he has been able to survive against that in private industry line, he should be able to survive against it in the Federal Government line.

Mr. SUMNERS. You made a point that I think the committee would regard as of considerable importance; that a manufacturer operating in a community in which the local standards of wages and hours, and so forth, would be precluded here from bidding on a Government contract. Unless he happens already to have observed the peculiar or particular standards issued by the Department of Labor he could not bid. You make some point of that, do you not?

Mr. KELLOGG. I do; and here is the particular difficulty that I see: For instance, in that bill that you speak of, the wage standards were in 1934 and they evidently referred to the code wage standard, but I happen to know, from hearsay, that the nut, bolt, and rivet industry never did get a code; they simply submitted them and got them rejected, and so on. There was no wage standard in anything. Now, if the Government sends out an order fixing the wage standard for all of the parts of that structure-in other words, if the minimum wage be paid by everybody making any part of this structure is to be so much, and the maximum hours are to be so much, that is one thing, but in the various industries we have different situations. You are running into a matter of immense complications, that is what I meant when I said a little while ago, without intending it at all, that the enactment of this bill might have a slowing up effect on the situation, and people would kind of sit back and say, "Now, here, I don't know just whether I should bid or not."

Mr. DUFFEY of Ohio. Do you mean to say that private industry is not able to absorb this kind of new legislation?

Mr. KELLOGG. The only answer I can give to that is this: That undoubtedly there are certain units and perhaps whole industries that would not be able to, and undoubtedly there are certain others that would be able to absorb this legislation.

Mr. SUMNERS. What would you suggest would be a provision in this bill that would meet substantially what the authors of this bill had in mind, and give reasonable liberty to manufacturers and reasonable protection to employees?

I mean here is in this bill, incorporated the power on the part of the Secretary of Labor to establish these conditions that enter into eligibility, what would you suggest would be a fair substitute for that and, at the same time, leave reasonable liberty to manufacturers properly to carry on their business?

Mr. KELLOGG. I cannot suggest a formula that would do it, sir. Mr. SUMNERS. That is the trouble we always have in these things, when we try to do something about these things, I do not mean to criticize you, we do not have anybody to help us. They say that ours is not good, but they have not got anything better. You understand, I do not mean anything at all as far as you are concerned. Mr. KELLOGG. I do not take it at all personally, but I know full well that I would be entirely incompetent to frame a bill that would meet all of these situations that are going to come up here.

Mr. SUMNERS. You see, our competency is under constant challenge, but we do not have any competitors.

Mr. RAMSAY. If this minimum-hour and minimum-wage bill for a State would do it, would you be in favor of that?

Mr. KELLOGG. No; I am not prepared to go that far. I am only prepared to go to the extent that perhaps there is the power in the State, when the State is the buyer of goods of manufacture within that State, to put in a provision somewhat similar to this, similar to what is intended here under the Federal act.

Mr. RAMSAY. Do you think it will be fairly impossible to have a State law regulating the maximum hours and minimum wages?

Mr. KELLOGG. I would be inclined to think that, in certain industries, it would be practicable, and in certain other lines of industry it would not be.

Mr. RAMSAY. Suppose one State would have a 2-hour day-requires 2 hours more work a day than another State-how would the State that had the lowest hours compete in the manufacture of goods anywhere at all?

Mr. KELLOGG. Well, that is assuming, of course, that your wage is not reduced proportionately to the reduction of the hours.

Mr. RAMSAY. Would you not have this situation: That the State having the lowest rate of wages and rate of hours would seek to take advantage of that situation?

Mr. KELLOGG. That is inherent in the competitive system, as I see it, which is existent now. It would seem to me, also, that Federal regulation would create the confusion.

Mr. RAMSAY. If the Federal regulation is uniform throughout the country and not arbitrary, how could it?

Mr. KELLOGG. If it is literally uniform, it is going to make one of the biggest shifts of industry from one part of the country to the other that this country has ever seen.

