000 retail ice-cream-manufacturing establishments employing one or two employees.

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Page 1206 Competition of Foreign Products

This illustrates that a great number of employees are employed in plants which provide work for less than 10 employees. Our knowledge of the balance of the cities with regard to milk distribution and with regard to the butter and cheese industries permits us to state a similar situation prevails in them.

Regardless, for the moment, of the diversity in the number of employees per plant in this industry, it is submitted that when the application of an order upon a multitude of conflicting units might prove to be impractical and unenforceable, than it seems to us, the Board should not be required to apply the provisions of the bill. The breakdown of law observance usually comes from the lack of sympathy and support from those affected. The Board should have authority to determine whether the application of an order will accomplish the broad purposes of the legislation and will be possible and practical of general application, observance and enforcement.

FARMERS AND CONSUMERS WELFARE

Section 4 provides that the Board shall, from time to time, by regulation or order, apply the provisions of this bill to employments if the Board finds that such provision can be made applicable to such employments without unreasonably curtailing opportunities for employment.

So far as the dairy industry is concerned there exists in the provisions of this bill a problem of graver significance than that presented by the possibility of curtailment of employment opportunities. We respectfully request the committee to give solemn consideration to the possibilities embraced by this bill for curtailing the opportunities of the American dairy farmer.

If the provisions of this bill result in advancing consumer prices sufficiently to stimulate additional imports of foreign products into this country, the American dairy farmer will suffer a reduction in the prices he receives for his goods. The Congress and this administration recognize the farmer as a factor of major importance in economic recovery. We urge caution lest the application of the provisions of this bill work a hardship upon him.

And on the other side of the picture, consumer service is an important factor in this industry. In the fluid milk business approximately one-half of the money received from consumers is paid for the milk delivered to the country receiving platform. Twenty-five to twenty-seven percent is paid directly to labor. In the ice-cream industry almost 25 percent of the sales price is paid directly to labor. These labor costs do not include the labor involved in the production of supplies and raw products. Your committee may deem this a matter which the Board should consider in determining whether the application of the provisions of this bill unreasonably curtail opportunities for employment.

Does not Congress intend under this bill to give the Board latitude in determining the effect upon other groups of citizens such as the agricultural group or

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the consumer group? This is a bill designed to assist labor, and with this we have no quarrel. Administration is vested in the Board. We suggest, however, that the Board should be charged with even broader responsibility than the welfare of employees. It should be charged with the public interest. Hence, Congress should carefully consider the necessity of giving authority to the Board to exempt industries from the provisions of this legislation, if in their application they would adversely affect agricultural interests or consumer interests.

CLASSIFICATION OF SALESMEN

The definition of an employee given at the top of page 4 (H. R. 7200) would exempt executive, administrative, supervisory or professional employees with authority given to define and delimit such employees. There is a group of employees, salesmen, which in this, as other industries, are not and cannot be under close supervision of management in regard to the hours in which they may be engaged. These employees are customarily paid on a commission or salary and commission basis, which recognizes their independence of direct management supervision. They are as individual in their method of work and as responsible to themselves for their own time and accomplishment as are those of the executive, administrative, supervisory or professional groups.

MINIMUM FAIR WAGE OF $1,200

Due to seasonal fluctuations in milk production on the farms, the dairy industry affords, during its seasonal peak, opportunity for employment to those otherwise unemployed or to the employees of other industries which have opportunities for employment in other seasons. Is it the intention of the authors of this bill to permit the establishment of an annual wage income for seasonal or part-time employment. It also appears that unless some modification is made in the wording from lines 22 to 25, inclusive, on page 14 and lines 1 to 33, inclusive, on page 15 (H. R. 7200) demands might be made upon the Board for such minimum wages for seasonal or part-time employment.

Most employees of this character have other means or other part-time or seasonal employment. It would be difficult for the Board as well as the employer to determine what other employment, seasonal or part-time, such employees might enjoy.

DAIRY INDUSTRY FACTORS NOT CONTEMPLATED BY THE BILL

The competition which is provided by farmers who deliver their product directly to consumers and the type of competition afforded by other methods of service which requires less labor and pays lower wages should be considered by the Board in its determination of the effect of the application of a regulation or order.

All of you know that milk and cream are the most perishable of all products and must be handled with the greatest of promptitude to prevent deterioration and financial loss. This fact, together with the necessity of employing trained and semiskilled men to handle the product under highly fluctuating circumstances and in conformity with Federal, State, and municipal ordinances and regulations to promote and protect the public health, should be taken into consideration in determining whether a labor standard order should be issued.

But at the risk of repetition, we do not find authority in the bill which permits the Board to weigh these matters with a view to evaluating the possible effectiveness while the issuance of an order is under consideration.

DEFINITION OF EMPLOYER

In the dairy industry there is one potential group of employers which are not covered and one real group which is not clearly covered in the definition of employer in lines 18 to 24 on page 3 (H. R. 7200).

The definition of employer would exempt the United States Government even though an employee might be engaged in a similar capacity to that of industry. If the States or political subdivisions thereof become engaged in industry, their employees would also be exempted.

The United States Government has made many loans to enterprises operating in the dairy industry. The time may come when the Federal Government may be required to take over the operations of these properties on which loans have been made, as it is doing now with loans which were made under other circumstances and in other fields.

The definition of “employer” does not exempt a labor organization when acting as an “employer.” If it is necessary to protect against this situation, then it is

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equally necessary to protect against an agricultural organization when acting as an “employer.”

There are a number of agricultural organizations engaged in marketing, processing, and distributing their products. There would be other possible complications because agricultural labor is exempted under the provisions of this bill with authority given to the Board to define and delimit it. There should be no possibility that employees of agricultural organizations so engaged may be classed as agricultural laborers or otherwise exempted.

