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he does have 10 percent. Let him have it. He cannot take all my business. I have still got a good trade.

The CHAIRMAN. How can you do it unless you meet the competition on wages?

Mr. Bardo. He does not have the capacity to do it. He does not have anything to do it.

The CHAIRMAN. If he is making more money out of it, out of his unit production—I don't see the reason for it. I just do not know.

Mr. BARDO. I do not know how many of these sweatshops make money: They just usually pass out. The sweatshop is usually the last condition before he goes out the door, before the sheriff comes in.

Mr. WALTER. Mr. Bardo, do you think by any stretch of the imagination the Schechter decision could be construed to mean that a reasonable condition could not be written into a contract voluntarily entered into ?

Mr. BARDO. Well, you say " a reasonable condition." As to what? Mr. WALTER. As to hours, wages, and child labor.

Mr. BARDO. We have been operating a great many years under the 8-hour law that was passed away back I don't know when. There has never been any difficulty about that law.

Mr. WALTER. You opposed that law, too, didn't Mr. Bardo. Oh, no; I never opposed it. There is nothing wrong with that law. Nobody questioned that. Under that law has been built up a sound basis of procedure, both from the standpoint of the laboring element, from the standpoint of wages, from the standpoint of overtime, from the standpoint of shop production. All of those things have been correlated and brought together so that you get at the arrival of N. I. R.A.

Mr. WALTER. I know how solicitous the Pennsylvania Manufacturers Association has been for the workers in my State. I know all about that.

Mr. BARDO. I don't know anything about

Mr. WALTER. I wish you would answer my question, though, about the Schechter decision.

Mr. BARDO. About what?
Mr. WALTER. Whether or not the Schechter decision applies?
Mr. BARDO. Applies to what?
Mr. WALTER. To Government contracts.

Mr. BARDO. Well, apparently it does, although I think the Government has got a right to set up certain standards that they might want to have adopted; but they ought to be reasonable. In other words, I do not think that the primary contractor would seriously object to some of these things if his resopnsibility could stop there. But if he takes a contract for a ship for the Government, 10 or 11 or 12 or 15 million dollars, with his responsibility running back to the iron mines, the coal mines and the oil fields and the lumber regions, why, he would just be a fool to take it under those conditions—just be a fool.

Mr. WALTER. Does he take that responsibility now?
Mr. BARDO. No.
Mr. WALTER. As to good materials?

Mr. BARDO. Oh, no. He buys materials on specifications. If they do not furnish him what he wants, he refuses it; but he is not responsible to what goes on down there as to labor.

Now it is proposed to recreate this stifling bureaucracy, but in an even more dangerous form. Under the codes experienced business men at least had the right to consult in the establishing of wage and hour levels. Under this bill this power would be turned over by the President to many of the same underlings, and wages and hours arbitrarily frozen.

Most important of all in this bill is the fact that it does not stop at fixing working conditions for the goods sold directly to the Government. The contractor with the Government must trace the material used right back to the raw state and see that it was produced under code conditions. The manufacturer in Maine must oversee the manufacturer in California to insure that the latter does not chisel. Every manufacturer dealing with any State or city government with Federal loans or grants must follow the same process. Manufacturers dealing with other industries using Government loans must do likewise.

Quietly, and without fanfare, the sponsors of this measure seek to control every working process in this country. It is a most unAmerican, dangerous and insidious proposal to fasten the harsh teeth of bureaucracy operating in Washington upon the small factories in every village and township of the land.

The Wagner bill is now on the statute books. The same is true of the social security program. The Banking Act and many other measures will, under the President's mandate as quoted in the press this morning, be enacted into law at this session. Surely here is enough legislation to jar industry from its center to its circumference and devil it to death. Industrialists are only human. They carry heavy responsibilities. They are patriotic but there is a limit to the things they can effectively do.

They must have time to devote to the expansion of their market; the improvement in plant faciilties, and many other things essential to a sound recovery.

May I, therefore, respectfully suggest to your Honorable Committee that action upon this bill be deferred until an opportunity can be had to morefully develop its implications and to determine more definitely that such legislation is required in the interest of social and economic justice?

I thank you.

The CHAIRMAN. Gentlemen, we meet at 3 o'clock, and the Chair renews the suggestion made this morning that the opponents to this bill seek to get together and determine upon your spokesmen as nearly as you can, because it will not be possible to hear each of the gentlemen here.

Mr. BARDO. Mr. Chairman, with your permission, I would like to present for the benefit of the record a statement that was prepared by Mr. James Hook, who is president of the Geometric Tool Co., of New Haven, Conn., who has been active in our committee work here in Washington, and has some very definite views with respect to this legislation.

