It objects to the unreasonable things that make burdensome taxes necessary. But business does object and objects seriously to the encroachment of anyone into its private affairs and to excursions into its books, records, and correspondence for evidence that can be interpreted to its disadvantage, regardless of its real intent. In conclusion and in order to explain how I believe this bill would react in actual practice, may I cite my interpretation of how it would apply to a specific order. A company, let us say, receives an invitation to bid on $2,000 worth of milling cutters. Now, milling cutters are produced from high-speed steel. A great variety of machines and machine equipment, such as chucks, mills, vises, drills, grinding wheels, cutting oil, and hardening and tempering equip ment, is required to manufacture them. As I read the bill, section 1 would exempt any stock of cutters as well as materials, supplies, or equipment needed to make them that may be on hand on the date when the law went into effect. Thus, in the case of the $2,100 invitation to bid, the bidder would be able, so far as existing inventories made it possible to do so, to supply the order from his stock. On stock, or supplies, or equipment delivered into his inventory after the law became effective, he would not be able to use any of it that he could not prove had been made by labor working within the limitation set in the invitation to bid. If the invitation were dated as much as a year after the date of the act, it is probable that he would find it difficult, if not impossible, to prove that anything in his inventory was up to requirements and this would be true, even though the workmen in his own shop had worked the whole time well within the wage and hour limitations contained in the invitation to bid. The reason for this proof being difficult is the fact that the bidder would have to prove that the steel contemplated in the invitation to bid and on hand in his shop had been smelted, rolled, and shipped by labor working within the limitations set in the invitation to bid; also that the chucks, mills, vises, drills, grinding wheels, cutting oil, hardening equipment, and fuel used to heat the hardening furnaces, if not indeed the fuel used to heat the shop itself, had all been made within the same limitations. So much for the problems arising from the use of stock on hand. Those that would arise from the purchase of materials, equipment, and supplies from outsiders to fill the $2,100 order would be no less formidable. Let me explain. The bidder decides in connection with the $2,100 invitation to bid that to comply with the act he must buy all materials and supplies from others. By doing so, he may notify each that said materials and supplies are to be used on a Government contract wherein certain stated limitations as to hours and wages are stipulated. By this procedure he can, for the time being, at least, shift the responsibility of conforming to these wage and hour limitations to their shoulders. Note well the phrase, "for the time being." As I have already pointed out, the act does not, by any means, relieve the principal bidder of responsibility when he buys materials from subcontractors. The Secretary of Labor may demand that he cancel any subcontract. If he refuses to do so, he subjects his own contract to danger of cancelation and, if so stipulated, to liquidated damages. Being forced, therefore, to cancel would necessitate that he hunt up other sources of supply, thus subjecting his own contract with the Government to delays which might seriously penalize him. But this is not all. The subcontractor or subcontractors might refuse to supply the small quantities of goods needed to fill the order. If, indeed, as I cannot believe, the vague section 2 of the bill would require these subcontractors, regardless of the size of the orders which were given them, to conform to the wage-and-hour provisions of the bidder's contract with the Government, simply because the latter is in excess of $2,000, then they might and probably would refuse to supply him. The small order involved would not intrigue them sufficiently to warrant them in taking the risk of having their books and records examined by the Labor Department. In such event, the principal bidder would be strictly up against it. While on the subject, let me point out to you what my own company might be confronted with as a subcontractor. Our product is sold to those who manufacture goods made out of metal. Dozens of different industries are involved. Nearly every one of them sells goods to the Government. Every one of them buys goods from us. Suppose some day we should get orders from two dozen plants in two dozen different industries for goods to use in the production of goods for the Government. Suppose, as well may be the case, that each had different wage and hour limitations in their contracts. How could we possibly agree to abide by all of these different limitations simultaneously? Can you imagine the Executive orders and regulations that the Secretary of Labor would have to devise to obviate such inconsistencies as these? Can you doubt that his repertoire of regulations necessarily would rapidly approach that which so