I have, in a general way, a general knowledge of the operations of he average business in these towns, such as the small telephone comanies, the retail stores, the lumber yards, the country grain elevators, he hotels, the laundries, the canneries and other types of small busiess, and know something of the problems which they face.

In the consideration of the present bill, as it would affect small usiness operations, it is generally recognized that living costs are ess in the small towns; that an average house may rent for approxmately one-half or less the rental as compared with the metropolitan reas. Many of these people also have their own vegetable garden, aise chickens, and have a cow in the barn.

In the interest of time, I will analyze in a general way, the comlaints, protests, and objections to H. R. 2033 and its effect upon the several segments of the business operations of the people of my disrict, as they have expressed themselves to me.

I might say, Mr. Chairman and gentlemen of the committee, that that was no small labor, because, as you see, I have in my hand two folders for consideration of telegrams and letters which I have reeived from those in my district.

Mr. LUCAS. And may I say to you, sir, that that would not comprise a hundredth of the letters and telegrams I have received.

Mr. O'HARA. I appreciate that. I appreciate that many members of this committee, by virtue of the fact that they are on this committee, have received a great many more from the districts than those Members of Congress who are not on the committee. I appreciate that.

Now, I have subdivided it into certain small business functions and departments, with my own apologies for so doing.

First, telephone companies. There are numerous so-called small telephone companies in my district, which is natural due to the large number of small towns within the area.

These telephone companies have operated, since the Wage and Hour Act became effective, under an exemption which exempts any switchboard operator employed in a public telephone exchange which has less than 500 stations. The operators of these small telephone companies feel that if this exemption is repealed it will drive many of these exchanges to the wall, since a telephone exchange must provide 24-hour service and; therefore, a wage increase hits it three times a day. They would be compelled to increase rates so high that many farmers and small-income people in rural areas would have to take out their telephones. Service would thereby be seriously curtailed, and this essential branch of American small business would be on its way out. What may be a fair and equitable wage law in metropolitan centers is not necessarily the measuring stick for little business. I quote a letter from one of the managers of a telephone exchange in my district, in which he states as follows:

We have a small exchange of about 400 stations, of which most of the patrons are rural subscribers. We are already paying above-the-average wage scale for that town; and, if we are forced to pay our operators 75 cents per hour, that would bring us far out of line with the store clerks and office girls.

Our total revenue for that exchange was about $12,000 for 1948. We paid out $3,341.40 only for operators' wages. In order to make a little profit on that exchange for 1949, we were authorized to increase our rates beginning with January 1, 1949. If the Lesinski bill goes through, we will have to pay $6,552 a year for operators' wages; and, in order to make up for that in revenue, our 85539 49vol. 2-32

rates will have to be increased again and approximately 75 cents per month per station.

In the larger exchanges, it is no hardship to pay that, but for the smaller exchanges it just does not make sense. In order to protect our subscribers from exorbitant telephone rates, we beg you to vote and use your influence against this bill.

Mr. BAILEY. If I can interrupt, will the gentleman yield right there, at that point?

Mr. O'HARA. Yes; I would be happy to.

Mr. BAILEY. Might I ask you how the exemption of 500 stations in the present act has worked-has that worked any hardships?

Mr. O'HARA. I think, Mr. Bailey, from my observation that it has operated rather fairly.

Mr. BAILEY. Then, suppose we eliminated the provision in the present bill as to the one operator, and went back to the 500-station exemption. Would that solve that problem?

Mr. O'HARA. Mr. Chairman and Mr. Bailey, I would like to say that I think you would almost have to do that. It so happens that some of these stations which have automatic telephones, and have as high as 2,000 and 3,000 stations, have only one operator.

So, I think that in the interests of fair play with the girl operators or the operators of the telephone companies, that you would be better off if you leave it just exactly as it is, leave it at 500, rather than one operator.

You see my point, Mr. Bailey, have I expressed it sufficiently well! Mr. BAILEY. I do, and I thank you very much.

Mr. LUCAS. Mr. O'Hara, while we are on the subject, does that not serve to limit the kind of telephone service received in these small communities?

Mr. O'HARA. I think it does.

Mr. LUCAS. Because telephone companies will not put in more than 498 stations, they simply will not.

Mr. O'HARA. That is right.

Mr. LUCAS. And no matter how much demand there is, with that provision, when they have 498 stations, they simply will not get

more.