The CHAIRMAN. Very well; place it in the record.
(The statement of Mr. James W. Hook is as follows:)

STATEMENT OF JAMES W. HOOK, PRESIDENT THE GEOMETRIC TOOL Co., New HAVEN,

CONN.

or

66

I am opposed to Senate bill 3055 for the following reasons:

The bill, if enacted into law, would permit the Government to use its power to make purchases to entice suppliers to do certain things that the Government wanted them to do and to boycott them if they refused. This is not an overstatement. The Government, without regard for its own costs, would be empowered to say to a supplier, We desire that you pay a stated minimum wage to your workers, work them a certain number of hours per day or week, hire no one under 16 years of age, and employ no convict labor. If you will do these things you will be granted the privilege of bidding on Government work. If you refuse, you will be denied the right to sell goods to the Government, or”—and here is where the boycott comes in—" to anyone who does sell to the Government."

To me this is a grave misuse of power and if permissible under the Constitution is capable of putting many companies out of business. Not only would it empower the President and other agencies of the Government to require certain labor standards in contracts entered into with the Government but by section 2 would empower him to force a principal contractor to require the same standards from subcontractors.

I submit that if Congress can delegate such power as this to any man group of men in the Government, that the power of the Government over private business engaged in interstate commerce is supreme and the rights of States to regulate their own internal affairs narroweu to almost meaningless limits. I cannot believe that if there was too much delegation of power in N. I. R. A. that there is not also too much in the bill in question. If anything, the Walsh bill goes further in this direction than N. I. R. A. It delegates legislative power beyond the President to agencies designated to administer the act by authorizing those agencies to establish minimum wages and maximum hours as they may choose. The so-called “standards " established in the bill are so impossible of application as to leave the President's agents what the Supreme Court described as unfettered discretion."

The bill, as written, is grossly unfair in that its practical penalties and inhibitions would not bear equally upon all industry or even upon all units in the same industry. Company A on one side of the street may sell its product to the general public. It could twiddle its thumbs at the powers and penalties of the bill. Company B on the other side may do a large or small business with the Government and a large business with those companies who do likewise wise. Under the Walsh bill it must do what the Government and its other customers say or close shop. Between companies of the classes of A and B lie others of almost every shade and description insofar as the importance of Government business to them is concerned. One company might be severely damaged by an alleged violation of the act, while another for the same offense may be affected scarcely at all. Labor conditions in a single industry and the same neighborhood would have no uniformity, the shops yielding the greatest weekly pay, by working longer hours than neighboring concerns affected by this legislation, having all the advantage. I assert that this is as unjust as it is economically unsound. I contend that this Nation has no moral right to pass a law, the penalties of which for the same offense may be a flea bite in the case of one violator and a veritable sentence of death for another.

Some companies with subsidiaries and others with diversified lines might easily have a decided advantage under the proposed act over those who would be more seriously affected by its provisions. The right given the President to impose the bill's requirements upon a concern selling directly or indirectly to the Government would force many concerns to refuse to bid on Government work. This would apply particularly to concerns which sell mostly to the general public and that cannot afford to disadvantage themselves by agreeing on labor policies which may not be accepted by competitors. In such instances the Government would lose the competition of these bidders, with the result that the field would be monopolized by fewer bidders, which, for the most part would be the larger and stronger concerns. Moreover, these larger concerns, with the power granted them by the Government to force subcontractors to comply with the provisions of the act, would have in too many cases the very power they have always wanted to put smaller competitors “on the spot”, and, as happened under the National Industrial Recovery Act, to reduce the margin of any competitive advantages which they may enjoy. This would

be against the public interest and the interest of labor employed in the smaller plants.

The act would be administered wholly by Government agents. In this respect it differs from the National Industrial Recovery Act which permitter! each industry to act through. a code authority of its own choosing and financed by industry funds. We cannot have forgotten the confusion and conflicts that had all but wrecked the efficacy of that act before it was declared unconstitutional by the Schechter decision.

On the date when that decision was handed down, the National Recovery Administration was overladen with problems of compliance and enforcement. Despite the fact that codemaking was practically over, the N. R. A. organization was the greatest had ever been and was still growing. If this was true when industry itself was supplying thousands of its own members, at an expense of $50,000,000 annually paid by itself to help administer the act, can we expect that a lesser organization can effectively administer the proposed Walsh bill, to say nothing of the added public expense that such would entail? My opinion is that the problems would be increased manyfold. The administration would be overwhelmed with the confusion and conflicts that would certainly arise as a result of having to rationalize the varying effects of the legislation upon different industries and, indeed, different units of the same industry. Violations and chiseling by those who would be willing to take chances on their representations not being checked up would rival the N. R. A., or even the eighteenth amendment, with the result, finally, that decent concerns only would bear the brunt of the penalties and restrictions of the act. Those doubting this statement need only to remember N. R. A. as it existed last May with its confusions and violations and the sense of relief that swept the country when the act was declared to be invalid.

