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but under this condition, we could not do that. Under the code, it was possible to request, through your code authority, N. R. A. to grant an exemption for specific and important cases. Under this we have no such chance.

The CHAIRMAN. Well, would it help the situation at all if you had some provision giving the necessary elasticity to the bill that would enable you, in an emergency, to work overtime?

Mr. O'LEARY. If it were provided in the bill so that there could be that, it would be all right. I do not know how you could do it, from a practical standpoint, Mr. Chairman. From an operating practical standpoint, with an agency administering the bill, our experience with the N. R. A. operations were that it usually required so many weeks, and sometimes months, to get that particular exemption through, that by the time it got through the occasion for it was gone; and that is one of the things that we fear in this particular bill, in its operations.

Mr. LLOYD. May I suggest this to you: Suppose your manufacturer were selling, we will say, 10 percent of his output to the Government, the other 90 percent on the open market. He would not compete with the manufacturer who was not under any obligation to maintain this standard.

Mr. O'LEARY. He cannot do it. He must give up the Government work if he wants to compete in the other. That is another one of our problems that I think some of these letters will bring out very clearly. Mr. Chairman, I am going to make these very sketchy. I will be very glad to have you ask the question.

The CHAIRMAN. We would like to ask you some questions, because a lot of the things you read naturally we know about, and the things we ask about we are very eager for.

Mr. WALTER. Mr. Chairman, may I ask this question: A moment ago, Mr. O'Leary, you stated it would be impossible under this bill to work over the 40 hours, assuming that 40 hours was the provision. Have you read this section 6 of the act?

Mr. O'LEARY. I could not tell you what section 6 is. Yes; that is the exception to the department involved.

Mr. WALTER. Do you not think that section 6 involves this?

Mr. O'LEARY. My answer to that is that our experience in trying to do it, to get those exceptions with complete administrative agency, which had had a year to school itself, plus a code authority, which has had a year to school itself, as to how to do it, that the time involved was so great that the occasion for the exception was passed., That is our difficulty.

One of these further says:

This bill seeks to impose virtually the same strait-jacket conditions as did the original N. I. R. A. Since the Supreme Court decision declaring the original act illegal, the number of employees of our company has increased 331/2 percent and the weekly pay roll 40 percent. We know that our own experience in this regard is only typical of our entire industry.

The CHAIRMAN. Get a few more bills declared unconstitutional and it would give you full time, would it not?

Mr. O'LEARY. I think that is where we are going. We seem to be on our way, very definitely, since May 26. There has been more progress in that period, in the heavy industries, than at any time since the depression.

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Another one, from Pennsylvania, says:

Should this bill become law it will be impossible for us to continue to bid on Government business, therefore hope that you are and will continue to be against the passage of this measure.

Another one objects to the provisions :

We feel that the Government should not be in a preferred position as compared to any other industrial purchaser of equipment. The measure would only cause tremendous confusion and dissatisfaction on the part of suppliers as well as on the part of Government officials who are attempting to take care of their duties in an efficient and conscientious manner. The measure would work great hardship on all industries such as ours where high-grade machinists and mechanics are employed and where limitation of hours of labor causes serious handicap on account of the wide fluctuations in volume of business to be produced.

The CHAIRMAN. Mr. O'Leary, you made a suggestion there, a moment ago, that is rather important. How did the declaring of the law unconstitutional result in the increase of employment, so much an increase in employment ?

Mr. O'LEARY. I think it was largely due to the overcoming of the caution and fear which existed in the minds of so many people, as to whether they would be able to do this or that or the other thing in their own operations.

The CHAIRMAN. Well, in the final analysis, is not the volume of machinery produced dependent upon the volume of demand for machinery to use?

Mr. O'LEARY. Yes, sir.
The CHAIRMAN. Farm machinery and all sorts of machinery?

Mr. O'LEARY. Immediately following the Supreme Court decision there was a relaxation passed over all the business world, and they began then to think, “Well, now, we have command of our own business again, I guess we will go ahead ”; and they began to plan ahead, instead of being curtailed.

The CHAIRMAN. Was there any demand, for instance, for farm implements that was not ever supplied because of the existence of a code?