Mr. O'HARA. Well, they would almost be forced to do that.

However, the larger telephone companies, I think which have an automatic exchange with several thousand subscribers and where they only need one girl, are not confronted, Mr. Chairman, with the same wage problem, the problem of eliminating' them from business by changing that exemption. They are not asking for the change.

The ones who are asking are the small 500-exchange business or less. These are the ones that are worried about this amendment, if I get the picture.

Mr. LUCAS. You are correct about it.

Mr. O HARA. The telephone people undoubtedly have testified here with much more preciseness and much more knowledge than I could have, except as far as I know the operations of these small companies. Mr. LUCAS. And I am glad you realize the problem that we have

here.

Mr. O'HARA. It is a tremendous one, Mr. Chairman.

Mr. SMITH. Have you had any property damage this winter!

Mr. O'HARA. Mr. Smith, this winter has not been bad, but a year ago, in November of 1947, practically every telephone pole and practically every electric light pole, for miles around my home town, was down. The only way we could get telephone service was by radio connection from the Twin Cities.

Now, a word about the tremendous costs to these little companies. You can imagine what that would be, if you gentlemen have ever been in a telephone company-I never have-in trying to build back up their telephone lines when they are down. It is a tremendous cost, tremendous.

Mr. SMITH. They do not have the capital to do that; that is all there is to it.

Mr. O'HARA. Exactly.

Mr. SMITH. In the area in my district and Nebraska, Wyoming, and Colorado, there is not one real line in operation there; they were simply wiped out.

Mr. O'HARA. That is right, and it will take them months to build them back up again; it may take them years, probably.

Mr. SMITH. And they do not have the capital to rebuild.

Mr. LUCAS. And usually the utility commissions regulating the rates do not let them raise their rates in order to get that capital.

Mr. O'HARA. I was going to illustrate that point in a paragraph

or so.

Mr. LUCAS. Oh, pardon the interruption.

Mr. O'HARA. I have received a letter from the chairman of the Minnesota Railroad and Warehouse Commission which I shall quote. That is the regulatory body in my home State which the telephone companies have to go to whenever these telephone companies want an increase of rates. They have to make a presentation, and they are heard before that Commission, usually, I believe, in the home town or central location of the telephone company which is asking increased rates.

The chairman states:

Our attention has been called to a bill now in the House Labor Committee amending the Fair Labor Standards Act of 1937.

It is our understanding that the bill proposes to increase the minimum wage, modifying or eliminating the present exemption of telephone operators in public telephone exchanges serving 500 telephones or less. Should the bill become law, it would affect 150 or more small rural communities in Minnesota. It is our belief that modification of the 500-station exemption would in many cases increase operating expense to such a high degree as to make inevitable burdensome increases in subscribers' telephone rates. There is a limit to what rural subscribers can and will pay.

We are calling this to your attention so that, if the bill comes up for a vote, you will be informed as to what the effect will be on many of our telephone exchanges. The clamor for higher rates in order to meet increasing expenses has taken on serious proportions, and telephone subscribers are resisting any further increases.

The smallest exchange in our little communities is just as important. a life line to the people of that area as the great telephone systems in the metropolitan centers, and I respect fully urge that the present exemption pertaining to telephone companies of less than 500 stations be continued.

Small business: I have been asked to protest the provisions of the proposed bill (H. R. 2033), as it would affect the numerous small

business operations, such as retail stores and lumberyards of my district. The position which they take can be summarized briefly as follows:

Retailers must give service direct to the public, which demands different hours than is required in production.

Retail business is the point of distribution and, unlike manufacturers, it is usually confined to a very small trade area. This means that stores in farming communities must conduct their business entirely different from those of the city, and laws applying to the cities would work a serious handicap on thinly settled farming communities.

It seems improbable that any Federal law could cover so many small areas with such varying conditions and still treat the matter fairly. Heretofore, regulation of retailers has been left to the States, and it was previously considered wise to exempt retail business from the Federal act. What has appeared in the picture to demand this change?

The retail employees today enjoy their highest earnings, but there is every possibility that the inclusion of the retail business under the act would work to the detriment of these retail employees. As one merchant, living in a small town of 400, wrote me

Mr. BAILEY. Mr. Chairman, may I interrupt again?

Mr. O'HARA. Yes, Mr. Bailey.

Mr. BAILEY. Will the 500-over-all gross exemption eliminate any appreciable number of those small merchants?