Mr. RAMSAY. As the bill stands, taking into consideration local conditions, anything that arranges the hours and wages-let me see a minute. It says [reading]:

may take into account all relevant circumstances affecting the value of the services or class of service rendered

that is the first thing we arrive at that you would fix—

may be guided by like considerations as would guide a court in a suit for the reasonable value for services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid, and (3) may consider the wages paid for work of like or comparable character by employers who voluntarily maintain minimum fair-wage standards; and in establishing maximum hours may take into account (1) the prevailing weekly total of hours for such class of services in the year 1934, (2) the health and safety of employees, (3) the amount of unemployment in the particular industries-

and so forth.

Taking all of those local conditions into consideration, do you not think it is possible to arrive at a fair minimum wage in each community?

Mr. KELLOGG. If that wage is not to be uniform, I would think such community would come nearer to knowing what condition is local than any one single Federal bureau in Washington.

Mr. RAMSAY. Well, they would have to go to the community to find out or have someone report from the community what the wages were. For instance, if you go to the Pittsburgh area, what trouble would there be to find out what their prevailing rates were in the steel mills? There would not be any difficulty about that, would there?

Mr. KELLOGG. I am not familiar with the Pittsburgh area, but I am willing to assume it would not be difficult to find out the prevailing rates in the mills.

Mr. MICHENER. It would not be difficult at all, would it, because down here in Washington, in the Department of Labor, they have on record the union wages everywhere where they have unions, and there would not be any necessity of making any inquiries, but just look at the books and see? Would not that be all that there would be to it?

Mr. KELLOGG. I am not prepared to say what they have in Washington, because I do not know. They may have statistical returns on all the industries. They may have on certain of the large industries, but I am not prepared to say that they have statistical returns on everything. I think Congress here passed a law about 2 years ago authorizing a census of industry, and I think the Census Bureau at the present time is collecting statistical data; but I am not advised at the present instance as to how classified the information is going to come in. I just do not know what is the answer to the question.

Mr. HEALEY. You favor, do you not, the elimination of sweat shops, child labor, and prison labor?

Mr. KELLOGG. Yes; I do.

Mr. HEALEY. And if we were able to find a sound, constitutional way of eliminating those, at least on Government contracts, would you not be in favor of it?

Mr. KELLOGG. I would think it would be a good thing to eliminate that, if possible.

Mr. HEALEY. Do you not think it would give a manufacturer who has set up decent standards in his plant or factory, a better opportunity to obtain a Government contract, if we would eliminate from bidding on these contracts persons or firms who do notmaintain decent standards? Would not that equalize his oppor-: tunity to get one of these contracts or get some of these contracts? Mr. KELLOGG. I am inclined to think it would, but I do not see how, practically, you are going to get that result.

Mr. CHANDLER. May I ask this gentleman a question?

Mr. HEALEY. Yes.

Mr. CHANDLER. The answer which you gave to the gentleman from West Virginia, Mr. Ramsay, relating to the shifting of industry throughout the United States, if this bill should become law-I would like very much if you would elaborate briefly on that. I live in Tennessee and represent the Memphis, Tenn., district, where there are a number of rather growing industries, and I would like to get that point cleared up in my mind. What do you mean by that?

Mr. KELLOGG. All I had in mind in regard to that was-and I think I limited my answer to that-that if you had an absolutely uniform wage scale throughout the United States, you would soon have a departing from the present existing situations, and that, if you could enforce the new wage scale, inevitably industry would change, because wages are not the whole cost of industry, because you have got your freight rate, you have got the question of climate, you have got the question of heating your buildings, you have got the question of snowstorms, or no snowstorms, or the question of floods.

.

Now, the selection of a site for industry is a matter of a multiple of factors. I will admit that labor is a very large factor, but it is not the only factor. If you change the labor factor in the picture, either by leveling it off, or assuming that such a thing could happen as that the bureau down here might make a mistake as between one locality and another, you might have a situation where industry would move from one place to another.

Mr. CHANDLER. I am interested in improving, if possible, the conditions of people who work in industry, but I would not want to make an attempt to improve them in such a way that industry would move away and leave these people without any work to do in my district. That is why I was interested particularly in your question. I do not want to have industry move out from under labor.

Mr. KELLOGG. No; and when you are in certain situations, when you raise the price of things by raising the wage level, you reduce the total wage payments, because there is less made and less consumed.

Mr. HEALEY. All right, Mr. Kellogg, we thank you very much. Mr. KELLOGG. I thank you very much, Mr. Chairman, and gentle

ment of the committee.