REGULATIONS AND ORDERS

A labor-standard order shall be issued only after hearing held pursuant to section 13 which in turn refers only to a labor-standard order. According to the definition, a labor-standard order means an order of the Board under certain sections of the bill. But in the language of the bill frequent references are made to regulations which seem to deal with somewhat the same objects as do orders. There is, however, no uniformity in the way in which references to regulations and orders are made throughout the bill. Where the terminology is “by regulation or order” it would appear that a regulation and an order might be synonymous but when the terminology is “by regulation or by order” it would appear that they may be different.

In line 3, page 12 (H. R. 7200), the phrase “by regulation or order” is used and similarly in line 12 of the same page. In lines 19 and 20 of the same page, the phrase “by regulation or by order” appears as it does in line 5 of page 13 (H. R. 7200).

In line 6, page 14 (H. R. 7200). the “Board shall make an order” and similarly in line 23, page 15.

In line 22, page 16, “The Board shall by regulation or order”, and in line 7, page 17 “The Board shall * * * define by regulation or order.” Lines 14 and 22, page 17, refer to orders but not to regulations. In line 7, page 18 (H. R. 7200), “Any such order may contain”, while in line 11, same page, “The Board shall provide by regulation or by order.”

In lines 10, 21, and 24 of page 21 (H. R. 7200), only orders are referred to, as is the case on pages 22, 23, 24, and 25.

This is confusing. Is the bill designed so that regulations may be adopted without hearing, or is it designed so that regulations shall mean the same as orders? Certainly if they have the same force and effect but are different than an order, they should be subject to public hearing just the same as an order of the Board.

While on the subject of public hearings, it might be well for the committee to consider the omission of “trade associations” as parties who might go before the Board to request a hearing without having their bona-fide interest determined by the Board (lines 18, 19, p. 27, H. R. 7200).

LABELS

Under the terms of section 17 (a) “The Board may require by regulation or by order that, any goods * * * shall be plainly and clearly labeled.” Diversity of products, packages and facilities for labeling require that such a provision, although not objected to, should be fully considered. Hence it would seem that hearings should be held prior to the adoption of any regulation or order requiring the labeling of goods.

COURT REVIEW OF ORDERS

The bill provides in section 25 for court review of orders. We have previously pointed out that there are labor-standard orders, regulations and orders provided for in this bill. If it is necessary in order to have a court review of orders and that the method under which this review may be obtained must be set forth, it should certainly be apparent that regulations and labor-standard orders should be subject to court review and regulated in the same manner.

EQUITABLE TREATMENT OF EMPL0YEES IN SAME INDUSTRY

Lines 19 to 22, inclusive, of page 35 permit the Board to classify persons and prescribe different requirements for different classes of persons. Congress should carefully consider the establishment of such a possibility. Is it intended under this provision that the Board could classify competitors differently, or might require employers of the same or different number of employees who are competitively engaged to meet different labor standards? Such a possibility would be highly prejudicial to any group of employees who might be engaged by an

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employer who may he classified otherwise than his competitors. Legislation designed as this is should have for its paramount purpose, it seems to us, equal treatment for employees who are employed under similar conditions in the same industries in the same communities.

The Chairman. Senator Pepper has also requested that I insert in the record for him a letter addressed to him dated June 4, 1937, by Mr. Clarence R. Bitting, Watch Hill, R. I. This is a discussion of this particular measure, and we will insert that at Senator Pepper’s request.

(The letter referred to is as follows:)

June 4, 1937.

Hon. Claude Pepper,

United States Senator, Washington, D. C.

Dear Senator Pepper: The President’s message of May 24, 1937, on legislation “further to help those who toil in factory and on farm” is the only reference which I can find which specifically indicates that the proposed hours-wages bills are intended to cover agriculture, although, as I read the bill (S. 2475) I do not find that agriculture is exempted or excepted. With this I have no quarrel, provided of course the law, as finally enacted and administered, is fair, reasonable. and just. I have no patience with the cry now being raised that such type of legislation, irrespective of its fairness, reasonableness, and justice, is an invasion of private and personal rights; every right we have necessarily carries with it an obligation, and I view the broad general approach developed by the proposed legislation as an interpretation of the obligation inherent in the right to employ others—the laborer is entitled to fair pay for a fair day’s work.

My experience with various types of activities, in many sections of the country, compels me to urge upon you the necessity of providing, most distinctly, for regional control subdivided by activities. Proper provision must be made for seasonal activity, such as harvesting of crops as well as other seasonal employment, if justice is to be administered to employer and employee alike. The result hoped to be achieved, as I read the legislation, is more toward a fair annual income than necessarily the wage per hour.

The exemption of employers of small working forces from the provisions of the law will, I am afraid, cause the reinstitution of abuses, such as the establishment of sweatshop conditions in many industries and the possible extension of the worst features of sharecropping and tenant farming. Mr. Murchison of the Cotton Institute can, no doubt, fully develop for you, far better than could I, the possibilities of sweatshops of four, six, eight, or more employees in the textile and needle trades. On the possibilities for abuse in the agricultural field I think I can speak with authority and will use our Everglades operations as an example.

You arc familiar with my philosophy as expressed in the actual operations of the plantations in Florida. We pay much higher than average farm wages, provide living accommodations, and conditions far higher than any other large employer of field labor, and endeavor to protect our workmen from the extortions of those who, for various reasons, attempt to make an easy living off this class of persons. All these things are done by us not because we want to run a philanthropic institution but because we believe it to be good business and enlightened self-interest, the most compelling force in human nature.