Mr. O'HARA. Mr. Bailey, I am not in position to answer that.
Mr. BAILEY. Well, it would certainly eliminate some.

Mr. O'HARA. Yes; it would eliminate a great many of them, I would think.

Mr. BAILEY. Right now I am talking about the small businesses in the farm-implement business.

Mr. LUCAS. Mr. Bailey, if he is in the farm-implement business on the side, you realive it would not take many of those implements to make up $100,000.

Mr. O'HARA. That is true, Mr. Chairman. I was thinking of that. because in our area we sell combines, and those combines and tractors. such farm implements, run into a lot of money.

Mr. BAILEY. I do not want to be asking questions just to be asking questions, but I realize that this committee is going to have to write some sense into the provisions of this bill, and I will ask questions any time that I think we want some guidance when it comes to writing up this bill, paragraph by paragraph, and hope to put some sense into it.

Mr. O'HARA. Mr. Bailey, I hope you understand that, in answering your questions, I want to be absolutely honest with you. I answered you that I was not in a position to know; and when I said that, I meant that I did not know-just that.

When it comes to a $500,000 retail business, I am frank to tell you that I do not know.

Mr. LUCAS. May the Chair state to Mr. Bailey that his suggestions are always helpful.

Mr. O'HARA. I appreciate that, Mr. Chairman. Now, I was about to quote from this man's letter:

I employ three people. This year we showed a 20-percent drop in sales, and it now looks as if we may expect further drops this year. If this bill is raised

to 75 cents per hour, it is going to mean that we will have to get along with less help, and this is going to happen to untold small firms in the United States employing 1 to 8 people. This is not going to help matters any as to employment in this country.

Do you not think that a provision should be written into this bill exempting any small firm employing from 1 to 8 people from the bill entirely? Most all firms such as myself are pretty much a local or family affair and get along pretty well if left alone.

I do not think the purpose of this bill at its start was to apply to small firms such as myself. The fellow that this bill hurts is the small firms like myself which we have untold thousands of in this country.

There seems to be a feeling in our Government that the smaller-business man should be given some consideration in order that he can continue in business and grow. It would seem that, as I have herein stated, small firms of 1 to 8 people should be exempted entirely from the wage-and-hour bill.

You have in your district many small firms that this bill will hurt, and I know they feel as I do; an exemption should be written into this bill to cover the smaller firms.

Your efforts to write an exemption into this bill to cover firms such as myself will be greatly appreciated, I am sure, by untold others like myself.

There are located in my district several pea-canning industries. Most of these companies are also canners of corn, and one company also does considerable freezing of vegetables, as well as canning.

I know that you gentlemen have had the canners in here at great length, but I just want to give you my composite of what some of these canners have written me. I have boiled it down.

In the canning industry, it is necessary to work 7 days a week for short periods during harvest time, since the crop matures rapidly and it is impossible to spread the work. I am talking about Minnesota, where we have long winters and short summer seasons. Sections 7 (b) (3) and 7 (c) in the present law, permitting a longer workweek for 14-week periods, are extremely necessary. If shorter working hours were required, there would be a serious loss of food or greatly increased prices to consumers.

While I do not speak for the canning industry generally, I do know that, so far as it affects the people of Minnesota, and I believe it to be true throughout the country, this seasonal exemption is imperative.

Grain elevators: There is also the problem of the country grain elevators, of which there are many located in my district in small rural communities. A country store or two, one or two grain elevators, and a creamery may comprise the so-called business section of a typical small community.

I received a letter from one of my constituents who sets up the problem of small country grain elevators, which I quote, and I know that Mr. Smith has a lot more of them out in Kansas than we have in Minnesota:

I believe you are familiar enough with the handling of grain to realize the average country elevator is situated with one man who is manager and is responsible for weights and grades of grain in his elevator. He is working alone or with probably one second man. There is no supervision of any kind or any way to check and we have no control over the hours which he works.

As far as his receiving pay equal to 75 cents an hour, we know that all of our men do receive at least this wage.

It is very conceivable for a farmer to deliver grain before breakfast in the morning and no more loads delivered to the elevator all day and another load may come in, say, about 8 o'clock in the evening. This, of course, would be a very unusual procedure; nevertheless, taking in those two loads of grain might result in the agent turning in a workday of 12 or 13 hours a day although he has only taken in two loads a day and, as such, his overtime would be all out of line