bestirred the Nation under the N. I. R. A.? I sincerely hope that you will recommend against the passage of this bill. The confusion attending its impossible enforcement, the unfair effect it will have upon the workers who can be brought within its purview, the effect it will have to reduce the number of competitive bidders for Government contracts to the high disadvantage of the Government, and the opportunity it affords for bureaucratic interference with the free operation of private industry, upon which must depend the supplying of jobs to all those able and willing to work, would, it seems to me, make such a rejection imperative. I would like to say one thing more, Mr. Chairman: The Honorable Madam Secretary this morning suggested that, for the most part, the subcontractors were fly-by-night concerns. I do not think she really meant just that, because I am sure she knows better than that, but the subcontractors in my case are such firms as the General Electric Co., United States Steel, Vanadium Steel, the Crucible Steel Co., and other concerns of that kind. Now, you can just imagine what I would have to do, what a time I would have in a little bit of a concern up there in New Haven, Conn., in forcing the Government's will upon that kind of subcontractor. I want to get that point across to you, because I think she may have misstated herself when she suggested that most of the subcontractors were fly-by-nights. Mr. HEALEY. She probably meant in one particular line. Mr. Hook. I think she did. 1 Mr. HEALEY. You know, as a matter of fact-you come from Connecticut, and you know that they have a great many fly-by-night concerns. Mr. Hook. I can tell you about that. Mr. HEALEY. There has been widespread violation of decent standards in the State of Connecticut in a certain line. Mr. Hook. I was chairman of the unemployment commission at the time that happened, Mr. Chairman. Mr. HEALEY. You know, as a matter of fact, that there were a great many fly-by-night contractors, and finally Mr. Hook. There were a great many who came up from New York and settled there for the purpose of getting out from under the union laws of New York, but, proportionately, the number of employees that were involved in those concerns were comparatively small, as compared with the number of employees in the State of Connecticut at that time. Mr. HEALEY. In your capacity at that time did you have occasion to investigate any of those concerns? Mr. Hook. Yes. Mr. HEALEY. And you can say to this committee that the conditions were really deplorable? Mr. Hook. In those particular cases, yes; but I do not want to give the impression to the committee that the proportion of the employees affected by those sweatshop operators in Connecticut was very large. Mr. HEALEY. In some instances those sweatshops were working on Government contracts? Mr. Hook. I presume they were, in the textile industry. Mr. DUFFY of New York. There is just one thing, referring to your paper, and I understand that it is your opinion that wages have risen since the Schechter decision? Mr. Hook. Yes; I have a report here of the trend of employment from the Department of Labor, also from the National Industrial Conference Board, which would indicate that that is true. Do you want me to read the figures? Mr. DUFFY of New York. No. Mr. Hook. You can see the National Industrial Conference Board report, also the Bureau of Labor Statistics for the month of May 1935 and December 1935. Mr. MICHENER. What you think business wants now is a genuine and prolonged breathing spell? Mr. Hook. Yes, sir; we do. But I want to say this, in answer to your question, that business is not in favor of sweatshops. Business is not in favor of Mr. DUFFEY of Ohio. Is not in favor of child labor-is not in favor of convict labor? Mr. Hook. Business is not in favor of convict labor in competition with decent employment. Mr. RAMSAY. I notice your main objection is the power granted to the board, or the Secretary. You really admit that the Government has the same right to make provisions in its contracts as you, yourself, would have? Mr. Hook. I wonder if I would have the right to make such a provision in a private contract. Mr. RAMSAY. Would you not have the right, in a private contract, to say that you would not buy goods from a man who worked and used sweatshop methods? Mr. Hook. I can refuse to buy from him, but whether I could enter into a contract with a sweatshop operator to raise wages and reduce hours in his plant, I have my doubts. I am not a lawyer and I cannot say. Mr. RAMSAY. If you made a contract of that kind, put that in your contract, if he violated that contract, that would void the contract, would it not? Mr. Hook. Not being an attorney, I cannot answer; but my own personal judgment is that the contract would not be enforceable. Mr. WALTER. May I suggest that you read the decision in the case of Adkins v. Kansas (129 U. S., p. 207), I think. Mr. Hook. I will be very glad to do that. Mr. HEALEY. I believe you said that if this law went into effect it would have the effect of changing the standards or conditions in private industry? Mr. Hook. I really think it would not. It would depend pretty largely upon what amount of business a concern was