Again we note the all-inclusiveness of the provisions of section 1 when we read the words "specifically or by reference" as these words pertain to the "classes of employment" and as they pertain to the establishment of minimum rates of pay and maximum hours. When we link these words with the enor mous powers given to the Secretary of Labor in later sections, we realize that "reference" may be the merest allusion to persons employed and to maximum hours and minimum wages.

The involved wording of this section of the proposal must arouse very definite suspicions in the minds of those who cannot forget that the entire principle upon which bills of this nature are based is, to use a hackneyed phrase, "a snare and a delusion."

SECTION 2

Section 2 was probably designed to overcome objections that were made to the Walsh bill in connection with the obligations of the principal contractor. In that purpose, the section fails. In the first place, while we are concerned primarily with manufacturing industries, we call attention to the fact that the section brings within the purview of the bill "construction, articles, materials, supplies, equipment, or services (except professional services)."

The section purports to relieve the principal contractor in the case of breach or violation of a contract by a subcontractor by relieving the principal contractor in case of such violation from the application of section 3 (1) or section 3 (2). We therefore should note carefully all of section 3 wherein we shall see that the principal contractor is not relieved and that in reality we end up with a three-party or one-hundred-party contract. That is as many persons, firms, or corporations are involved as there are persons, firms, or corporations supplying materials that go into the product of the principal contractor.

SECTION 3

This section starts out by providing that "Every representation or agreement made pursuant to the provisions of this act by a principal contractor, subcontractor, or supplier, shall provide." Thereafter follow the subsections referred to above and which will be discussed hereafter.

Note that the portions of section 3 thus far quoted bind not only the principal contractor, but the subcontractor and supplier as well. Note also that subsection 4 of section 3 provides that if the Secretary of Labor so directs, the principal contractor must cancel his contract with any alleged subcontracting violator; otherwise, he (the principal contractor) "shall subject his contract to cancelation."

Again, it should be noted that in section 2 it is provided that "actual notice" of the conditions of the principal contract shall be given by the principal contractor to all subcontractors. These facts clearly establish our contention that the Healey bill places fully as much responsibility on the principal contractor as does the Walsh bill.

Returning now to subsections 1 and 2 of section 3, referred to above, we find that any breach or violation of a representation or agreement as between the Government and a principal contractor, subcontractor, or supplier, shall render the party responsible therefor liable for "liquidated damages" in a sum equal to twice the difference between the amount required to be paid to employees, including overtime, and the amount actually paid; and the sum of $10 a day with respect to each person under 16 years of age employed in violation of any representation or agreement; and that (subsection 2) the exaction or acceptance of any refunds or kick-backs of wages shall render the party exacting or accepting the same liable for liquidated damages in a sum equal to five times the amount of such refund.

We do not object to the penalties involved, because we have full faith that the employers represented in our group would abide by the provisions of such a law if passed, provided they still felt it wise to do business with the Government. We point out the penalties merely to show that their application will be general. We point them out also to establish the fact that in all probability it will be within the power of the Secretary of Labor to determine what constitutes "refunds or kick-backs of wages." We wonder whether it will be safe for any manufacturer to continue many of the so-called employee-welfare plants that are now in force.

SECTION 4

Under section 4 the Secretary of Labor becomes the depository and paymaster for any sums that can be collected under the penalty clauses, whether or not such sums are paid by court order or otherwise.

SECTION 5

Section 5 forever bars any person from entering into a contract with the United States Government if the person "has, in the performance of any other contract, breached any of the agreements or representations required by this act."

SECTION 6

With this section we begin to understand the full purport of the act and realize the amazing power that is given to a single individual (the Secretary of Labor or anyone whom she designates). Under section 6 the Secretary is to create a unit in the Labor Department to carry out the purposes of the bill. She is specifically directed to disregard civil-service laws in her appointments of personnel. She is to fix the compensation of officers, attorneys, and examiners, and she may utilize "such Federal officers and employees' and, with the consent of the State, such State and local officers and employees" as are found necessary in the discharge of the duties of the unit. In addition, she is to "prescribe rules and regulations with respect to their duties."

Our experience with clauses of this latter type during the past few years has been most distressing. The power to issue administrative and executive orders and to prescribe rules and regulations has resulted in the building up of a body of law that is more far-reaching in importance than are the laws that have been enacted by the Congress itself.

SECTION 7

The machinery being established under section 6 without regard to civilservice laws and without consultation with or approval of anyone, we proceed to the provisions of section 7.

The Secretary of Labor "or representative designated by him" has the power to hold hearings, issue subpenas, and take testimony under oath. In regard to the compliance with the orders resulting from the grant of these powers, all of the laws of the United States are invoked in case of refusal to recognize.

The Secretary is given the power, under this section, to make findings of fact, which findings shall be conclusive upon all agencies of the United States, and if supported by evidence, shall be conclusive upon review by the courts.

The section continues: "and the Secretary shall have the power, and is hereby authorized, to make such decisions based upon findings of fact as are deemed to be necessary to enforce the provisions of this act."

Again we have that broad grant of power that should never be given to a single individual nor to any group of individuals when it affects the rights of the States to govern.

