ments are presumably covered by the Walsh-Healey Act, and employees of service establishments are sought to be included by the bill now before this committee.

There is also an important difference in the treatment of learners, apprentices, and handicapped employees, and there are additional variations too numerous to mention here. I have singled these out simply to illustrate why these two statutes, to the extent they overlap, duplicate, and provide conflicting regulation of the same subject matter, create confusion and misunderstanding and unnecessarily increase the difficulty of operating a manufacturing establishment. I believe the facts would reveal that close to 100 percent of those manufacturers subject to the Walsh-Healey Act are also covered by the Fair Labor Standards Act and directly affected by this unnecessary duplication and conflict. A considerable portion of these manufacturers may also be affected by either or both of two additional laws applicable to Government contractors or subcontractors. I refer to the 8-hour law of 1912 and the Bacon-Davis Act of 1931. This additional burden would be further increased by approval of the new definition of "supplies" contained in S. 1032.

BACON-DAVIS ACT

The Bacon-Davis Act applies to contractors or subcontractors performing work in connection with public buildings or public works, and requires payment of not less than the prevailing wage paid in the same locality for like or similar work. Since the present Walsh-Healey Act applies only to contracts for supplies, contractors performing construction or public work contracts are apparently not affected. However, many manufacturers may perform subcontracts covered by the Bacon-Davis Act and at the same time obtain contracts to furnish similar supplies direct to agencies of the Government and also be held subject to the Walsh-Healey Act.

This situation would be further confused if the Walsh-Healey Act should be amended to include subcontractors and to include contracts for vessels and floating equipment as contemplated in S. 1032. Many manufacturers who are subcontractors and now subject to the Bacon-Davis Act would likewise be brought within the scope of the Walsh-Healey Act if they furnished to a principal contractor any part of the supplies being manufactured or furnished to the Government.

EIGHT-HOUR LAW

The Federal 8-hour law of 1912 adds further confusion, duplication, and conflict. That law provides in brief that every contract made by any agency of the United States "which may require or involve the employment of laborers or mechanics" shall contain provisions that no such employee doing any part of the work contemplated by the contract "shall be required or permitted to work more than 8 hours in any one calendar day." This act applies whether the employee is in the employ of a contractor "or any subcontractor contracting for any part of said work contemplated." The law requires an 8-hour day and does not permit employment in excess of such hours even with payment of overtime compensation as permitted under either the Walsh-Healey Act or the Fair Labor Standards Act of 1938.

In the past this statute has been thought to have no application to contracts for the purchase of supplies or materials. In fact, section 2 of the act itself specifies that it shall not apply to contracts "for the purchase of supplies by the Government, whether manufactured to conform to particular specifications or not, or for such materials or articles as may usually be bought in open market

* * * ""

Recently the scope of this act has been reconsidered in several opinions of the Comptroller General. In one of the most notable of these, expressed in response to questions submitted by the Veterans' Administration, the Comptroller General ruled in substance that the mere fact a contract may be for the purchase of supplies or materials does not necessarily exclude it from the operation of the 8-hour law, if "laborers or mechanics" may be required by any contractor or subcontractor in the performance of the contract or subcontract. (See Opinions of the Comptroller General, A-97726, Oct. 14, 1938.)

As a result of this opinion construing application of the 8-hour law, it is inevitable that many contracts now subject to the Walsh-Healey Act are also subject to the 8-hour law. To this extent, provisions of the Walsh-Healey Act permitting employment in excess of 8 hours in a single day of 40 hours in a week, if overtime is paid, are clearly nullified.

In our judgment, there is no basis in reason or common sense for continuation of this absurd condition. While the situation might be somewhat alleviated by providing that the 8-hour law and the Bacon-Davis Act shall not apply to contracts subject to the Walsh-Healey Act, this proposal offers no real solution. The condition would still prevail under which a single manufacturing establishment would still be subject to each of the four statutes regulating the same subject matter. While such a solution would avoid the possibility that work pursuant to one contract would be subject to conflicting statutes, it would not alter the situation where the application of each statute arises by virtue of a different contract, To illustrate, a manufacturer today may obtain a contract subject to the WalshHealey Act. In the performance of that contract he would be subject to the wage and hour standards required by that law. Tomorrow the same company may obtain a contract subject to the 8-hour law and possibly the Bacon-Davis Act. In the performance of such contract, the employees involved would be subject to a different minimum wage and different maximum-hour standards. During the same period the company would also be subject to the Fair Labor Standards Act of 1938, with respect to all employees, whether performing work pursuant to public contracts or otherwise.