Mr. O'LEARY. No; the farm implements were encouraged by the A. A. A. and the Farm Credit Administration, because they were furnishing the farmer with money and he was buying farm implements. That was where they got their increase.

The CHAIRMAN. Who was it who began to do something after the code was declared unconstitutional who was not doing that thing before?

Mr. O'LEARY. Quite general; very well diversified, Mr. Chairman; all over in every line. That is demonstrated by the fact that the ordinary standard type of machine tool was beginning to be purchased more than before. The purchases of machine tools prior to that had been largely of the special type, for instance, the type that an automobile manufacturer might have designed for a specific purpose; but following it there was a very noticeable general demand for standard type of tools.

The CHAIRMAN. From automobile manufacturers?
Mr. O'LEARY. No; from general-diversified.

The CHAIRMAN. They were going to make something to sell to the public, were they not?

Mr. O'LEARY. Yes, sir.

The CHAIRMAN. But I am trying to find out, how did this Supreme Court decision affect the ordinary people scattered through the country?

Mr. O'LEARY. Because it released the restraint which they felt they were under by not having control of their own affairs because of code operations.

The CHAIRMAN. Who, for instance? What group of people? I do not want to press it too much, but you are going into it this far.

Mr. O'LEARY. Any manufacturer.

The CHAIRMAN. Well, the manufacturer makes something to sell for usage?

Mr. O'LEARY. Yes, sir. He began to have confidence that he was going to have market.

The CHAIRMAX. He had a market not because of this decision, was it, but because somebody wanted to buy for use?

Mr. O'LEARY. Well, it is very difficult, Mr. Chairman, to try to say what confidence is when you begin to try to define it, but we do know that there is an effect on people that starts them buying and encourages them to feel that they are now running their own affairs, and that they can proceed to do so; they can go ahead and buy and begin to make a little inventory.

Mr. PERKINS. Mr. Chairman, I would like to ask a question. As I understand it, business and industry does not actually wait for orders, but it gets a little ahead of the orders ?

Mr. O'LEARY. That is right.

Mr. PERKINS. And as soon as you are relieved from restraint and constraint and run your own affairs then you anticipate orders and therefore can go ahead?

Mr. O'LEARY. Yes.

Mr. Hess. Isn't it true that when there has been a long period of stagnation the old machinery wears out and there comes a time when you need machinery to take the place of that?

Mr. O'LEARY. No question about that. The obsolete machinery, of course, is one of our great hopes for following through the depression.

Mr. HANCOCK. And when this decision came there was a public reassurance and everybody felt safer.

Mr. HEALEY. Do you think that was wholly responsible for increased demand, just the mere fact that there was an adverse decision against the N. R. A.?

Mr. O'LEARY. I don't think entirely; no. I think it is a factor, and an important factor.

Mr. LLOYD. I am wondering if this is not true: With the passing of N. R. A. did not machinery become a little cheaper ?

Mr. O'LEARY. With the what?

Mr. LLOYD. With the passing of the N. R. A.; with the Supreme Court decision did not machinery become a little cheaper, and when it became a little cheaper people could afford to buy it? Isn't that true ?

Mr. O'LEARY. Well, in some cases; in standard lines, yes, it did become a little cheaper.

The CHAIRMAN. How much?

Mr. O'LEARY. Oh, very little. Machinery never had advanced much, Mr. Chairman. That was one of the difficulties. The additional cost as put on by code operation never could be passed on to the consumer, as you would in ordinary consumption goods.

The CHAIRMAN. Mr. O'Leary, was not one of your main troubles that you had your mbore or less fixed overhead, you had your entire factory and you had such a small percentage of capacity production?

Mr. "O'LEARY. That is right.
The CHAIRMAN. That your unit production was higher?
Mr. O'LEARY. That is right.
The CHAIRMAN. And you had to go into volume production?

Mr. O'LEARY. Right. "As the volume increased of course we could decrease prices but we could not increase them, unfortunately. That is why there is so much red ink in the heavy industries during these years of depression. The losses, of course, have been tremendous, the diminution of surplus in the market.

Mr. RAMSAY. Is it not true that the N. R. A. did put a great many men in employment that had formerly been out of employment?