We find that the best results for both the workers and ourselves can be obtained from working the men (as you know we do not employ women or children) in crews of 20 to 25 and it is our intention to continue to operate for the best interests of all concerned, both employer and employee, irrespective of the minimum number of employees placed in the final legislation. To escape the provisions of the proposed legislation, those not possessed of farsighted self-interest might find it .advantageous to break their operations into small units to be operated under some form of contract or agreement with an individual employing one less than the minimum number of employees to which the proposed legislation would be .applicable. I can visualize, and I think you can, what such methods would mean if carried out in the Everglades. They would mean the utter break-down of the high standards now established in the Everglades and would undoubtedly be followed by much lower wages, as well as abominable living quarters and conditions for the workers and the introduction of all of the worst features of sharecropping and tenant farming which, most fortunately, are not found in the Everglades today. I am sure these same deplorable conditions might also come into -being elsewhere in the country.

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Part I, section 2 (a), subparagraphs (2) and (3), delimit the proposed law so as not to be applicable to the Territories and possession of the United States. This I consider to be most unfair. These areas have all the protection that a State has and in some instances none, or few, of State obligations; they have free access to our markets and in some instances extremely low standards of living. From our studies of labor conditions and wages in the various sugar areas I am satisfied that Hawaii, while not paying as high wages as we do, is far better in this respect than any other offshore area. During recent hearings on proposed sugar legislation a representative of Puerto Rican sugar interests testified that cane land in Puerto Rico was worth 8700 to 8800 an acre. I maintain that no land for agricultural purposes is worth any such amount. The reason land is valued so high in Puerto Rico is due to the fact that it carries with it an unwritten franchise to exploit labor inside our tariff walls and in substantiation of this statement I respectfully refer you to various reports of Department of Labor and Brookings Institution on this subject. Continental producers having to abide by the standards set up in the proposed legislation should be protected from the unfair competion of underpaid offshore labor, either by making them subject to the provisions of the proposed legislation, or providing that their production be denied admission until they meet such standards.

With the very much higher standards of living in the United States (which I would like to see much higher and which I believe can be accomplished), the social security and other taxes to which we are subjected, and the proposals contained in the hours-wages legislation, it seems only fair and reasonable that our domestic markets, both industrial and agricultural, should be protected from the competition of low standard of living countries. Unless this is done I am fearful that our problems of general welfare will become aggravated in the future. (May I direct your attention to the difference between low wages and low standard of living, we, of thiB country, are more interested in the real standard of well-being, not necessarily the wage per hour, because it is conceivable that a very high wage per hour might buy none of the comforts, and but few of the necessities of life. We all know that increased prices for our own production increases our resources but we all hate to have the cost of that which we buy increased, because it lowers our resources and for this reason, if no other, human nature being what it is, the individual will fill his necessities at the lowest cost and this will probably mean the purchase of merchandise and supplies from low standard of living countries having neither social security, hours or wage legislation, which the consequent decline in demand for American products produced under high level standards.

As you know I believe that we are far short of the goal possible in this country: Higher standards of living, represented by both higher real wages and lower relative costs to the consumer, with adequate food, clothing, and shelter for all of our people who are willing to work. This is all within our grasp if we will protect our people in supplying their own needs.

Sincerely,

Clarence R. Bitting.

_________________________

Statement Submitted by Erwin Feldman, National Association of House-Dress Manufacturers

National Association of House Dress Manufacturers,

New York, N. Y., June 23, 1937.

Gentlemen: The National Association of House Dress Manufacturers iB the representative trade association of the house-dress and wash-frock manufacturing industry. The association represents members of the industry who do approximately 85 percent of the business, whose total annual volume is approximately $150,000,000 and who emploj- approximately 100,000 persons.

This industry, because of its methods of operation, its products, the geographical location of its members and in many other respects, differs widely from the women’s apparel needle trades, as typified by the New York ready-to-wear silk-dress industry.

Some members of this industry have been established for upward of 50 years in the business. Among our members are some of the oldest and largest mercantile establishments in America.

During the existence of the National Recovery Administration, the overlapping question arose between our members who operated under the cotton-garment code and the firms operating under the code for the dress-manufacturing industry. This question developed into one of jurisdiction. Many unfair and improper methods

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were resorted to in an effort to transfer the jurisdiction of the members of this industry from the code under which they were operating, to the code for the dress-manufacturing industry, with which they had absolutely no connection, and under which it would have been impossible for them to continue in business. Members of this industry and administrative officials will recall the harassing experiences which our members underwent until they were finally able to convince the National Recovery Administration of the impropriety of the claims of the New York City dress industry.

No useful purpose would be served in recounting each and every administrative act and development during the N. R. A. code period in which this industry was involved, but the record will show that from August 1933 to May 1935 the industry, through its representatives, was in constant attendance in Washington, attending hearings, fighting administrative orders, obtaining stays and struggling against a bureaucratic assault such as no American industry ever experienced at the hands of a Government bureau.

This industry, in principle, does not oppose the Black-Connery minimum-wage and maximum-hour bill if the bill stands for the establishment of fair standards applicable to all industries alike. We are fearful, however that the placing into the hands of a board of five the power to set up varying standards according to industry classification will once more raise the questions of classification and definition and will bring about a return of the horrible conditions which prevailed during the N. R. A.

The members of this association oppose such provisions of the bill as are calculated to bring about this result. We oppose anything but the establishment of fair minimum wages and maximum hours for all industries which will not dislocate competition in favor of any particular region of the country or any particular branch of the industry. We do not want to be victimized by the ignorance of an administrative board who will probably follow the dictates of certain pressure groups who now seem to control all Federal departments.

It took the N. R. A. almost 2 years to comprehend the issues which were involved in the conflict between this industry and the New York ready-to-wear dress industry before we could get relief. We do not want to go through such experiences again at any cost.

For an interesting analysis of this issue, we refer you to the publication of the Division of Review of the N. R. A. in March 1936, entitled "Some Aspects of the Women’s Apparel Industry”, by Shetrman Trowbridge, Works Material No. 44, dealing with the overlapping between the Dress Code and the Cotton Garment Code during the N. R. A., beginning at page 90. Mr. Trowbridge, a former N. R. A. official, made a study of this bitter controversy and after making the trenchant observation that the "intensity of the controversy would have prevented any sort of effective industrial self-government through an amalgamated code authority. It is a mild simile to compare the situation to the impossibility of mixing oil and water. A more explosive comparison, such as gunpowder and fire, would be more accurate”, concludes with the following statement and recommendation, on page 100.

