advantage to the unethical and to the illegitimate or fly-by-night bidder or contractor.

In the interests of fair competitive bidding it may be that there should be some specifications with regard to direct labor involved in contracts as in the construction of buildings, vessels, piers, roads, etc.; but to attempt legislation that will reach back into the processes of production and seek to control the wages and hours of those employed in the "production or furnishing of articles, materials, supplies, equipment, or services in connection with or which may be identified as part of the subject matter of the purchase" (lines 6 to 8, p. 2) is attempting to inflict an unusual and unnecessary burden upon any "principal contractor" under this act.

The act evidently seeks to control every process necessary to the production of the articles furnished, for the reference "which may be identified as part of the subject matter of" undoubtedly was inserted for that purpose.

Recently a retailer located in the city of Washington was awarded a portion of the contract for supplying and laying carpet and rugs in the new Supreme Court Building. If this proposed bill is enacted into law, a similar contract would have the following possibilities:

The regulation of the following wages and hours:

(1) Those of the employees of the retailer who in any manner aided in delivering the carpet and rugs utilized in this contract to the place of installation, such as receiving and shipping clerks, credit office, and delivery or truck

men;

(2) Those of the actual employees engaged in the installation of the carpet and rugs;

(3) Those of all employees of the manufacturer of the carpet and rugs so installed who were engaged in the production thereof.

The bill provides that the original contractor, in this case the retailer, under pain of certain penalties including the cancelation of the contract with possible subsequent damages, under paragraph 3 of section 3, is obligated to contract with the manufacturers or subcontractors to the effect that they were required to maintain any minimum wages or maximum hours which may have been provided for in the invitation to bid.

(4) Those of the employees of the manufacturer which produced the yarns of which the carpet and rugs were made.

Should the invitation to bid provide that the yarns of which the carpet and rugs were manufactured must have been produced under certain maximumhour-and-wage provisions then the manufacturer of the carpet and rugs would be obliged to have yarns produced under the prescribed conditions, and the responsibility would be upon the retailer to give actual notice to the yarn manufacturers of the conditions with respect to wages and hours under which his part of the work must be done. Although the retailer would not be liable for certain liquidated damages as provided in paragraphs 1 and 2 of section 3, his contract would still be in jeopardy if there were any violations in any step in the process of production, and he would be liable for any additional cost to the Government in having the work completed by means of "open-market purchases."

These are a number of possible controls of wages and hours in as simple a contract as the furnishing and laying of carpet and rugs. Imagine the complications which might ensue if the provisions of a bill of this nature were carried to a logical conclusion and the manufacturer of every step in the process of producing materials necessary to the construction of an important building were controlled in this manner.

We do not believe that the Department of Labor and the labor advisors and the labor leaders interested in the various divisions of industry are going to overlook any possibility under this act, and so we do not feel that we are exaggerating when we say that eventually these various invitations to bid will seek to control the hours and wages paid in every possible branch of industry which furnishes any material, labor, or services utilized in the production of any of the articles which are the subject of the invitation to bid. Naturally the tendency of the Labor Department will be toward attempting to prescribe minimum wages and maximum hours which labor leaders have set for their goal in the various industries even though such wages and hours may not be prevalent in the particular industry. That this is true we believe is clearly indicated by the language of section 9 of the bill. While this section

apparently seeks to establish certain standards or guides for the determination of minimum wages or maximum hours, the use of the word "may" instead of "shall" all through this section indicates that the Secretary of Labor will not be bound by any prevailing methods of determining the value of services such as would guide a court seeking to establish similar values. It is simply suggested that the Secretary may take certain factors into consideration if the Secretary so desires.

The language of the bill likewise indicates (lines 14, 17, of p. 8) that the framers of this bill had in mind the utilization of codified wages and hours as established for various industries under the N. R. A. It likewise suggests that the Secretary of Labor may take into consideration the amount of unemployment in the particular industries involved. This would probably result in the establishment of maximum hours which would be considerably under the prevailing hours in any given industry, for the reason that it is very seldom that unemployment cannot be considered to exist in the majority of industries.

Since the Federal Government contracts for such a small part of the total goods produced in the United States, the tendency will be, not to raise standards, which would be most desirable if it could be properly and legally accomplished, but to establish monopoly on Government contracts or further exploitation by the so-called bid broker. Obviously no manufacturer nor producer will increase wages and reduce hours for all of his production employees in order to obtain a Government contract, if such contract by its specifications requires him to pay higher wages and reduce his hours of employment in order to entitle him to bid. He would either confine his labor standards to the required specifications solely for those employees engaged in the actual production of the materials contracted for or else he would refuse to bid. He might prefer to lose the opportunity of obtaining a contract rather than have two sets of wages and hours prevailing in his plant at the same time.