Mr. O'LEARY. No; I think not.
Mr. RAMSAY. You think that is not correct?
Mr. O'LEARY. No.
Mr. Ramsay. Do you know about the mining business?
Mr. O'LEARY. No. I am speaking of our business.

Mr. RAMSAY. Well, you sell a lot of machinery to mines, cutting machines?

Mr. O'LEARY. Yes.
Mr. RAMSAY. Electric machines of all kinds?
Mr. O'LEARY. Yes.

Mr. RAMSAY. Is it not true that under the N. R. A. the volume of the coal business developed to a greater extent than it had in 15 years? Mr. O'LEARY. As I say, I am not familiar

with the coal. Mr. RAMSAY. Not familiar with that. Is it not also true that the reason there is a bigger demand now is that there is more purchasing power among the people through the advantage the farmers had under the A. A. A. and different legislation, and also that after the N. R. A. they commenced to cut wages and make things cheaper; isn't that right?

Mr. O'LEARY. No. The cut in wages—I think these letters that I have been reading to you give an indication of what there have been. There has not been a cut in wages nor increase in those except, as I say, in the case of flexibility at emergency times. I have a study on that. I find it is not here. I thought I might put it into the record, Mr. Chairman. At the time there was being considered by N. R. A. the question of policy on employment provisions in the codes we made a study of the employment, the difference in employment, and what it was due to, and in the durable goods our figures showed in round figures something like 600,000 increase in employment, of which all but 26,000 was attributed to P. W. A. operations. In other words, we could not find the increase in employment due to the code operations in those particular industries.

Now, you speak of another industry. I could not answer that.

Mr. DUFFY of New York. May I ask you one question, Mr. O'Leary? As I take your argument, after the decision of the Supreme Court your industry seemed to be released from a restraint, a strait-jacket?

Mr. O'LEARY. Yes.

Mr. DUFFY of New York. Now, as I follow your argument in regard to this bill, which only applies to Government contracts, child labor is not a factor?

Mr. O'LEARY. Right.
Mr. DUFFY of New York. Convict labor is not a factor?
Mr. O'LEARY. Right.
Mr. Duffy of New York. Minimum wages are not a factor.
Mr. O'LEARY. Correct.

Mr. Duffy of New York. So there is only one factor that would be involved here, and that is maximum hours?

Mr. O'LEARY. Yes.

Mr. DUFFY of New York. Now, how much more restrictive than that is the code ?

Mr. O'LEARY. The code-during the period of the code operations there was a possibility of increasing, and if the N. I. R. A. had continued we would have asked for greater flexibility and tried to have incorporated in our codes a maximum hours which would permit of that flexibility. That was our suggestion at that time, that for our type of industry that be done.

Now, this bill would freeze what we had concluded was the wrong thing for recovery in our industry, because it settles on what it was when we knew at that time from experience that that was not what was the best thing for the industry.

Mr. DUFFY of New York. As I understand your argument, the only thing that would be touched by this bill, and then only on Government contracts, are maximum hours?

Mr. O'LEARY. Ah, but you are talking now only of hours and wages. Of course, the fact is we go on beyond that. I have not tried to repeat the things that Mr. Bardo brought out this morning. Of course, the thing that bothers us as much as the hours is this responsibility. It carries us back to the supplies all the way back to the primary products. And that in itself is enough to warrant us in feeling that we could not go on, although we need the business very badly. We could not go on with the Government stuff. The need is great for this business, and as I have said, the largest opportunity for reemployment comes in the heavy industries and in the durable goods if we could just get a chance to let things go for a while.

The CHAIRMAN. Mr. O'Leary, if the committee should perchance decide to vote the bill out, would you have any constructive suggestion to make as to what arrangements should be made that would prevent this delay that you say resulted when you wanted some flexibility to operate on and you could not get it until after the neeri for it was gone, the occasion had gone?

Mr. O'LEARY. Mr. Chairman, I am sorry I cannot see a practical way out of it. That is the trouble. That is one of the difficulties with this type of legislation, that you cannot write a uniform ticket for all industries. And it just won't work, never will work.

Mr. RAMSAY. May I ask you a question: Have you read the bill? Mr. O'LEARY. Oh, yes, I read it all the way through.

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