"CONCLUSION—SOLUTION VIA BASIC, UNIVORM STANDARDS

"The National Industrial Recovery Act was an emergency act. While its basic principles and much of its specific content had their roots in earlier developments of thought and practice, its exact form was determined by existing circumstances, and it was largely a venture into territory that had had only theoretical exploration. As previously indicated, it appeared desirable that the wishes of industry should be respected as to not only the areas to be covered by the codes, but also so far as possible, as to the type of wage structure to be established under each code. It could not be foreseen that this entirely reasonable approach to codification would have the unfortunate result of creating a hopeless tangle of overlapping, quarreling divisions of industry, or that practical administrative measures would fail to effect adjustments of such overlapping situations as might arise.

"Now, however, bitter experience has been gained. It is possible to look back upon the code experience analytically and objectively, and to weigh in the balance the theoretical value of the principles and policies which governed the structure and procedure of N. R. A., against the convincingly demonstrated practical disadvantages caused by certain of these principles and policies. In a remodeled act for industry regulation there would be, or should be, changes. The exact nature of these changes would again depend upon existing circumstances and the prevailing attitudes of industry, labor, and the Government, but it is

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"inconceivable that past experience should be disregarded, and that specifically,, the overlapping problem should again be permitted to foment strife of such- intensity that the success of the general program would be endangered.

"“As a practical matter it would seem that the basic necessary modification of policy involves changed conceptions of, first, the scope and extent to which Federal law may operate in the regulation of industry without introducing complications inimicablc to effective administration; and, second, the role to be played by and the authority delegated to industry in the formulation and administration of the provisions of the law.

"“The policy of protecting wage rates above the minimum by means of elaborately classified wage schedules in one segment of the industry, and of coincidentally recognizing the low-wage status of a competitive industry group by adopting a simple basic minimum wage, and the policy of segregating the two groups on the indefinite basis of self-determination, trade association organization, and entirely inadequate product distinctions, have proven unworkable. If a recurrence of the unhappy experience of overlapping codes is to be avoided in future, these polities must be modified, even at the expense of abandoning some of the potential gains, and of restricting the objectives of regulation to a limited but attainable- area.

"“It is recognized that a proposal to adopt simple, uniform wage and hour provisions for broad divisions of industry such as the needle trades, would be opposed by those elements whose established wages are high and hours low, or at least such a proposal would have been strenuously opposed under N. R. A. There have been evidences in recent months, however, that support of the simple basic wage and hour principle would now be found in unexpected quarters. The author has heard directly and at second hand from certain influential individuals that a change of attitude has taken place. 1

"“The administrative advantages of such a simplified program are obvious. In the first place, there would be no necessity for attempting to draw narrow distinctions between allied industry groups. Broad group definitions might not eliminate all conflict between the needle trades and the knitting trades, for example, but even in that instance, if the basic wage and hour requirements were the same, there would be only minor questions of jurisdiction to be settled. So-far as wages and hours are concerned, in fact, there would be no need for codes or code authorities, except to the extent that the code authorities might act as statistical and compliance agencies. As to compliance, there is good reasons to question the desirability of again delegating police and judicial powers to industry, in view of the potentialities or actualities of abuse when these powers are placed in the hands of individuals or groups who by the force of circumstance cannot be considered impartial in their attitude toward other individuals or groups. Such functions as might be added to those performed by the Federal agency charged with administration of the law, would be counterbalanced by practically eliminating the heavy load carried by the National Recovery Administration in handling exemptions, overlapping problems, and controversies over differentials. It is no exaggeration to say that if these three tasks had been eliminated, the work of the deputy’s office in the apparel section would have been reduced by three-quarters, perhaps by nine-tenths, with a consequent reduction in personnel required, and that opportunity would have been afforded for other and perhaps more constructive work.

"“It is by no means a proven hypothesis, moreover, that the result of such a simplified program would inevitably be a net reduction in wages and purchasing power, or that it would create unfair competition. It is at least tenable, on reasonable grounds, to assert that in general, classified craft wages would continue to be protected by the unions, and further, that there is a somewhat automatic check on minimum wages becoming the maximum, in the necessity for maintaining productivity in each plant. If a manufacturer fails to recognize this necessity and makes no provision for regarding the productivity of individual workers by piece rates, task and bonus, or other device, his production falls; his unit costs rise, and he is placed at a disadvantage in comparison to his competitors; of course, there will always be exceptions, but some evidence of the way this works is indicated by the data on wash-dress-industry wages under the code, when the minimum of about 34.7 cents per hour unweighted average between 36.1 cents in the North and 33.3 cents in the South) resulted in an average wage of 41.2 cents per hour.

"“The factor of productivity also has a general equalizing effect upon unit costs of similar competitive garments produced in metropolitan, unionized shops at

_________________________

1 The confidential nature of these expressions, and the possibility that future circumstances might necessitate reversals of official attitudes, maxes it impossible to state their origin.

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higher wages and in out-of-town nonunion shops at lower wages. Insofar as the two wage levels represent the productive abilities of two classes of workers, and there is abundant evidence to indicate that metropolitan workers are more productive than workers in the less thickly populated areas, the labor costs of garments produced by both classes of workers will tend to be equal. Naturally this does not mean that any particular area differentials apply uniformly and equitably to all establishments in either area, but it implies that in terms of competitive costs, assuming a basic minimum wage except where union agreements have created higher wages, the differentials so established are in some measure diminished by the unit production per worker in the different areas. In any event, it is doubtful if the unfair competition resulting from such instances of disproportionate differentials as might exist would cause as much damage to the morale of the industries and to their respect and confidence in the Federal program as was caused by the overlapping situation as it existed under N. R. A.; and some measure of protection against the worst type of sweat-shop competition would certainly be gained.

