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CONDITION OF GOVERNMENT CONTRACTS

TUESDAY, AUGUST 20, 1935

HOUSE OF REPRESENTATIVES,
COMMITTEE ON THE JUDICIARY,

Washington, D. C. The committee reconvened in the hearing room at 10:20 a. m., Hon. Hatton W. Sumners (chairman) presiding.

The CHAIRMAN. We would like to know what witnesses there are here today who have not heretofore testified before the committee. We would like to have a list of the opponents. Mr. Myles, will you be good enough to get the list of the gentlemen here who are in favor of the bill and hand up the list with the length of time they feel they will have to have?

Mr. Zimmerman, I think we can hear you now while that is being done.

STATEMENT OF HON. ORVILLE ZIMMERMAN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MISSOURI

The CHAIRMAN. Mr. Zimmerman, you are appearing in opposition to the bill, as I understand it?

Mr. ZIMMERMAN. Yes, sir.

The CHAIRMAN. Give your name to the reporter and proceed, Mr. Zimmerman.

Mr. ZIMMERMAN. Orville Zimmerman, Representative Tenth District of Missouri, which comprises the southeast corner of the State of Missouri. My district is about 100 miles north of Memphis and about 150 miles south of the city of St. Louis.

Now, gentlemen of the committee, in view of the far-reaching scope of this bill it would seem to me that this matter should not be rushed through this committee or through Congress, but that this subject and the matters proposed in this bill should be given close and extensive study in order that the right thing might be done about the matters that are contained in this bill.

I want to say this, as a representative of rural Missouri and as a representative of a great many shoe and garment factories in my district, I should like to have the privilege and the opportunity of bringing witnesses here before this committee and give you men the real facts about that situation and a vivid picture of conditions which obtain in my district and in other districts in Missouri and adjoining States, in order that intelligent legislation may be enacted which will not be detrimental to certain sections of our country, particularly in the West and in the South.

So, gentlemen, what I shall say here today applies with equal force to the western manufacturer, the little manufacturer, and the small towns in the West and in the South. You have already heard something about the plight of the manufacturer in the South, and what is true of the South is true of the West, because the same conditions obtain in both sections of our country, and we are grouped in the same class.

And so, gentlemen, I urge that you give this bill your most earnest and careful consideration, and, if possible, give these people a chance to come here and present their case before legislation is enacted which I believe, and which a great many of us believe, will bar us from the privilege of pursuing our vocations as we have in the past.

Let me call your attention to this fact also: The purpose of the bill on its face is the reincarnation of the N. I. R. A., particularly with reference to the maximum hours and minimum wages. There can be no doubt about that; it is patent upon its face, and while, gentlemen, I am not going to attempt to argue the legal phases of this question, I do hope we will do this: I hope we will first give the Wagner labor disputes bill an opportunity to operate and demonstrate what it will do for labor with reference to minimum wages and maximum hours.

I do not hold myself out as a constitutional lawyer. We have a great abundance of that group in our Congress. I am just a plain country practitioner, and shall not pretend to argue the constitutional phases of the question.

A great many of us think that the Wagner bill gives labor an opportunity to bargain and to work out the proper standards of hours and of wages, and it seems to me that we ought to give that bill, which has been passed by this Congress and signed by the President, an opportunity to work and see what it will do and what effect it will have upon hours of work and wages.

For that reason, it seems to me that the operation of that bill should be given a chance to work and should challenge this committee to proceed cautiously and slowly with the consideration of this bill, which has for its objectives the same purpose.

Now. gentlemen, as I said a while ago, in my congressional district we have about 10 small factories. Most of these factories are shoe factories scattered over the principal towns in my district. These factories are subsidiaries of the larger factories in the city of St. Louis.

How did we get these factories? The truth about the matter is the people down in my agricultural district-and, by the way, I come from one of the finest agricultural districts in the whole countryfelt the necessity and importance of providing some industrial opportunity for the labor in our towns and communities, where this labor could not be absorbed in agricultural pursuits.