The "bid broker" could easily set up contractors to produce merchandise solely for individual Government contracts and would have no problems of this type to consider. He likewise, of course, has practically no employees of his own and would be under no restriction with respect to them.

It is a practical certainty, demonstrated so forcibly under the N. R. A., that the unethical and unscrupulous employer will find means of avoiding the obligation as to wages and hours and so have a tremendous advantage in bidding and in carrying out his contracts, nor will the penalties provided deter him.

If the word "may" is changed to "shall" and the present standards remain in the bill, their tendency would be to cancel one another.

This bill attempts to reestablish, insofar as Government contracts are concerned, the control of labor sought to be established under the National Industrial Recovery Act, and by indirection to accomplish with respect to such governmental contracts that which the Supreme Court of the United States has declared that Congress had no power to do, namely, to establish minimum wages and maximum hours for labor in various States.

While the legality of this bill is not here questioned, there is a question involved and that is whether or not any division of the Government should be permitted to attempt, by indirection, such controls as the Supreme Court has declared to be beyond the proper jurisdiction of the Federal Government.

The members of our organization directly benefit by increased earning power of the consumer and the consuming public is largely made up of wage earners, but we cannot favor any attempt to increase the consumer's earning power by giving to any subdivision of the Government whose personnel constantly changes any such power to regulate industry as this bill seeks to establish. Mr. HEALEY. We will resume this hearing at 2 o'clock. (Thereupon, at 1 p. m., a recess was taken until 2 p. m.)

AFTERNOON SESSION

Mr. HEALEY. The meeting will come to order, please.

Gentlemen, this is Mr. Green, of the American Federation of Labor, who desires to make a statement in reference to this bill.

STATEMENT OF WILLIAM GREEN, PRESIDENT, AMERICAN FEDERATION OF LABOR

Mr. GREEN. I thank you, Mr. Chairman, and the members of the subcommittee for the opportunity of appearing here and meeting with you this afternoon.

I wish you to know, first of all, that the American Federation of Labor most strongly favors the enactment of the measure now under consideration into law. The principles embodied in this bill have been given very careful thought and consideration by the officers and members of the American Federation of Labor. The executive council analyzed it carefully and arrived at a definite and unanimous conclusion that the measure is necessary, and that it is economically sound, and that, if enacted into law, will tend to promote national recovery. We are wholeheartedly for the measure. We want you to know that so that what I may say this afternoon shall be interpreted in that light, as facts and information submitted in support of our recommendation that this measure be favorably acted upon and passed by Congress at the earliest possible date.

Now, we are all familiar with the objections of the bill. The bill is similar to Senate bill 3055, which was introduced in the Senate by Mr. Walsh and passed at the last session. We gave continuous support to this bill when it was considered and passed by the Senate in the last session of the Congress.

Now, I wish, for the benefit of the record, to make just a brief statement. First, under the present law, the Government is forced to award contracts for work or supplies to the lowest, responsible bidder, the only requirement being that what is considered "responsible" is the ability of the bidder to furnish a bond. Now, anyone securing a Government contract, by paying a premium to a bonding company, of course, is able to furnish a bond. So under the present law contracts are going to those employers and contractors who work their employees long hours, for low rates of pay. Now, this naturally creates a situation unfair and detrimental to the employers, those fair employers, as well as to their employees.

I concede the Government to be the model employer. The Government represents all of the people, and I think it is the desire of all classes of people to establish and maintain our living and social standards at a high level. The labor organizations, of course, are continuously fighting and struggling in an effort to establish the wage rate on a high basis, as high as the industry can afford, and to establish fair and tolerable conditions of employment, reduce the number of hours, so that we can spread employment among a larger number of people.

Now, if the Government is not to be the model employer, then who is to be the model employer in our country? If, through the Government, we insist that the standards and wages shall be fair and reasonable and high, and the hours reasonable, and the conditions tolerable, it is expected that the Government will first set the example for private industry to follow. Now, the reverse has been true, because, under our law, and under the policy pursued by the

Government contracts are awarded for Government supplies and
Government services to the lowest bidder.

That means that the employer, or he who gives service, that can manufacture goods cheaper and cheapest, and can give service cheaper or cheapest, gets the business from the Government.

Now, it is an economic fact that the man who can put wages on the lowest possible level, or can establish hours of labor at the highest maximum point, can produce cheaper than the man who attempts to maintain decent standards.