“The importance of having the approval, support, and confidence of industry can hardly be overstressed, as no law is effective without the essential element of public acceptance.

“In plotting a future course, the potential gains and losses must be weighed. Perhaps it is a compromise; perhaps it is a choice of evils; but as between following a formula whose weaknesses are known through past experience and adopting a policy which may reasonably be expected to yield substantial benefits, and which at the same time is obviously far more workable in practical application, there would seem to be no question as to which course should be followed.”

After almost 2 trying years of N. R. A. regulations of industry N. R. A. officials came to the conclusion that the best way of handling such problem would be by simple basic wage-and-hour regulations, without attempting to impose the impossible standards such as were attempted during the N. R. A.

For that reason we earnestly request all due consideration be given to a limitation of the power of the board to be set up under the proposed bill in order to prevent a recurrence of the conditions which existed during the N. R. A.

Respectfully’ submitted.

Erwin Feldman,

Director and Counsel, National Association

of House Dress Manufacturers, Inc.

(Letter submitted for the record by Senator Allen J. Ellender:)

United States Senate,

Committee on Agriculture and Forestry,

June 22, 1937. Joint Committee on Labor,

Washington, D. C.

Gentlemen: Enclosed is copy of a memorandum prepared by Mr. Tracy L. Harrel, manager of the Winnfield, La., plant of the Mansfield Hardwood Lumber Co., of Louisiana, Inc. I would appreciate your incorporating the enclosed memorandum in the hearings now being held on the Black-Connery bill.

With best wishes,

Very truly yours,

Allen J. Ellender.

Memorandum Regarding Minimum Wage and Maximum Hour Legislation

It is apparent that the administration is going to introduce a minimum wage and maximum hour bill and the general talk is that it is going to be 40 cents an hour, and a 40-hour week. This is the time to point out the situation and what the effect of this legislation would be on lumber and no doubt many other industries in the South.

The cost of living in the South is lower than in other parts of the country and labor is plentiful. Because of this situation machinery to eliminate men has not been necessary and in fact we have not, in the South, favored labor-saving machinery on an even break. In contrast the western lumber manufacturer has faced a different situation in that the cost of living is much higher and in many cases he could operate only part of the year on account of the weather and also there was a shortage of labor. For this reason the western lumber manufacturer has installed all the labor-saving machinery he could and that coupled with his larger logs, has made it possible for him to produce about four times as much lumber per man-hour.

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The lowest rate for common labor paid by the large mills in the South west of the Mississippi River is about 27 cents an hour for a 44-hour week. If this is increased any large percent it will result in the lumber manufacturer in the South putting in labor-saving machinery and eliminating over half of his men. The question is whether it is right to force the manufacturer of lumber and many other products in the South, who have pursued a policy of the employment of as many men as possible, to throw this vast multitude of labor out of employment. Further, there are many manufacturers who have a business that could not do as we would be forced to do in our case (install machinery and eliminate men), and these manufacturers would no doubt be forced out of business. Their employees would lose their jobs.

(Statement of the Sailors’ Union of the Pacific, submitted for the record by Representative Richard J. Welch:)

Sailors' Union,

Washington, D. C., June 23, 1937.

To the Honorable Members of the Joint Committee on Labor, Washington, D. C.

Sirs: Having been unable, during the course of the hearings conducted under your auspices on the Fair Labor Standards Act of 1937, to appear before your committee in person, I take this means of communicating to you the position of the Sailors’ Union of the Pacific with respect to the aforementioned bill.

I understand that the committee invites constructive discussion, and I trust that what I have to offer will fall into that category.

Representing as I do, the 8,000 members of the Sailors’ Union of the Pacific I wish to say first of all, that this organization has, for 52 years, been in the forefront of every struggle for better conditions for seamen, and w'e see in this bill, a long forward step in the direction toward which we have pointed our own efforts. The provisions for abolition of child labor, industrial espionage and strikebreaking are most commendable.

Without going into some of the usual controversial sections of the proposed act, I would say that the two things which we would discuss here are—

1. Does the scope of the bill extend the authority of the Board to cover seamen?

2. Will the Board as set up under the proposed act in any way, transcend, supplant, supersede, or overlap the authority and duties of the National Labor Relations Board or the Maritime Commission, as their authority and duties apply to seamen?

As we read and interpret the proposed act, the answer to both questions is yes.

With respect to no. 1, the bill as written, does not specifically except the seamen from the operation of the provisions of the act. At the same time, there is nothing in the bill which repeals any previous acts or parts of acts with which its proposed provisions may conflict.

In this connection, I would refer you to the Social Security Act for legislative precedent. By specific language, seamen are excluded from participation in that benefit.

To further emphasize the point, I would refer you to section 2 (a), subsection 7, of the proposed act, wherein certain exclusions are listed, among them agricultural laborers. Seamen are not mentioned, and it can be presumed, and it indeed is the opinion of some authorities that seamen could be included in the definition of “employee” as set out in section mentioned.

However, it is our honest opinion that the purpose of the law is to make provision for the prevention of unfair labor practices in industries not already covered by law, particularly in industries engaged in the production of commodities and goods. This conclusion would seem to be borne out by the exception of agricultural laborers from the definition of "employee” in the proposed act. I would point out that so far as the seamen are concerned, they are not engaged in production; rather they are part of the “carrier” system.

But the bill is not clear on that point, and in our opinion, it should be made so.

With respect to no. 2, I would respectfully call your attention to the provisions of section 10 of the National Labor Relations Act of 1935, which section is entitled “Prevention of Unfair Labor Practices.” It reads in part:

“Sec. 10 (a). The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8) affecting commerce. This power shall be exclusive, and shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, code, law’, or otherwise.”