SECTION 8

The Secretary of Labor may make exceptions respecting minimum rates of pay and maximum hours of labor in specific cases "or otherwise" whenever such action is recommended by any Federal agency and when "justice or public interest will be served thereby." Furthermore, the Secretary may modify the terms of "an existing contract" as to rates and hours upon joint recommendation of the "governmental agency and the contractor." Further, the Secretary may provide reasonable limitation "and may make rules and regulations allowing reasonable variations, tolerances, and exemptions to and from any or all provisions of this act respecting minimum rates of pay and maximum hours of labor or the extent of the application of this act to contractors, subcontractors, or suppliers."

In other words, while it would appear from a superficial reading that this section is intended to prevent the working of any hardship on any employee or employer, it should be noted that the Secretary of Labor has the sole power. The word "shall" does not appear in the section; the word "may" appears four times. It matters not what the War Department, the Navy Department, the Post Office Department, the Departments of Agriculture, of Commerce, of the

Interior, of Justice, of State, or of the Treasury think about the justice of any stipulation of the Secretary of Labor. It matters not what the contractor or subcontractor may think, or what the employee working on a Government contract may think. The Secretary of Labor is supreme, and all persons are hereby notified that the moneys of the United States are to be spent in accordance with the desires of the Secretary of Labor.

SECTION 9

This section makes no bones about the powers of the Secretary of Labor in regard to the fixing of minimum wages and maximum hours a function that we had always supposed was left to the States-for the section starts out: "The specific minimum wages and maximum hours specified or referred to in any proposal or contract shall be determined by the Secretary of Labor." The section concludes with a proviso containing many vagaries that were presumably designed as so-called standards upon which minimum wages and maximum hours are to be based. They include, first, that the minimum wages fixed "shall be such wages as are fairly and reasonably commensurate with the value of the service or class of service rendered”—an innocent phrase, but it gives the power to the Secretary of Labor not only to fix a single minimum wage per hour, as was usually provided for in codes under the N. R. A., but it clearly gives the Secretary of Labor the power to establish a minimum hourly, daily, weekly, or monthly wage for each class of work involved in any contract. That is, the Secretary of Labor may stipulate (and such stipulation becomes a part of any Government contract when accepted) a certain hourly, daily, weekly, or monthly wage for floor sweepers, another for assemblers, another for machinists, another for weavers, and another for toolmakers. In other words, in the office of the Secretary of Labor we should eventually find piles of tables or expansive charts that would show at a glance the wages that must be paid in every establishment in the United States. If this is not bureaucracy, overriding of constitutional rights of individuals, and disregard of the rights of the State, we are not properly informed.

Furthermore, "in establishing a minimum wage for any service or class of service under this act the Secretary, without being bound by any technical rules of evidence or procedure", "may" take into account all relevant circumstances affecting the value of the service or class of service rendered; “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; "may" consider the wages paid for work of like or comparable character by employers who voluntarily maintain minimum fair wage standards. Thất is, the Secretary, in determining any wage schedule, "may" take into consideration any of these things, but there is no compulsion to do so. If it suits her need, she may "consider" the wages paid by employers who voluntarily maintain fair wage standards. It is for her to decide, therefore, what is a fair wage. If there is disagreement, she may refer to the fact that under section 9 she may establish the minimum wage without being bound by any technical rules of evidence or procedure.

In only one respect does section 9 restrict the power of the Secretary of Labor. She "shall" set overtime rates, and such rates "shall" be not less than one and one-half times the basic hourly rates received by the employees affected.

SECTIONS 10, 11, 12, 13, 14, AND 15

With the above sections we need not concern ourselves particularly. The first provides that funds shall be made available from the Emergency Relief Appropriations Act of 1935. The second defines the word "person" in the usual terms. The third, section 12, seeks to avoid conflict with existing acts that it might otherwise modify or amend. Section 13 specifically exempts "agricultural or farm products processed for first sale by the original producer" and "contracts made by the Secretary of Agriculture for the purchase of agricultural commodities or the products thereof." This section also provides for nonapplication to common carriers subject to the Interstate Commerce Act and the Railway Labor Act. Section 14 is a separability clause, and section 15 provides that the act shall apply to all contracts "entered into pursuant to invitations for hids issued on or after 30 days from the effective date of this act."

CONCLUSIONS

We have attempted to point out the inequities of the act, the inadvisability of conferring upon any individual the vast powers that are conferred by the bill upon the Secretary of Labor, the questionable method of circumventing private and State rights, the failure to eliminate the great majority of objections that have been voiced against the Walsh bill, the subservience to the Secretary of Labor of all Government departments, agencies, and bureaus in their contractual relationships so far as purchasing is concerned, and the somewhat concealed fact that the Secretary of Labor is empowered to determine the wage that shall be paid to every man and woman in the various classes of work in every factory in the United States that directly or indirectly does business with the Federal Government.

We did not enlarge upon the fact that the minima prescribed will actually become maxima. We did not express wonder as to the attitude of organized labor, who might see in this bill a method of reducing the union scale.