Now, we are fighting for the man who is humane in establishing decent standards, decent wages, decent hours, and decent conditions in employment, the elimination of sweatshop conditions, the abolition, of child labor. I feel that this Government, under those circumstances, should not support any employer, or buy goods from any employer, who produces the goods or services under substandard conditions; and the principle embodied in this bill is to make the Gov-2 ernment the model employer. I do not mean that the Government shall be exploited or be required to pay unreasonable prices for services or goods, but that the Government shall pay such prices as will guarantee and permit the establishment and maintenance of decent wages, decent standards, and with the elimination of sweatshop conditions and the abolition of child labor.

This situation now being considered has been recognized for some time by our Government-not only the present administration but previous ones recognized that such a state of affairs existed, as outlined above, and as the result endeavored to correct the situation by enactment of several pieces of legislation. First, I refer to the Bacon-Davis Act. That act was designed to bottom the construction industry, bottom wages, and the conditions of employment in the construction industry.

Mr. HEALEY. May I interrupt just a moment, Mr. Green?
Mr. GREEN. Yes, Mr. Chairman.

Mr. HEALEY. This bill has the same purpose in view, has it not?
Mr. GREEN. The same purpose.

Mr. HEALEY. In the other industries

Mr. GREEN. To establish the basis.

Mr. DUFFEY of Ohio. Do you think they are comparable?

Mr. GREEN. Only in that respect, primarily just in the establishment of the principle, because the Bacon-Davis law provides for the payment of the prevailing rate of wages in the community. This bill provides that the Secretary of Labor, or the President, or through a Board, whichever may be created, shall stipulate in calling for bids the rate of pay that shall obtain. Well, now, it is reasonable to assume that whoever is clothed with authority to do that thing will establish-will ascertain what is the prevailing rate and establish it in calling for bids.

Mr. HEALEY. I use the same term that you used-to establish the bottom?

Mr. GREEN. The bottom, yes. That is my conception of it. It very largely embodies in it the same sound and economic principle

1

that was embodied in the National Recovery Act to establish a bottom. Here is the Bacon-Davis Act; I will not dwell on it:

"EXHIBIT A❞

(Public-No. 798-71st Cong.)

(S. 5904)

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.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That every contract in excess of $5,000 in amount, to which the United States or the District of Columbia is a party, which requires or involves the employment of laborers or mechanics in the construction, alteration, and/or repair of any public buildings of the United States or the District of Columbia within the geographical limits of the States of the Union or the District of Columbia, shall contain a provision to the effect that the rate of wage for all laborers and mechanics employed by the contractor or any subcontractor on the public buildings covered by the contract shall be not less than the prevailing rate of wages for work of a similar nature in the city, town, village, or other civil division of the State in which the public buildings are located, or in the District of Columbia, if the public buildings are located there; and a further provision that in case any dispute arises as to what are the prevailing rates of wages for work of a similar nature applicable to the contract which cannot be adjusted by the contracting officer, the matter shall be referred to the Secretary of Labor for determination, and his decision thereon shall be conclusive on all parties to the contract: Provided, That in case of national emergency the President is authorized to suspend the provisions of this Act.

SEC. 2. This Act shall take effect thirty days after its passage, but shall not affect any contract then existing or any contract that may thereafter be entered into pursuant to invitations for bids that are outstanding at the time of the passage of this Act.

Approved March 3, 1931.

Mr. MICHENER. The real purpose of this, Mr. Green, is to carry on the principle established under the N. R. A., insofar as we can, under the existing law?

Mr. GREEN. Not exactly that, but the principle, the philosophy, the economic philosophy applied, dictates that we bottom industry, that we establish the basis, and that anything below that be regarded as substandard.

Mr. MICHENER. Yes. I remember very well, when the Walsh bill was up for consideration the contention was made by the proponents that it was the purpose of the Walsh bill to carry out, insofar as possible, the N. R. Á., which had been held unconstitutional. That was correct, was it not?

Mr. GREEN. Well, I do not view it just exactly in that light. I do not know, of course, what those who advocated the adoption of the Walsh bill might have said, but I do recognize that the philosophy and the principles involved in that sort of legislation is represented here, insofar as I am able to analyze it, and that is, that we establish a bottom, a basis, and that any labor standards below that will be substandard; that the employer who maintains those decent standards may bid on Government contracts and Government services.

In 1934, the "Buy American" clauses were inserted in the appropriation act for the Treasury and Post Office Departments for the