that in establishing a minimum wage for any service or class of service under 11. Section 13 provides that this act shall not apply (a) to agricultural or 12. Section 15 provides that this act shall apply to all contracts entered D 13. It is clear from the foregoing statement that the Healey bill improvingly 14. But it is also clear that the Healey bill is fundamentally the same as E 15. Grocery manufacturersiare necessarily interested in this bill. For they 17. Grocery manufacturers support valid legislation effective duly to protect F 18. Manifestly the first question presented by this bill is whether it is consti- 19. This bill is unconstitutional, first, because it delegates legislative power For this bill does not itself fix the minimum wages and maximum hours it establishes. Rather, it empowers the Secretary of Labor to fix them. And his power to fix them is practically subject to no restriction other than his own unfettered discretion. It is no answer to say that section 9 prescribes standards restricting the Secretary's administrative action in fixing such wages and hours. For (a) these so-called "standards" are not true legal standards of administrative action, because they are too general and vague; (b) the Secretary's compliance with them is optional, wherefore he may ignore them; (c) even if they are true legal standards, the fact remains that section 8 gives the Secretary an unrestricted power to fix such wages and hours. And it cannot be successfully argued that the law enacted by this bill is not subject to the express constitutional provision that all legislative power is vested in Congress alone. 20. This bill is unconstitutional, second, because it is practically purposed and effective to regulate local manufacture within a State. Such manufacture is not interstate commerce; and Congress has no constitutional power directly to regulate it. (See the Hammer and Schechter cases.) In short, this is much more than a Government purchase contract bill. For it is also a bill to use such contracts as a device for Federal regulation of a subject constitutionally reserved to the States. And such a law cannot stand, as the Hoosac case establishes. It is true, of course, that Congress is constitutionally empowered to enact a law prescribing conditions of a Government purchase contract. But it is also true that this is a limited power. The first limitation is that the conditions must have a reasonable relation to the purpose of such a law, which is to safeguard the Government in its purchase of necessary supplies. And a condition of minimum wages and maximum hours in manufacture is demonstrably not within this category. The second limitation is that these conditions cannot be used as a scheme to accomplish an unconstitutional end and thus to circumvent the Constitution. Which is precisely the situation as to the condition under consideration. G 21. But aside from any constitutional question this bill is subject to the practical objection to a Federal law imposing upon manufacturing industry a code of minimum wages and maximum hours independently and conclusively fixed by the Government acting through an administrative officer exercising his own unfettered discretion. We oppose such a Federal law as wrong in principle and unsound in public policy. We believe that such a broad law cannot be duly administered consistently with the fundamental economic and equitable considerations underlying it, and that it cannot be duly enforced in its practical conception. And such a law is certain to create a vast bureaucratic organization, with all that it implies in an invidious sense and against which the N. R. A. experience forcefully argues. 22. This bill is also subject to the objection that the law it enacts will be unfair to the patriotic and conscientious manufacturers who voluntarily come under it, because and to the extent they will be exposed to competition by outside manufacturers who sell at a lower cost accordingly. 23. This bill is further subject to other important objections, including the following: (a) It is inequitable to principal contractors with respect to subcontracts beyond their control; (b) it vests in the Secretary of Labor inequitable administrative power as to compelling the attendance of witnesses and making conclusive findings of facts; and (c) it does not equally apply to Government competition with private business. H 24. It has been suggested that the appropriate remedial legislation here is that duly defining the term "responsible bidder", whereby it includes the element of fair dealing. We believe that this term can be reasonably defined in such a way as to assure adequate protection of Government purchases and to avoid the objections presented by this bill. Therefore this suggestion should receive due consideration. 25. Having in mind the fact that the Government must purchase its necessary supplies and also the fact that they are purchased upon a voluntary sale basis, the conclusion follows that it is not in the public interest to enact legislation which is unduly preventive of such sales. As a rule grocery, manufacturers can practically operate only upon the basis of a single standard of employment conditions. And they cannot accept any standard of such conditions which is uneconomic or effective arbitrarily to enhance the prices of their products essential to the consuming public. CHARLES WESLEY DUNN, General Counsel. STATEMENT OF AMERICAN MINING CONGRESS The American Mining Congress, representing the mineral-producing industries of the United States, in which the livelihood of millions of our population is directly involved, respectfully protests the enactment of the measure introduced by Representative Healey, known as H. R. 11554. This bill is apparently founded on the theory that through the enormous purchases of materials and the magnitude of the contracts placed