Mr. HEALEY. Mr. Gall, who is your next witness?

Mr. GALL. Mr. Chairman, may I present Mr. Hook to the committee? He is one of our witnesses.

Mr. HEALEY. The committee will accommodate Mr. Hook, because we understand he cannot be here much longer.

Mr. GALL. May I present him to the committee as a witness for the National Association of Manufacturers?

Mr. Hook is president of the Geometric Tool Co., of New Haven, Conn. I do not think Mr. Hook will tell you very much about his background, and I would like to do it. The Geometric Tool Co. makes tools to produce threads on the ends of bolts and on the inside of nuts. It has been in business about 40 years. It is a small concern employing 150 to 200 hands-a good many of whom are skilled.

Mr. Hook, the president of the company, also was chairman of the Connecticut Unemployment Commission, was appointed by the Department of Labor to select and enlist Connecticut's quota in the C. C. C. camps and is a member of the Emergency Relief Commission in Connecticut which, until the advent of W. P. A.. had disbursed Connecticut's share of Federal relief funds.

Mr. Hook was a permanent industrial adviser to the National Recovery Administration, a member of the Industrial Advisory Board, and the administration member of the boiler manufacturing industry code authority.

Mr. HEALEY. Very well, Mr. Hook.

STATEMENT OF JAMES W. HOOK, PRESIDENT OF THE GEOMETRIC TOOL CO., NEW HAVEN, CONN., ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

Mr. Hook. Mr. Chairman, my name is James W. Hook, and I am president of the Geometric Tool Co., of New Haven, Conn.

I am more particularly interested in this bill as to its effect, its immediate effect upon my business and other businesses like

mine. I have prepared a statement, Mr. Chairman, which I would like to read, because, to get into the subject extemporaneously, might mean a long discussion.

Last August I presented to your committee a statement in opposition to the Walsh bill, S. 3055. You also thought that the bill should not be passed and declined to report it out of committee. Today you have before you a bill, H. R. 11554, introduced by Mr. Healey, which, if reported favorably by you and passed by the House, and not accepted by the Senate, may go into conference for correlation. with the above mentioned Walsh bill. If, as I hope will not happen, the legislation in some form reaches the conference stage, the question of what that conference will agree upon is of very great importance to American industry. I am here to point out to the best of my ability and judgment what the effect of such legislation upon industry would be.

I am opposed to the Healey bill. Obviously it was the intention of the drafters to overcome at least some of the objections to the Walsh bill. The Walsh bill included contracts regardless of the amount of money involved. The Healey bill exempts those under $2,000. The exemption which would come to the minds of those who are familiar with Government contracts and with various acts such as the Vinson Act would be $10,000. Such an exemption would avoid the terrible confusion that would arise in the case of thousands of small contracts for services and purchases from suppliers' and manufacturers' stocks. To avoid misinterpretation and doubt as to meaning, however, the exemption should be carried over into section 2 and inserted after the word "subcontractor" in the first line (line 18). Surely this is what is meant. I cannot believe, as some have suggested to me, that it was the intent of the drafters to make an exemption in the case of a principal contractor and deny the same exemption to a subcontractor.

Another objection to the Walsh bill which was sought to be overcome in the Healey bill is the supposed relief which is given to principal contractors from having to enforce compliance on the part of subcontractors. In my testimony in connection with the Walsh bill last August, I pointed out that the Walsh provision constituted a legalized boycott in disguised form, a thing foreign to our democratic society and a device which the world over has led to such confusion, resentment, and evasion as to make fair and reasonable enforcement impossible. All of us have freshly in mind the experience of trying to enforce compliance with codes of fair competition under the National Industrial Recovery Act. That act, before the Schechter decision, you will recall, was rapidly becoming a finely woven umbrella which protected those who were too numerous or too cunning to be caught evading the act.

In an attempt to protect the principal contractor from the stringencies of the Walsh bill I feel that the drafters have failed. It is true that in section 2 of the Healey bill it is provided that

any breach or violation of the employer directly responsible therefor, shall not subject the principal contractor to any of the provisions of section 3 (1) or section 3 (2), provided he has given actual notice of such representations or agreements to such employer.

Nevertheless, exemption from liability is limited by two subsections of section 3 which pertain to legal damages and to penalties