I understand that opinions have been asked as to whether section 8 as referred to above covers all the points covered in the proposed act, particularly as regards

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espionage and strikebreaking, and that in the event section 8 is held insufficient in those respects, new legislation will be asked for in remedy of those defects. However, with respect to other practices, it would seem that the duties and authority of the proposed board would overlap the duties and authority of the National Labor Relations Board.

Further attention is called to title III, section 301, of the Merchant Marine Act of 1936, wherein the Maritime Commission is empowered to perform, for subsidized vessels of the United States Merchant Marine, duties similar to those assigned to the proposed board under H. R. 7200 and S. 2475. The section referred to reads in part:

“Sec. 301 (a). The Commission is authorized and directed to investigate the employment and wage conditions in ocean-going shipping and, after making such investigation and after appropriate hearings, to incorporate in the contracts authorized under Titles VI and VII of this Act minimum-manning scales and minimum-wage scales and reasonable working conditions for all officers and crews employed on all types of vessels receiving an operating-differential subsidy. * * * ”

Here again, if seamen are to be included in the definition of “employee” as set out in section 2 (a), subsection 7, of the proposed act, it would appear that the authority of the proposed board would overlap the authority and direction of the Maritime Commission.

I offer these references and observations for your consideration, because within the past 3 years, the seamen, through organized effort, have reached certain agreements which have resulted in better conditions for them. These agreements have been so written as to be operative within the present provisions of the law with respect to labor relations between employer and employee.

Our union does not like to see any further or additional legislation enacted to cover a group of workers already so well covered, which might tend to create some confusion in labor relations, which are now on the road to practical and successful operation.

Therefore, I ask on behalf of the Sailors Union of the Pacific, that the bill be so written as to exclude the seamen from the operation of the provisions of the bill.

Respectfully,

E. R. Howell,

Assistant Secretary and Legislative Representative.

(Letters submitted for the record by the House Committee on Labor:)

Congress of the United States,

House of Representatives,

Washington, D. C., June 4, 1937.

Congressman Wm. P. Connery,

Washington, D. C.

My Dear Congressman: I am attaching hereto a letter received from Mr. J. E. Slater, of the Slater Lumber Co., New Bern, N. C., who is, in my opinion, one of the best-informed lumber manufacturers in my section of the State. He presents facts very- similar to those which we discussed a few days ago and I would greatly appreciate your bringing this matter to the attention of the committee and, if possible, have this letter printed in the committee hearing.

With personal regards, I am,

Very truly yours,

Graham A. Barden.

New Bern, N. C., June 3, 1937.

Hon. G. A. Barden,

Member of Congress, Washington, D. C.

Dear Sir: Following suggestions might help you in considering the wages and hours as applied to lumber industry in the South:

1. Number of men employed at different plants per thousand feet of production; viz, mill equipped with mammoth production by machinery with few men, might produce say five thousand feet per day per man employed—another might produce 2 thousand per day per man employed, and another one or three thousand or even one-half thousand per day of men employed. This factor enters in the different costs for different mills, and as object seems to be to get more men

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working it will be easy to get more out of work by forcing smaller producers out of business and letting large producers increase production out of proportion to employment given, and thus do exactly what you are trying not to do; on an average cut of 10 hours per day our plant produces net finished lumber ready for sale 24 thousand per day. We employ average of 78 men, about 300 feet per day per man. Check up on other operations in the South and also in the West. See the kinds of mills that are employing more labor per thousand feet of production. Take the 26 billion feet of lumber being produced and see how many jobs are given per thousand feet of production—then do not discriminate, play fair in arriving at this, then the pay per hour by different mills can be obtained to make production cost work out fair per mill. The mill that produces most per man per thousand feet should reduce production to the point where their production per man per thousand feet equals other mills.

2. The proposition of costs versus grades in different sections in arriving at the right answers. Average percentage of knotty low-grade lumber obtainable from timber in this section is running around 75 to 80 percent, all of which is handled at a heavy loss by plants of our type; the other 20 to 25 percent has to be good enough to offset the loss in the low grades. This consideration should be a factor, one section versus another.

3. Class and type of labor employed in various sections—low-grade, medium grade, high-grade labor. A flat minimum price means paying a sorry slow-moving, devil-may-care, good-for-nothing specimen as much as a good man that is worth two to five times as much anywhere—anytime. The proposition of a blanket union for good and bad—go to the market buy two oranges—one half rotten— pay as much for a good one and be forced to eat them both at the same time and keep it up on that ratio or worse.

There are a number of suggestions; if we can be of further help, call us.

Respectfully,

The Slater Lumber Co., Inc.

_________________________

Congress of the United States,

House of Representatives,

Washington, D. C., June 5, 1937.

Hon. William P. Connery, Jr.,

House of Representatives, Washington, D. C.

Dear Mr. Connery: I beg to hand you herewith for inclusion in your record in connection with the hearings on the wages and hours bill a letter from Mr. C. S. Beardsley, secretary of the Consolidated Labor Councils of Vallejo, Calif.

May I add that I am in accord with the views that are expressed by Mi. Beardsley.

Sincerely yours,

Frank H. Buck.

Consolidated Building Trades, Metal Trades, Central

Labor Councils of Vallejo and Vicinity,

Vallejo, Calif., May 29, 1937.

Hon. Frank Buck,

House of Congress, Washington, D. C.

Dear Sir: In view of the fact that so-called “N. R. A.” legislation will probably be considered by this Congress it is quite likely that arrangements will be made so that individuals and associations will frequently desire or be required to appear before certain administrative or quasi-judicial committees provided to carry out the provisions of the law.

In view of the very evident fact that it is quite impossible for California citizens to attend Washington, D. C., conferences, we urgently request that any proposed National Recovery Administration legislation should carry a specific provision that hearings and the reviewing of such hearings be held in the immediate vicinity where the cause of action is received.