In our judgment, the only sound solution will ultimately prove to be repeal of the Walsh-Healey Act and perhaps modification of other statutes conflicting with the general law governing wages and hours. If the time is not yet ripe for such action, then we earnestly urge modification of the Walsh-Healey Act to the extent necessary to make the wage and hour standards of the Fair Labor Standards Act apply on contracts subject to the Walsh-Healey Act. This could be accomplished by a simple amendment to the bill now pending before your committee. In lieu of the provisions of section 1 of the Walsh-Healey Act, requiring payment of minimum wages determined by the Secretary of Labor to be "the prevailing minimum wage,' new language could be substituted to the effect that the contractor will pay not less than the minimum wage required under section 6 of the Fair Labor Standards Act or established by order of the Administrator issued pursuant to section 8 of that law. In a similar way, provisions regulating maximum hours of service could likewise be substituted.

Repeal or modification of the Walsh-Healey Act in line with these suggestions is consistent with, and in recognition of, the basic purposes of the Walsh-Healey Act. This law was not intended as a wage-fixing measure or as a device for constant regulation of wage rates in separate industries. The act was designed to fill the gap caused by invalidation of the N. R. A. and code provisions regulating minimum wages and maximum hours. The purpose of the act was clearly apparent in the report of the House Committee on the Judiciary recommending enactment in 1936 of S. 3055, introduced by Senator Walsh. This committee had completely rewritten the Walsh bill, and in recommenidng its passage stated: "The object of the bill is to require persons having contracts with the Government to conform to certain labor conditions in the performance of the contracts and thus to eliminate the practice under which the Government is compelled to deal with sweatshops.

"An investigation conducted at the request of the committee has shown that in recent months the requirement that Government contracts must go to the lowest bidder, regardless of his labor practices, has tended to depress the advance in wages and purchasing power achieved during the first 2 years of the administration. Passage of this bill will end the present paradoxical and unfair situation in which the Government, on the one hand, urges employers to maintain and uphold fair labor standards, and on the other hand gives vast orders for supplies and construction to the lowest bidder, often a contractor or manufacturer whose own labor policies offend all decent social standards" (H. Rept. 2946, 74th Cong., 2d sess., June 5, 1936).

In

A similar purpose was expressed and repeated in two reports from the Senate Committee on Education and Labor submitted in the first session of the Seventyfourth Congress. In these reports the committee calls attention to the desire to protect "a reasonable living wage,' to prevent continuation of a condition under which the Government would be committed "to the unconscionable practice of allowing private industry to dictate wages and hours of labor-no matter how oppressive for undertakings financed with Federal funds." another place these reports stated that the purpose of the bill is to direct Government purchases "along lines tending to maintain the advance in wages and purchasing power achieved under the N. R. A."; that its effect would be "to set a standard of wages and hours of labor which otherwise is threatened in view of the abandonment of N. R. A.," and that the bill then reported would "end the present paradoxical and unfair situation in which the Government, on the one

hand, urges employers to maintain and uphold fair wage standards and, on the other hand, gives vast orders for supplies and construction to the lowest bidder, often a contractor or manufacturer who does not sympathize with, and fights hardest against, labor and social welfare policies."

It is clear the purpose of the act was to provide basic minimum wages to prevent break-down of National Recovery Administration standards and the award of contracts to persons observing sweatshop labor conditions. It was obviously not designed to authorize fixing of minimum wage standards at such levels as have been prescribed in actual administration of the Walsh-Healey Act. The Fair Labor Standards Act itself has clearly taken over the area of regulation vacated when the National Recovery Act was declared invalid, and this is clearly the same field in which the Walsh-Healey Act was intended to operate. Unless the purpose of the Walsh-Healey Act is to be fundamentally changed, unless it is to become a device for fixing and constantly increasing all wages, it should be repealed or made to conform with the Fair Labor Standards Act of 1938.

