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forming the contract will be reduced or increased solely by reason of compliance by the contractor, subcontractor, or supplier with the requirements of such substituted provisions.

(e) Where proposals have been invited prior to the effective date of this Act and all bids submitted in response thereto have been rejected for the sole reason that same were made subject to the provisions of any code or codes of fair competition and amendments thereto, if any, or the President's Reemployment Agreement or applicable approved substitutions therefor, if any, or any related requirements prescribed by Executive Order Numbered 6246 of August 10, 1933, as modified by Executive Order Numbered 6646 of March 14, 1934, and no invitation for further bids has been issued, if the bidder, whose bid would otherwise have been accepted, with the assent of his surety, shall agree in writing that the contract, if entered into, shall be subject to the provisions of this Act in the same manner and to the same extent as contracts made subject thereto by the provisions of this Act, contracts may, in the discretion of the officer or officers otherwise authorized to accept the bid, be executed according to such proposals : Provided, That in such cases the compensation to be provided for in the contract shall be reduced or increased from that stated in such bid in the amount and to the extent that the contracting officer shall find the cost of performing the contract will be reduced or increased solely by reason of compliance by the contractor with the requirements of such substituted provisions.

SEC. 10. The provisions of this Act shall be carried out under the direction of the President and in accordance with such orders, rules, and regulations as he may issue for that purpose. The President is hereby authorized to establish such agency or agencies and to appoint, subject to the provisions of the civilservice laws, such officers and employees, and without regard to the civil-service laws semijudicial and administrative officers, attorneys, and examiners, and to utilize such Federal officers and employees, and, with the consent of the State, such State and local officers and employees as he may find necessary; to prescribe their authorities, duties, responsibilities, and tenure; and, in accordance with provisions of the Classification Act of 1923, as amended, to fix the compensation of any officers and employees so appointed. The President may authorize any of his functions under this Act to be performed by any agency or agencies now existing or herafter established wi-hin the Government. The President, or any member of any Board, or any individual upon whom is delegated under section 11 the authority to administer this section of this Act, and any examiner duly authorized by such Board or individual is authorized to administer oaths to such witnesses. The funds appropriated and made available pursuant to section 220 of the National Industrial Recovery Act by the Fourth Deficiency Act, fiscal year 1933, and by the Emergency Relief Appropriation Act of 1935, are hereby made available for the expenses of administration of this Act.

SEC. 11. The provisions of this Act shall not be construed to modify or amend title III of the Act entitled “An Act making appropriations for the Treasury and Post Office Departments for the fiscal year ending June 30, 1934, and for other purposes ", approved May 3, 1933 (commonly known as the “ Buy American Act”), nor shall the provisions of this Act be construed as authorizing the payment of wages below the standards required by “An Act relating to the rate of wages for laborers and mechanics employed on public buildings of the United States and the District of Columbia by contractors and subcontractors, and for other purposes ”, approved March 3, 1931 (commonly known as the

Bacon-Davis Act”), as amended from time to time, with respect to contracts which are also within the provisions of such Act as amended from time to time, nor the wage and hour provisions of title II of the National Industrial Recovery Act approved June 16, 1933, as extended.

SEC. 12. Nothing in this Act shall be construed to apply to agricultural or farm products processed for first sale by the original producer nor to loans made by any governmental agency to associations of producers as defined in the Farm Credit Act of 1935 nor to any contracts made by the Secretary of Agriculture for the purchase of agricultural commodities or the products thereof. Nothing in this Act shall be construed to apply to loans made by the Governor of the Farm Credit Administration, or by any agency, corporation, or institution under the supervision or control of the Farm Credit Administration.

SEPARABILITY CLAUSE

Sec. 13. If any provision of this Act, or the application thereof to any persons or circumstances, is held invalid, the remainder of the Act, and the application of such provisions to other persons or circumstances, shall not be affected thereby.

Sec. 14. This Act shall remain in force for two years after the date it becomes effective.

Passed the Senate July 29 (calendar day, August 12), 1935.
Attest:

EDWIN A. HALSEY, Secretary. The CHAIRMAN. You do, of course, know, also, that we are nearing the close of this session. Members of this committee are working under very high pressure. A very important bill is now being considered on the floor of the House. It will not be possible for the committee to hear many witnesses.