The philosophy of the proposed legislation undoubtedly is that minimum wages are necessary to thwart the sweatshop operators and that maximum hours are needed to enforce a spread of work and absorb more workers on pay rolls. It is probable that there is an economic minimum wage. Whether it is a social wage or not is not so certain. I have no quarrel with a minimum wage set at a level which can be justified, industry by industry, on the basis of reasonable relationship to the average wage rate paid by the industry as a whole. But the minimum wage set so high as to advance price levels at a time when consumer demand is lagging is, in my opinion, wholly wrong. All experience with N. R. A. proved that beyond all question of a doubt. Maximum hours, on the other hand, are not only uneconomic but unfair to the worker. What right has a government to limit the earning capacity of a worker by placing a ceiling on the hours he may work? Do the sponsors of such a policy think that the working man will long stand for such an invasion of his rights as a free citizen? My opinion is that when he awakens to the full import of what it means to him that the din he will whip up will be deafening.

No part of the National Industrial Recovery Act was more widely violated than the one imposing a limit to hours. Employees, themselves, chafing under the curtailment of their weekly income but knowing that wage rates could not be increased without affecting sales, were perfectly willing to remain silent when their employer violated the maximum-hour provisions of their codes. How much better would it have been if the old recovery act had provided for fixed normal hours rather than maximum hours with penalty wages for all hours worked in excess of normal. Such a provision would have been self-enforcing, since no employee would be willing to forego the extra pay provided for the extra hours. Employers, on the other hand, to avoid paying the added wages would employ enough help to avoid them, at the same time not being estopped from working their forces extra hours in cases of emergency.

As to the imparct of the bill upon industry it is estimated that in the State of Connecticut, where practically all industries sell principally to concerns that supply the Government, that fully 85 percent would be affected by the proposed act. This percentage may vary in the different States, but on the whole, and for the entire country, could not average below 50 percent. Here is legislation, then, that affects in the matter of vital labor policies only 50 percent of American industry. The affected 50 percent would be controlled by a huge bureaucracy in the Federal Government. The remaining 50 percent, so far as their labor policies are concerned, would be left scott free.

I query you, is such legislation worthy of our great country and Government? As a citizen of that country I say it is not, and I say it when my own company is adhering fully to the labor provisions of my industry's old code and expects to continue. I say it also because I believe that in the confusion of enforcement that the labor employed in the affected industries, as well as their employers, will bear the brunt of the proposed legislation to their own great disadvantage and to the high advantage of those who cannot be brought within the purview of the act. I plead with your committee to recommend against its passage.

The CHAIRMAN. The committee will recess, then, until 3 o'clock in this room.

(Accordingly, at 12:05 p. m. a recess was taken until 3 p. m.)

AFTER RECESS

(The recess having expired, the committee met and resumed its hearing on S. 3055 as follows:)

The CHAIRMAN. May I inquire what progress has been made by the opposition in arranging a schedule, and in arranging with reference to the person or persons whom you desire to be heard ?

Mr. FULBRIGHT. Mr. Chairman, some of the parties were not here when they recessed at noon, but Mr. O'Leary has a brief statement to make, and Mr. Edgerton, and I may desire to add something to them, because we found that one man could not cover so many angles of this bill, we could not very well reduce to a presentation by one person, unless we had had a lot of time to do so. If everyone will conserve the time of the committee as much as possible, it will not take long

The CHAIRMAN. We would not like, if it can be avoided, to shut out somebody who neither himself nor through his elected representatives has an opportunity to speak.

Mr. FULBRIGHT. I will say there were several gentlemen who agreed not to make any statement, upon the assumption that their point of view would be covered by one of those who is going to make a presentation.

The CHAIRMAN. Let us see what you can do about covering all the points of view.

Mr. O'Leary, we will be very glad to hear you, now.

STATEMENT OF JOHN W. O'LEARY, ARTHUR J. O'LEARY & SON CO., MANUFACTURERS OF IRON AND STEEL PRODUCTS; PRESIDENT OF, AND APPEARING ON BEHALF OF THE MACHINERY & ALLIED PRODUCTS INSTITUTE

The CHAIRMAN. State your full name and whom you represent, Mr. O'Leary, please.

Mr. O'LEARY. My name is John W. O'Leary. I am chairman of Arthur J. O'Leary & Sons Co., manufacturers of iron and steel products. I appear here on behalf of the Machinery and Allied Products Institute, of which I am president. The Machinery & Allied Products Institute is a federation of 57 trade associations, each of which represents manufacturers of machinery and allied products, such as steam engines, Diesel engines, locomotives, conveyors, machine tools, and so forth. The membership of these associations include about 1,000 manufacturers of capital goods. Employment and

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