There remains the duty to the committee to point out the impracticability of the application of such a bill.

Under section 2, every principal contractor is compelled to notify all of his subcontractors and suppliers of the provisions of the contract into which he has entered and to which they become bound. Take the case of an automatic toolroom machine. Such a machine is made up of literally hundreds of parts, including castings, gears, bearings, sleeves, spindles, dynamotor, pump, conveyor, motor, magnetic clutches, oilers, screws, nuts, bolts, piping, et cetera. Many of the parts of such a machine (and this is true of most machines) are not made by the manufacturer of the machine but are supplied to him by other manufacturers. If a manufacturer of an automatic toolroom machine becomes a principal contractor, it will be necessary for him, if he is to observe the spirit and the letter of the law to notify every other manufacturer or supplier who furnishes him with the smallest screw that goes into the finished machine. It may be that the Government order is for one machine; it may be that at the same time there are under construction 10 machines for private companies. The principal contractor cannot use the screws or the nuts and bolts that he has in stock, for in all probability he or his subcontractor would be in violation of the act. He must employ the persons working on the Government machine for a limited number of hours or he must reduce the maximum hours of those who are employed on the machines ordered by private companies. The inevitable result is confusion, increased cost, delayed deliveries, or evasion-evasion on the part of the irresponsible contractor who is a chiseller at heart-with resulting unfairness to the honest contractor.

Mr. GALL. Our next witness is Mr. C. Parker Holt, executive vice president of the Caterpillar Tractor Co.

Mr. DUFFY of New York. We will be glad to hear him. (Here followed discussion off the record.)

Mr. HEALEY. Would you yield to a gentleman who has to leave soon?

Mr. HOLT. Yes.

STATEMENT OF CHARLES W. ERWIN, REPRESENTING THE AMALGAMATED CLOTHING WORKERS OF AMERICA

Mr. ERWIN. Mr. Chairman and gentlemen of the committee, my name is Charles W. Erwin, and I represent the research department, Amalgamated Clothing Workers of America.

Mr. HEALEY. Whom do you represent?

Mr. ERWIN. The Amalgamated Clothing Workers of America. We have about 145,000 workers involved in this bill. I approach it solely from the point of view of the sweatshop.

I do not want to waste any of the time of the committee in going over the things that have been brought out here yesterday by the witnesses from the Government, the Quartermaster General's De

partment, and the Assistant Director of the C. C. C., who told this committee that they knew the sort of people they were dealing with in their contracts. That is on your record; and that they were powerless to do anything about it.

I want to approach the matter entirely from the point of view of a field investigation in 16 States on this sweatshop proposition. My statement is on three pages, so you will not have to wait long. According to a report in the Daily News Record of February 23, 1936, nearly half of the 3,500 firms holding Government contracts scrapped N. R. A. minimum-wage and maximum-hour records as soon as the Supreme Court voided the N. R. A. The information was obtained through an inquiry by the contracts division of the Government.

In connection with these facts it must be noted that on June 5, 1935, the News Record reported that the Philadelphia Army Depot announced that, following orders from Washington, it would no longer require adherence to N. R. A. standards by firms in bidding.

The Philadelphia Army Depot is one of the chief purchasing agents of the Government and is constantly letting orders for a wide variety of textile products-cotton, cotton textiles, sheeting, buttons, thread, pins, braid, binding, needles, cotton drill, denim, flannel, serge, lining, eyelets, silesia, blankets, caps, hats, gloves, socks, uniforms, underwear, shirts, and breeches for the Army and for the C. C. C.

The magnitude of their orders may be judged by the fact that between March 23 and March 26 1936, they propose to let contracts for the following articles: 1,061,500 pairs of shorts, 975,000 undershirts, 92,000 one-piece working suits, 220,000 pairs of trousers; 165,000 jumpers, 18,500 hats, and 49,874 caps.

Union firms have always been at a disadvantage in bidding for these orders. Among the most successful bidders have always been the Phillips-Jones Corporation, which is now making plans to move south to obtain cheaper labor than it now can obtain; and the Sigmund Eisner Co., which is notorious for the low standards it has always maintained.

When the Government let contracts for 625,000 pairs of trousers on June 3, 1935, which was after the N. R. A. decision, but prior to the announcement that N. R. A. standards would no longer be required, only two out of nine firms among whom the order was divided were union firms. Of the other firms, one was the New York Knee Pants Co., which eventually made up some of its work in the Scranton Pants Co. The Scranton Pants Co. of Scranton, Pa., has an official 44-hour week, but no proper time records are kept and workers frequently work long overtime so that their earnings seem to be higher per hour than they actually are. In spite of this, the wages of these workers range from $10 to $12 per week on the average. It was under such conditions that the order for the New York Knee Pants Co. was made up last July.

Other firms which received shares of the order at this time were the Weaver Pants Co., of Corinth, Miss., the Washington Manufacturing Co., of Scottsville, Ky., and the Champion Manufacturing Co., of Chattanooga, Tenn. The firms in the South are all known to have much lower standards than even the nonunion firms in northern areas. You will remember also that when efforts were made to