doing with the Government. That is my personal opinion. Mr. WALTER. Mr. Hook, I am entirely in sympathy with your contention with respect to the hardships that might ensue if the contractor is penalized for something that a subcontractor has done. I tried to meet that situation in a bill that I presented last session. I am quite certain it was the desire of the Healey subcommittee to meet that situation. Do you not think that has been done? Mr. Hook. I really do not, Congressman. I really do not. I have studied this bill and I have had several attorneys in whom I have the greatest confidence read over section 1 and I think it is vague; but when you read it, it says, "designated as agencies of the United States". Mr. HEALEY. Where is that? Mr. Hook. That is section 1, beginning at the bottom of page 1, or the top of page 2. He just groups the agencies as all agencies purchasing from the Government. There shall be required to be included in the proposal or contract a representation or agreement that all persons hereafter employed by the principal contractor in classes of employment described specifically or by reference in the invitation to bid, while engaged in the construction, or the production or furnishing of articles, materials, supplies, equipment, or services, in connection with, or which may be identified as part of the subject matter of, the purchase or contract will be paid not less than such minimum rates of pay— And so on. I tell you how I honestly interpret that, and I do not believe it means just that-I will admit that. I interpret that to mean that if I got a contract from the Government, and I had bought a machine in my plant, after the bill went into effect, I would have to be able to prove to somebody from the Labor Department, who might come into my plant, that particular machine had been constructed under the limitations required under the invitation to bid. Mr. WALTER. You are overlooking the fact that the word "will" is in that section. Mr. Hook. I recognize that word "will." Mr. WALTER. "Will be paid", and so forth? Mr. Hook. Will be paid; yes. Mr. WALTER. And in line 13, "will be employed"? Mr. Hook. That refers to the actual goods that the Government is furnished. But I tell you, Congressman, and you will pardon me, that I certainly would suggest that you try to straighten that out. Mr. WALTER. That is simply a question of English, and we did not say that. Mr. Hook. There are a lot of men that would not agree with you. Mr. WALTER. I know that. I know who they are, all over the Nation, but if you will read Mr. Hook. I do not quite agree with you, because I have read it over. Mr. WALTER. I know that. I can understand that, of course. Mr. DUFFY of New York (acting chairman). We thank you very much. Who is next, Mr. Gall? Mr. Hook. May I insert this statement of the Manufacturers Association of Connecticut for the consideration of the committee? (The matter referred to is as follows:) STATEMENT OF THE MANUFACTURERS ASSOCIATION OF CONNECTICUT, INC. The Manufacturers Association of Connecticut, Inc., is composed of practically all of the manufacturers, both large and small, of any importance in the' State of Connecticut. It has had numerous representations made to it by manufacturers in opposition to H. R. 11554, now commonly called the Walsh bill substitute. It has made a diligent search in the State and has found no manufacturer who is in favor of the bill or of this type of legislation. We therefore contend, in behalf of the manufacturers of the State, that this bill, like the Walsh bill, is an attempt to circumvent decisions of the United States Supreme Court and of many lower courts by utilizing the purchasing position of the United States Government for the purpose of putting into force industrial regulations that would otherwise be illegal. We hold, therefore, that this bill and all legislation of a similar nature is not honest legislation and is not in the best interests of either employe or employer. We are opposed specifically to H. R. 11554 for the following reasons: SECTION 1 A casual reading of section 1 might cause the thought to arise that no subcontracts not exceeding $2,000 are involved. It is clear, however, that when the provisions of sections 2 and 3 are applied, a subcontract involving only $1 is bound quite as completely as is a contract for $100,000. It might also appear from a casual reading of section 1 that the bill concerns only contractors and direct subcontractors, whereas the experience under the certificates-of-compliance plan of the N. R. A. makes it quite evident that practically all manufacturers are involved. This becomes clear when we realize, first, that the Government is a purchaser of practically every type of commodity produced, and, second, that the great majority of manufactured products are made up of component parts. In other words, the products of large numbers of manufacturers go into each commodity. We are persuaded, through cur experience during the operation of the N. R. A., that the application of the Healey bill, if passed, would to some extent reach practically every manufacturer in the country. Thousands in a position to do so would wash their hands of Government contracts altogether. |