It has occurred to me that the parties, the various groups interested—I do not know how many there are—might get together and determine who are to be your spokesmen. The committee would like to know how many different groups there are here; that is, how many groups are here for whom no one individual could be a proper spokesman. I see Mr. Fulbright in the audience, and I happen to know him very well. I wonder if he could give us any suggestion about it! We are going to have to move pretty fast. :

Mr. R. C. FULBRIGHT. Mr. Chairman, I do not think the parties had an opportunity to canvass this situation among the various interests here. I had heard that Judge Bardo was going to make the presentation for the American Manufacturers Association, and I had no opportunity to talk with him. I have just a very brief presentation for the cotton interests and one for the lumber interests.

The CHAIRMAN. Now, let us get it straightened out. You represent the lumber interests and cotton interests. What other interests are represented here?

Mr. R. V. FLETCHER. I represent the railroad interests.

The CHAIRMAN. What other interests are represented, on the righthand side?

Mr. Evans. Representing the Philadelphia Chamber of Commerce.

The CHAIRMAN. I do not believe we will be able to hear individual chambers of commerce. I think the chamber of commerce people probably ought to get together—and must get together if there are others here.

Mr. ARNOLD BERMAN. Arnold Berman, representing the cottongarment manufacturers, in favor of the bill.

Mr. O'LEARY. John W. O'Leary, representing machinery.
The CHAIRMAN. And you are opposed to the bill?
Mr. O'LEARY. Opposed to the bill.
The CHAIRMAN. You represent machinery?

Mr. O'LEARY. Machinery interests, Machinery and Allied Products Institute.

The CHAIRMAN. Manufacturers? Mr. O'LEARY. Manufacturers; yes. Mr. Bardo. C. L. Bardo, representing the National Association of Manufacturers.

Mr. Davis. A. P. Davis, representing tire and rubber manufacturers, against the bill.

Mr. ZIMMERMAN. Representing the Tenth District of Missouri, representing the shoe and garment manufacturers in Missouri, Illinois, Tennessee, Kentucky, and South and West, against the bill.

The CHAIRMAN. Opposed to the bill?
Mr. ZIMMERMAN. Yes, sir.

Mr. EDGERTON. John E. Edgerton, president of the Southern States Industrial Council, representing approximately 10,000 industrial units in the 14 Southern States, opposed to the bill.

The CHAIRMAN. May I make a suggestion? We cannot possibly, as you must appreciate, hear all the opponents of this bill. My suggestion is for you to get out there in one of those rooms right now and pick yourselves out a couple of pretty good talkers who are well informed and send them in here to represent you.

Mr. Reed, the Solicitor General, I believe, is here, and he had much to do, I believe I am saying this on my own responsibilityin the preparation of the bill. Mr. Reed possibly has some helpful suggestions to make, and will you come up now and give us, Mr. Reed, suggestions you have on the bill, so that the persons who afterward want to discuss the bill could discuss it having in mind your suggestions?

Mr. McCOMAS. Mr. Chairman, might I say that I think the Associated General Contractors are to be here. I have not seen Mr. Harding or Mr. Marshall. I am representing the surety companies, but the Associated General Contractors were to do the talking for those interests.

The CHAIRMAN. I still have the suggestion for your consideration that you might have spokesmen for the different groups, which would be more adapted to our limited time. I am sure that

many

of

your interests would be quite similar. I believe you had better pick a couple of spokesmen, because we are going to quit here pretty soon.

STATEMENT OF HON. STANLEY F. REED, SOLICITOR GENERAL OF

THE UNITED STATES

The CHAIRMAN. Mr. Reed, I understand you will be good enough to give us some specific suggestions in regard to the bill.

Mr. REED. Yes, Mr. Chairman. There are three matters contained in the Senate bill that I desire to call to the attention of the House Committee for your consideration.

One is found on page 4, lines 24 and 25, of the House print. My suggestion is that the phrase “ including Federal Reserve Bank industrial loans” should be eliminated.

The CHAIRMAN. Let us get that exactly, now.
Mr. REED. Page 4.
The CHAIRMAN. What line?
Mr. REED. Lines 24 and 25 of the House print of the Senate bill.

The CHAIRMAN. What language do you think should be eliminated ?

Mr. REED. “ Including Federal Reserve Bank industrial loans.” I have written a memorandum, Mr. Chairman, which is in the hands of the secretary to the committee.

The CHAIRMAN. How long is it?

Mr. REED. It is half a page. I merely say that the precise point in the bill where the language is that I suggested the elimination of is pointed out is that, so you need not take it down if the clerk of the committee has that.

The CHAIRMAN. All right.