And so the citizens of these smaller cities went together and arranged with these larger shoe operators in the city of St. Louis, like the International Shoe Co. and the Brown Shoe Co., and others, to establish factories out in rural Missouri. That thing has happened all over the State of Missouri, in the States of Illinois, Kentucky, and Tennessee, and in other sections of the country. As a result of their efforts the citizens would get together and raise

$50,000 or more and build a plant, in order to induce these large companies to establish branch factories in their particular towns.

As a result about five or six shoe factories have been established in my district, and they had been operating many years before the N. I. R. A. went into effect, and they operated successfully, because there was a natural wage and living cost differential which operated in favor of these small factories in these rural communities, and but for which they could not have operated.

Now, gentlemen, in the larger cities like Boston, New York, and the city of St. Louis, they have what we call the line operation. They have many mechanics, trained and skilled to man their machines when they get out of order. They have a surplus of skilled laborers, superintendents, and so forth. If one gets sick and drops out another can step in and take his place. If a machine breaks down they can substitute another and go ahead with the operation.

But down in these rural sections 100 or 150 miles from the larger center they do not have the mechanics, they do not have the skilled superintendents, nor do they have a surplus of machines; and necessarily, when any mishap takes place, it means delay and it adds additional cost to the manufacture of shoes or of gloves or of overalls or of shirts in these communities.

There is another thing we have found out: We have learned from investigation that the freight rate, shipping the raw material from Memphis, Tenn., or from the city of St. Louis down to my section, adds an additional cost, and when the product is manufactured and ready for the market the additional freight charge back to the center for distribution adds more to the cost.

We have also found out that these operators could operate at a less wage in these rural communities than they could in the city of St. Louis or in the city of New York or any other large city, because the cost of living is cheaper. Down in these sections we find that the factory worker owns his home. He has a garden, where, after his factory hours, he goes out and raises his potatoes, sweet corn, beans, cabbage, and a large part of his living. In many instances they have a cow. Land is cheap enough that they can afford enough land to support their cow. They have their flock of chickens; and so they have their eggs, their butter, their milk, their garden truck, as we call it down in our country, which contributes a large part of their living.

And so these men can do this work in their factories, work in their gardens and take care of their homes, and they make a good living. In fact, gentlemen, these men out in these rural communities live better than the man in the city who gets a larger wage; and for that reason the wage differential becomes a very material factor in the successful operation of these small factories in these communities.

The same thing is true of our garment factories. In my home town, the Ely-Walker Dry Goods Co. in St. Louis, one of the largest in the country, established one of the largest rural factories in the State of Missouri. The citizens of my town, including your humble servant, put up about $50,000 to build an adequate plant in order to carry on this factory. It gives work to about 750 people, boys and girls, in my county and community, when operated to capacity, and that was made possible because of the wage differential which I am going to talk to you about, and which has naturally grown up and obtained long before thé N. I. R. A. went into effect-a natural differential based upon facts; and it was because of that wage differential that these factories were able to operate successfully and at a profit in these small towns, and without which these laborers would have had no employment.

Mr. WALTER. Mr. Zimmerman, what effect did the passage of the National Industrial Recovery Act have on the manufacturers in your district ?

Mr. ZIMMERMAN. In my particular district, I have letters from the garment factories in my home town. A gentleman who lived in the city of Memphis, and who has operated factories for years, told me that he was doubtful if they could operate much longer under the wage differential that was provided by the N. I. R. A.; that they were barely getting by, and if there was any material change he did not see how they could proceed very much longer.

What would that mean to our community! Suppose that factory would close. It would mean that our citizens wonld have on their hands a $50,000 or $60.000 building, a complete loss to that community, and these 750 ambitious boys and girls coming from the farm would lose their jobs and have no place to go.

I will say this to the gentleman: At Kahoka, Mo., which is up in my friend Romjue's district—they had a shoe factory, but they were forced to a wage differential of only $1 per week and they were forced to close that plant down because they could not manufacture shoes at a profit but at a loss.