We urgently request your active support to incorporate the above provisions in pending legislation.

Very truly,

C. S. Beardsley, Secretary.

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Congress of the United States,

House of Representatives,

Washington, D. C., June 9, 1937.

Hon. William P. Connery, Jr.,

Chairman, Committee on Labor, House of Representatives.

Dear Billy: I enclose you herewith- copy of letter I have received from my good friend, Mr. Idus T. Gillett, of the Dowlett Packing Co., at Canutillo, Tex., and which is self-explanatory.

It seems to me there is much merit in what he says concerning small packing, and canning plants such as his. I will thank you to present this letter to the committee and if it is permissible under the rules, I would be glad if you would incorporate it in the hearings.

Thanking you and the committee to give same careful study and consideration,. I am

Very sincerely,

R. E. Thomason.

Dowlett Packing Co.,

Canutillo, Tex., June 3, 1937.

Hon. R. E. Thompson,

House of Representatives, Washington, D. C.

Dear Mr. Thompson: The new labor law as proposed, setting up 40 hours a week and a proposal of 40 cents and hour as a minimum wage to be paid, will absolutely put small canners like ourselves out of business, because of the seasonal nature of our operation. I am sure you realize that small canneries like the one we have on our farm and operating approximately 20 weeks in the year, are placed at a decided disadvantage with the larger packers who operate on a year-round basis. We are paying at present 25 cents an hour, which is twice the prevailing scale on the farm, and if we are now forced to raise the ante another 30 percent, obviously we anticipate grave concern as to the final outcome. This would wipe out all of the margin of profit in this highly competitive game, and as we are generally forced to sell our product at 25 to 50 cents a case under the highly advertised lines, such legislation as this will force small canners out of the picture, the result being that only the large ones will be left.

Again as to hours: The preservation of foods being seasonal necessarily requires for several weeks, depending on the nature of the crop, everyone work double- quick time in order to preserve the crop as quickly as possible. We think that serious consideration should be given any further “upping” of prices as regards food and the elimination of small canners will accomplish just that.

May I suggest that some sort of exemption be given small canners operating in rural communities who employ less than 20 regular employees on a year-round basis. You can readily see that our products are bound to flow into New Mexico, because of the fact that we are only 6 miles from the line. While we are in thorough sympathy and accord with bettering conditions, we would hate to face ruin by legislation which automatically kills the goose that lays the golden egg. In other words, instead of being able to contribute employment for some 5 months in the year, labor would be deprived of that should we be forced out of business. The canning business from our angle is so closely kin to agriculture in every sense of the word that 40-hour weeks are entirely out of the question because of our inability to procure seasonal labor on account of the peak coming for a few weeks, and then dropping off to where we employ very few employees.

I would appreciate very much your keeping me advised as to progress being made on this legislation, and while we again wish to say that we are very much in favor of giving labor a fair deal, we do know that raising wages in a cannery in an agricultural community to approximately 3 times the prevailing wage about us simply brings on chaos instead of something desirable. As stated before, we are already paying twice the prevailing scale paid by farmers, and this 30 percent or more increase simply means that we will have, in all probability, to cease operations, with the net result that very shortly the larger canneries can place their own price on their commodities in the El Paso area. What we have said about our own cannery I think will apply to the three other existing canneries here on the project, which can something in excess of 100,000 cases of food per annum. Were it not for these canneries all over the United States, I would be afraid to say just what the dear public would be paying for tomatoes, spinach, string beans, chili, etc.

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With best personal regards, and wishing to thank you for all of the fine work you have been doing for our project, and also to state how proud we are of you for this, I am

Sincerely yours,

Idus T. Gillett.

_________________________

American Pulpwood Association,

New York City, June 23, 1937.

Joint Committee on Labor,

Washington, D. C.

Dear Sirs: I beg to submit herewith a recommendation for an amendment to the present draft of the Black-Connery wages-and-hours bill, upon which hearings are now being held before your committee, exempting from the provisions of this bill industries, the operations of which, like agriculture, are subject to control of weather and seasonal conditions.

Together with this suggested amendment, I am submitting a statement on behalf of the American Pulpwood Association, which points out conditions which make it impossible for this industry to operate on any restricted or prescribed weekly basis, which situation may also apply to other industries controlled by weather and seasons, and, on behalf of this association, may I request that this suggestion and accompanying statement be incorporated in the records of this hearing.

Very truly yours,

William P. Good, Executive Secretary.

The American Pulpwood Association is a trade association having 198 members located in 25 States and representing over 60 percent of the annual production of pulpwood in the United States.

The members of this association, although favoring the objectives of the Black-Connery bill, are generally opposed to the principles involved in the methods which the bill proposes to use for attaining those objectives. They are opposed to such broad Federal control over industry, to the infringement on State rights and finally to the placement of such autocratic power and control over the industrial life of the country in the hands of five men, which this bill contemplates.

Should the Congress deem it advisable and worthwhile, although no national crisis now exists, to scrap beliefs and ideals which have been a part of American life since the Nation was born, for the purpose of attaining the ends desired, the members of the American Pulpwood Association still believe there are certain unalterable conditions surrounding the pulpwood industry, which must be considered. We make this statement, not because this association takes the position that all industry should be subject to regulation except this industry, but because the conditions referred to are beyond the control of any human agency. They relate to weather, physical conditions, and type of operation, which, as we have stated, are practically unalterable by man. In explanation, therefore, of the amendment which we will hereafter present we earnestly urge consideration of the following facts relating to the necessary method of operations in the pulpwood industry.

First, we would refer to discussions which took place with the National Industrial Recovery Administration during the National Recovery Administration, on the question of restricting operations in the pulpwood industry to any specified or limited number of hours of labor per day or per week. This question was long under consideration without any decision or any feasible suggestion as to how restricted hours of labor could be adopted without serious injury to the industry and to the very individuals which such a project aimed to help.