Mr. REED. The reason for urging the elimination of that is that the Federal Reserve System is operating distinct from the usual Government agencies, and, of course, is privately operated. It is true that the money which is used by the Federal Roserve System in making industrial loans is furnished by the Government, and therefore there is no legal impediment to the Government putting such limitations as they please on the use of that fund, but because the Federal Reserve System is not operated as a Government agency and have their own system of making the loans, it has seemed to me that it would be difficult administratively for them and for the Government to carry out the plan through the Federal Reserve Bank. That clause was inserted by the Senate Committee on Education on Labor, and they felt that it was a desirable addition.

The CHAIRMAN. That would prevent the Federal Reserve Bank from making any loan to anybody who did not comply with the requirements with reference to labor conditions !

Mr. REED. That is correct; but of course, sir, only so far as industrial loans are concerned; not for the general loans.

The CHAIRMAN. Yes.

Mr. REED. But only made out of the funds that have been furnished by the Federal Government.

The CHAIRMAN. I think we have the point.

Mr. REED. The second point is an addition that was made in the Senate committee which added convict labor to the requirements of this bill.

Mr. GREGORY. Page 5, line 24?

Mr. Reed. It is in several places. You will find it on page 3 at line 3, and as you said, page 5, line 24.

The CHAIRMAN. Wherever it appears you suggest its elimination ? Mr. REED. No; I do not suggest its elimination, sir. I suggest the addition of a clause that will make it clear that that does not apply to the Government penitential and correctional institutions.

The CHAIRMAN. Have you the language?

Mr. REED. I have the language, sir, in a memorandum that I furnished to the clerk.

Mr. MICHENER. Just what do you mean by the Government? It would apply to a State institution and not to the Federal institution!

Mr. REED. That is correct, sir.

Mr. MICHENER. In other words, if you buy material from the Federal Government there would be no exemption or limitation, but if a contractor attempted to buy the same material from a State reformatory or penal institution, that would be prevented ?

Mr. REED. That is correct, under this language.
Mr. MICHENER. Is that what you want?

Mr. REED. The thing that I am interested in, from the standpoint of the Department of Justice, is the Federal prisons and the Federal correctional institutions. I am not familiar enough, sir, with what

Mr. MICHENER. But you want to be able to use the labor there and prevent the use of the same labor in a State institution; am I right?

Mr. REED. No, sir; not at all. At the present time we have an act which arranges for the transfer of material produced in Government institutions to other agencies of the Government that may need it. That is section 7 of the Penitentiary Act, and it is very short, sir, and reads as follows:

The several Federal departments, independent establishments, and all other Government institutions of the United Stites sall purchase at not to exceed current market prices such products of the industries herein authorized to be carried on as meet their requirements and as may be available and are authorized by the appropriations from which such purchases are made.

The entire problem of convict labor, as the committee knows better than I do, has been an extremely difficult problem to handle in its relations both in competition with free labor and to our people who are incarcerated in the Federal institutions. Congress has some time ago developed this plan of meeting it, and of course there are only limited quantities and limited types of things produced in these Federal institutions. Shoes, I believe, are produced at Leavenworth and some other supplies at Atlanta and different places, and the Federal departments are required to purchase those things from the Federal institutions.

One of two suggestions is made that this should be included in the bill :

Nothing in this act shall apply to commodities manufactured in or services rendered by Federal penal and correctional institutions for the Federal Gcyernment or any department or agency thereof.

Or in the alternative the following might be used : Nothing in this act shall apply to commodities or services referred to in the act of May 27, 1930, or in the act of June 23, 1934 with the statutory citations.

The policy of whether you wish to permit the use of convict-made goods, of course, is a matter that the committee is advised on. The point that we desire to make here is in regard to the present language which permits the penitentiaries and correctional institutions to sell the products of their labor to the Federal Government agencies only and to ask that that should be continued by this explicit language.

The third suggestion that I have to make is in regard to language which appears on page 2, lines 1 to 24; page 3, lines 17 through the page and on down to line 7 of page 4; and page 5, lines 7 to 14, inclusive; page 7, lines 5 to 18; and possibly at another place in the act. The whole comment, however, is directed at a single problem.

This language sets up the codes which were in effect on May 26, 1935, as the requirement for the operation of industry from the time that this act goes into effect, which, by the language of the present draft, is 30 days after the date of the signature or approval by the President.

Under the codes, there were, of course, a body of codes in existence on May 26 that were already having very considerable difficulty in administration. I presume representatives of N. R. A. would be here, who can give you more of the detail of such difficulties as they may have than can I, and I am not speaking for the N. R. A. in what I am saying

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