Senator Walsh. The differential, of course, was only on minimum wages, not on any wage scale at all.

Mr. ZIMMERMAN. What about Washington, Mo., about 75 miles west of the city of St. Louis? They had been running at a loss for mon's, because the wage differential as allowed by the code was not enough to enable this company to operate that large plant, which accoamodated nearly a thousand employees.

Let us take for example Joplin, Mo. A gentleman down there for years has been manufacturing ladies' handbags, one of the finest plants in the country, in fact the pride of our State. It never was allowed any wage differential whatsoever, and gentlemen, I heard that man stand up and say that unless conditions changed they would be forced to close that plant, throw out of employment all those people in the little city of Joplin, and that plant, erected at a cost of hundreds of thousands of dollars, would be idle and useless and could not be used for any other purpose.

Now, gentlemen, it is this group of manufacturers that I want to plead for here today, because I say to you that if this bill is passed in its present form and the code differential of $1 per week for the shoe manufacturer obtains, I believe it will mean the ultimate ruin of every rural shoe manufacturer in my State and in the surrounding States

And, gentlemen, that is not right. I want to give you a few facts and figures about that. Since the distinguished gentleman from Massachusetts (Senator Walsh) made reference to the shoe business. we all know in this Congress that early this year shoe manufacturers in Boston came down to Washington en masse, held hearings before the Labor Committee to induce the code authorities to abolish

the wage differential in the manufacture of shoes, and when the Missouri delegation and the Illinois delegation met the code authoriries over here to discuss the situation and after we gave them the facts they conceded to us that the $1 wage differential provided by the code was not adequate.

Mr. WALTER. Mr. Chairman, may I ask a question?
Mr. ZIMMERMAN. Yes.

Mr. WALTER. What percentage of the business these manufactur*rs of your district do is done with the Government?

Mr. ZIMMERMAN. Well, I can't answer that, but I am sure they will not be able to do any business with the Government if this bill becomes a law.

Mr. WALTER. Of course, your argument would apply if you were arguing against the extension of the N. R. A.

Mr. ZIMMERMAN. I want to touch on that a little later.
The CHAIRMAN. Well, now, there isn't going to be much lat r.
Mr. ZIMMERMAN. Oh.

The CHAIRMAN. We are crowded for time, and you have already occupied about 15 minutes.

Mr. ZIMMERMAX. Oh, I didn't think I had talked but about 5, Judge.

The CHAIRMAN. We didn't either. We had to look at a watch to realize it.

Mr. ZIMMERMAN. I want to say to you this-
The CHAIRMAN. Wait just a minute.
Mr. ZIMMERMAN. Pardon me.

The CHAIRMAN. I don't want to crowd you out, but get to the most important facts you have to suggest.

Mr. ZIMMERMAN. All right. Driving this point a little further, these gentlemen on the shoe and boot code said that a dollar was not enough _“You are entitled to a greater differential.”

Senator Walsh. I understood there was just one shoe factory in this country that makes all the Government shoes for the Army and Navy. They carry out certain specifications and built their plant for that purpose, and there is no competition.

Mr. ZIMMERMAN. And they have a chance to create the greatest monopoly in this country, as I will try to show you a little bit later. it opens the door to monopoly:

Gentlemen, a reading of section 3 on page 10 of the bill and subsection (1), and subsections (a) and (b) under (1), and subsections 2, 3, 4, and 5 will disclose requirements which will deter the average business man from bidding on any Government contract, and, in my humble opinion, it opens the door to the greatest opportunity for companies to monopolize a field and chisel the Government, if you please, that you could have anywhere.

Now, I want to talk more about this wage differential. I want to give you the facts, gentlemen, as worked out by the research staff of the Industrial Club of St. Louis. A tabulation was made of 31 cities in the United States for the year 1933, showing the average cost of living in such cities, the index number being based on New York living cost as 100 percent. The average cost of living for the worker was found to range from $1.214 down to $914 per annum for a family of four. This calculation shows the cost of living, population, and relationship, in terms of index numbers and dollars, for the

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