Almost generally throughout the pulpwood industry employees are paid not on an hourly basis but by the unit of measure known as the cord. This method developed largely because operations are scattered over wide areas, frequently in locations hard to reach, so that close supervision is practically impossible. The employee is left on his own and his efforts are rewarded on the basis of his production. No record is kept of his time and it would be economically impossible to supervise any such restriction.

The working week for American labor has gradually been reduced over the years. Such reduction has been accomplished slowly and without increasing appreciably the labor cost per unit of production, because of the substitution of labor-saving machinery. Machinery has been introduced only to a very small extent in the production of pulpwood. The axe and handsaw are still the only implements which have proven economically satisfactory in felling and cutting

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trees into pulpwood sizes. Operations for pulpwood frequently occur far from power outlets and other facilities accessible to the average industrial plant. Accordingly, the employee must use physical labor and he uses it in part time, overtime or in any way he may choose to produce the most income for himself.

Bad weather (rain, floods, etc.) prevents work in the woods. In some regions, particularly in the South, pulpwood is cut as it is consumed in the mill. Several days of forced idleness create the necessity for extra effort in the following days to prevent mill shutdown from lack of wood. It is not feasible to put on extra crews for several days only in order to take up this slack, particularly at this time when many sections are faced with an acute shortage of woods labor. In the South wood cannot be stored for long because, particularly in summer, it quickly deteriorates and is attacked by insects, mold, fungus, etc., which prevents storage of wood to insure against possible shortage.

In the North and West pulpwood is frequently transported to destination, or to reshipment points, by the “drive” method—that is, floating the wood down streams. This work must be entirely accomplished during the spring period of high water, between the time the ice goes out until the stream is reduced to its normal level. This is a short period and every daylight hour must be utilized: for, unless the wood is driven to destination before the stream recedes, the “drive” may be hung up or stranded, the wood becomes unavailable until the next spring high water, and a whole year's work is nullified. Enlargement of crews is not feasible as in many cases only a definite number of men can be used at one time, and, as these driving crews must follow the drive as it proceeds downstream, this also necessitates movement of a large amount of cumbersome camp equipment which must be moved with them.

The principal type of pulpwood delivered to consumers is known as sap-peeled wood—that is, the bark is removed during sap season when it can be most readily loosened. The sap seasons vary in length for different species of wood and in different elevations or climates, or with varying wet or dry seasons, and range from 1 month in the case of certain hardwoods to 4 or 5 months. It is the usual practice for a man to cut down and peel in tree lengths as much wood as possible during sap season; for this supply furnishes him with work for the balance of the year, first in sawing and piling and later in hauling when snow roads can be made. Accordingly, every available hour must be utilized by such an employee, during the sap-peeling season. Frequently this work is done in off-season by farmers and their help, adding to their income derived from other agricultural pursuits. To limit a man to any specified workweek would reduce his income, decrease pulpwood supplies because such labor is now scarce, and result in no benefit to any person or group. Indirectly, the resulting shortage would tend to curtail employment in the consuming industries, thus defeating one purpose of the bill.

In the North snow or ice roads are used for transportation of pulpwood from forest to mill, to river bank, or to another transportation center. It is economically impossible to construct any other type of road where rough ground, swamp, and heavy undergrowth exist. Thaws, heavy snows, and other weather conditions determine the success of the transportation of pulpwood over these roads. While the weather is right, every hour of daylight is used so that the wood cut and piled may be hauled out and landed at its destination or shipping point for further transportation.

Men who work in the camps, miles from any center of recreation, are only too glad to put the daylight hours to remunerative use. If restricted to a short day or short week, there is nothing for them to do with their spare time, 40 or 50 miles from town and from any facilities for recreation. These men expect to put in all the possible hours during a season and reserve their fun until they come out with the largest possible earnings they can produce while weather conditions permit.

Operations in the woods cannot be carried on except during hours of daylight. During winter months, the daylight period is so short that it would be impossible to work in shifts. For example, if a day were restricted to 6 hours of labor and there are only 10 hours of daylight, a second shift would be impossible except on the basis of 4 hours.

In the pulpwood industry, when nature provides opportunity, man must take advantage of it. Pulpwood is harvested just as any other product of the soil and operations in the industry are dependent on weather and seasonal conditions. When the farmer prepares the soil to plant his crops, he must do so as seasons and weather permit, just as the pulpwood operator must await season and weather which permit him to cut and peel the trees which are eventually made into pulpwood. When farm products have reached the stage of harvesting, the farmer must use every available hour in gathering and transporting these products to

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destination, just as the pulpwood operator must gather up and transport bis wood to destination, whether it be over snow or ice roads, “driving” streams, or otherwise, as rapidly as weather conditions and seasons permit.

The facts heretofore presented we believe demonstrate definitely either that this industry should be classed as agricultural or exempted by an amendment exempting any industry whose operations are of such a character that it is obvious that the provisions of the bill cannot be made to apply equitably because of uncontrollable factors. To accomplish this result we, therefore, suggest that article 7 of section 1, part I, be amended to read (the amendment being in italics) as follows:

(7) “ ‘Employee’ includes any individual employed and any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unlawful discharge, and who has not obtained any other regular and substantially equivalent employment, but shall not include any person employed in an executive, administrative, supervisory, or professional capacity or as an agricultural laborer as such terms are defined and delimited by regulations of the Board, or any laborer employed in an industry, the activities or operations of which are controlled by weather or seasonal conditions."

American Pulpwood Association.

June 22, 1937.

The Chairman. This will close the hearing, and so far as the joint hearings have been held there will be no future evidence taken.

I wish to express my appreciation to the Members of the House for their cooperation on the committee, and also to the Senators.

(Whereupon at the hour of 6 p. m., the hearings ware concluded.)