by the Government of the United States, wage and hour requiremen s may be set up by the Department of Labor in such manner as to permeate the entire industrial structure of this country. Its purpose is evidently similar to that of the Walsh bill, S. 3055, which was intended to assure the maintenance of N. R. A. standards of wages and hours. We oppose this bill for the following reasons: 1. It would impose upon industries, or those members of industry concerned with Government purchases, arbitrary regulation contrary to natural economic forces. The producer of basic raw materials, such as minerals and metals, must sell his product in a broad competitive market in which prices are deter mined by world conditions. His income is derived from the sale of his product, and wages can be paid only from such income. Establishment by fiat of high-cost, unecomonic wage, and hour levels applying to the field of Government purchases, as provided for by the terms of this bill, would bar producers complying therewith from the normal competitive markets, viously no producer can operate for part of the time with a normal wage and hour structure permitting him to compete in the domestic and foreign markets, and for another part of the time on a higher cost basis arbitrarily imposed upon him. Ob 2. The bill would provide a degree of discretionary power, whether it be in the hands of the Secretary of Labor, of a board within that Depar.ment, or of any other agency, which in our belief is unwise and contrary to sound principles of government. The power to determine, practically without limitation, the wages, hours, overtime pay, and other conditions applying to every Government purchase or contract, and to allow or to refuse exceptions and variations from such standards, is practically the power of life or death over countless enterprises which must deal directly or indirectly with our Federal Government in its myriad activities. 3. Adequate enforcement of the provisions of this bill would be impossible. This statement is fully supported by the record of the N. R. A. The compliance machinery of that agency, as is well known, had hopelessly broken down long before the act was declared unconstitutional. Even though a huge administrative organization be set up to enforce the present proposed legislation, the same conditions which caused failure of the N. R. A. would inevitably cause failure in this instance. 4. Such legislation is not needed nor justified under present conditions. The reductions in wages from code rates which were anticipated last year have not occurred. Evidence presented to your committee shows that in the mining industry wages have been maintained and in many cases increased since last May, and that employment has been materially augmented. For industry as a whole, the figures of the National Industrial Conference Board, also presented at this hearing, show a like situation. No emergency exists which would call for any such drastic and all-pervasive regulation as this bill would entail. We believe that H. R. 11554 would be unwise, unduly burdensome, and distinctly harmful not only to the mineral industries but to the economic structure of our country, and urge that your committee reject this bill. Respectfully submitted. THE AMERICAN MINING CONGRESS, 58539-ser. 12, pt. 2-36-28 STATEMENT FILED BY AMERICAN PHARMACEUTICAL MANUFACTURERS' ASSOCIATION A 1. This is a statement in behalf of the American Pharmaceutical Manufacturers' Association, located at 608 Fifth Avenue, New York City. 2. It is a national association of manufacturers of pharmaceutical products sold for use upon direction by the medical profession. Its membership includes 65 manufacturers in this category located throughout the country. B 3. This bill is a substitute for the Walsh bill (S. 3055). The latter bill has passed the Senate; but it has been tabled by this committee. Its purpose is described in the report thereon by the Senate Committee on Education and Labor as follows: "The purpose of the bill is to direct Government purchases along lines tending to maintain the advance in wages and purchasing power achieved under the N. R. A. Its effect will be to set a standard of wages and hours of labor which otherwise is threatened in view of the abandonment of N. R. A. It will end the present paradoxical and unfair situation in which the Government, on the one hand, urges employers to maintain and uphold fair wage standards and, on the other hand, gives vast orders for supplies and construction to the lowest bidder, often a contractor or manufacturer who does not sympathize with and fights hardest against labor and social welfare policies." (S. Rept. No. 1157, 74th Cong., 1st sess.) 4. To effectuate this purpose the Walsh bill requires that a contract for the sale of supplies to the Government shall contain an agreement by the seller that his employees engaged in the production or furnishing of such supplies have been paid (since the effective date of this act) not less than the minimum rates of pay and employed not exceeding the maximum hours specified on May 26, 1935, by applicable and approved N. R. A. code or, in the absence thereof, by applicable President's reemployment agreement; and that said employees will be paid not less than such minimum rates of pay and employed not exceeding such maximum hours as shall be designated in the invitation to bid, etc. 5. The report by the aforesaid Senate committee further states: "The bill has been prepared upon the theory that Congress has power to prescribe conditions in public contracts, loans, or grants, and adopt such policies as conditions in them and to direct or authorize the President with respect to their effectuation. Decisions of the Supreme Court bear out this policy. The commitee believes that in the absence of action by Congress the Executive has power to require any condition in contracts, loans, or grants necessary to protect the United States, but that his authority stops there and that matters of general policy not strictly necessary to secure to the United States the performance of a contract can only be laid down by Congress. "In deciding to incorporate these particular provisions, the committee was guided by the following facts: "1. Many trades and industries, despite the Supreme Court decision in the Schechter case which set aside N. R. A. codes, have to a considerable extent continued to adhere voluntarily to the wage and hour provisions of such codes. The committee believes that this tendency should be encouraged and rewarded. "2. The wage and hour provisions contained in the recent N. R. A. codes provide an equitable 'yardstick' for determining the proper minima, as to wages, and the proper maxima, as to hours, that should be required by the Government in connection with contracts involving the use of Federal funds. The establishment of these code wage and hour provisions was the result of exhaustive study of nearly 2 years by the National Recovery Administration in collaboration with representatives of industry and labor. In each instance, code wage and hour provisions were determined only after exhaustive hearings, participated in by a majority representation of the trade or industry involved, and in every case the trade or industry itself assented to the said provisions. The reference to code wage and hour provisions in the bill does not represent, directly or indirectly, an attempt to revive N. R. A. codes of fair competition. It was deemed advisable, however, to use the code wage and hour provisions for the reasons above stated. "Both the Seventy-third and the Seventy-fourth Congresses have repeatedly committed themselves to the principle that American labor is entitled to a reasonable living wage, and that it should not be compelled to work more than a reasonable number of hours per day, week, or month. The Seventy-third Congress, in section 1 of title 1 of the National Industrial Recovery Act, stated in part: * * "It is hereby declared to be the policy of Congress to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry * * "This declaration of policy was reaffirmed by the Seventy-fourth Congress in Public Resolution No. 26 (S. J. Res. 113), approved on June 14, 1935. "Existing statutes require that Government contracts be let to the lowest responsible bidder on open competitive bidding. The operation of this statute was qualified as to wages and hours under the provisions of Executive Order No. 6646 of March 14, 1934. Subsequent to the issuance of this Executive order, borrowers, grantees, contractors, and subcontractors, on Government contracts were required to comply with the codes of fair competition to which they were subject and in the absence of such codes, with the President's Reemployment Agreement. This procedure was found in actual experience, to be practical and workable and not productive of undue hardship upon industry. However, following the Supreme Court decision in the Schechter case, the operation of Executive Order No. 6646 was necessarily suspended. "Since the suspension of Executive Order No. 6646, the above statute has been construed as requiring an acceptance of the low bid without any limitations as to wage and hours except those contained in other Federal statutes such as the Adamson Act and Bacon-Davis Act. "Such construction commits the Government to the unconscionable practice of allowing private industry to dictate wages and hours of labor-no matter how oppressive for undertakings financed with Federal funds. The insistence of such standards on projects financed wholly or in part with Federal funds, should, in due course, encourage private industry voluntarily to adopt like standards in private undertakings, thereby increasing purchasing power and improving the general conditions of our citizens. "The committee believes that the enactment of this bill will aid materially in securing of industry recovery and the permanent adoption of the standards of wages and hours and conditions of labor set forth in the bill." C 6. The Healey bill was introduced on March 2, 1936. It is entitled "A bill to provide conditions for the purchase of supplies and the making of contracts by the United States, and for other purposes." It contains 15 sections. 7. Section 1 requires that a contract for the sale of supplies to the Government, in an amount exceeding $2,000, shall contain an agreement by the seller that his employees engaged in the production or furnishing of such supplies will be paid not less than such minimum rates of pay and employed not exceeding such maximum hours as shall be designated in the invitation to bid, and that no person under 16 years of age and no convict labor will be employed in the production or furnishing of such supplies. 8. Section 2 imposes the same requirement with respect to pertinent subcontracts by the seller. Section 3 stipulates that every aforesaid agreement shall provide that its violation shall render the party responsible therefor liable to pay liquidated damages in (a) a sum equal to twice the difference between the amount required to be paid to employees, including the amount required to be paid for excess overtime, and the amount actually paid; and (b) the sum of $10 per day for each employee under 16 years of age. That it shall also provide that the exaction of any refunds or kick-backs of wages from employees shall render the responsible party liable to pay liquidated damages in a sum equal to five times the amount of such refund, and that it shall further provide that the violation of such agreement shall entitle the Government to cancel this purchase contract and to make equivalent open-market purchases and to charge any resulting additional cost to the party violating the agreement, etc. |