BLACKLISTING

While not incorporated in the Walsh bill as introduced, it is our understanding that an amendment has been proposed to section 3 of the Walsh-Healey Act which now authorizes the Secretary of Labor to place on a blacklist the names of all persons or firms found to have breached any of the agreements or representations required by the Walsh-Healey Act. Persons on this list would be denied contracts for a 3-year period. The amendment now offered would provide that this list should also contain "the names of all persons who shall be found in a final adjudication by the appropriate court to have interfered with, restrained, or coerced their employees in the exercise of their rights to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, or to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection."

While this proposed amendment is obviously less drastic than the similar amendment contained in the Walsh bill introduced in the Seventy-fifth Congress we are still vigorously opposed to its enactment.

First, let me call attention to its scope.

It would include not only persons found in violation of the National Labor Relations Act; it would also include any person or firm found by a State court to have violated any State law similar in scope to the National Labor Relations Act.

Second, it appears from the language of the amendment that blacklisting would now be applied to any company which, during the past several years, may have been found in a final adjudication to have interfered with, restrained or coerced their employees. In other words, the amendment will clearly apply retroactively and in substance impose new penalties not existing either at the time of the violation or at the time of the final adjudication.

Third, the Public Contracts Division has taken the position publicly that the 3-year blacklist is far too drastic a penalty to invoke or apply for violations of the Walsh-Healey Act, even though such violations may be on the part of contractors who voluntarily agree to comply with the Walsh-Healey Act. Because of this reluctance to invoke this drastic penalty, the administrator of the Walsh-Healey Act has requested amendment of the law to provide what he describes as "a middle ground penalty" by which contractors would be penalized according to the number of violations. We respectfully submit that if the blacklist is too drastic for violators of the Walsh-Healey Act it is likewise too drastic for persons violating the National Labor Relations Act or a similar State law. In fact, if moral turpitude affords the basis for such penalties, blacklisting would seem far more appropriate for deliberate violations of the Walsh-Healey Act than for violations of the far reaching and still ambiguous National Labor Relations Act or similar State laws. Fourth, in our judgment this amendment would impose serious obstacles to the friendly settlement of cases arising under the National Labor Relations Act in which enforcement is obtained by consent of the parties. According to the figures in our possession, the National Labor Relations Board has obtained voluntary or consent enforcement of orders in nearly twice as many cases as it has obtained enforcement by actual litigation. The practice of obtaining enforcement by consent orders or consent decrees has been increasing. We believe the amendment now proposed to the Walsh-Healey Act would seriously interfere with this procedure since any company consenting to a final order would be immediately placed on the blacklist and denied Government business for a 3-year period.

Fifth, we believe also that this amendment would be unduly harsh in those cases where the order of the National Labor Relations Board is set aside in large part

but enforced in some minor respect. This situation has existed in approximately 19 cases which already have been reviewed by various circuit courts of appeal. Two outstanding illustrations could be found in the recent decisions of the Supreme Court involving the Fansteel Metallurgical Corporation and the Consolidated Edison Co. In each of these cases the order of the Board was set aside and reversed in most important respects. The orders, however, were sustained in part. Nevertheless such companies would presumably be blacklisted because in a final adjudication they have been found in some respect to have interfered with the rights of their employees as defined in the National Labor Relations Act.

The Consolidated Edison case affords a striking illustration of the drastic nature of this proposed amendment. In sustaining the jurisdiction of the National Labor Relations Board over this local public utility, the Supreme Court called attention to the fact that:

"Under contracts with the Federal Government they supply electric energy for six lighthouses and eight beacon or harbor lights, also light and power for the general post office and branch post offices, the United States barge office, the customshouse, appraisers' warehouse and various Federal office buildings."

Considering the effect of the proposed amendment, it should be borne in mind that the Walsh bill also proposes to include contracts for services (utilities) not now covered by existing law. The combination of these two amendments would mean that the Federal Government would be deprived of power, light, or heat to the extent such supplies are now obtained from the company involved in this litigation. This would be the result even though the Supreme Court merely found an incidental violation of the National Labor Relations Act and refused to enforce the more important and controversial portions of the order issued by the National Labor Relations Board.

Sixth, this amendment is in substance an amendment to the National Labor Relations Act. Since additional amendments to that law are already being considered in hearings not yet concluded by the appropriate Senate and House committees, we consider it extremely improper to use the Walsh-Healey Act as the vehicle for obtaining such amendments. If additional penalties are needed for persons violating the National Labor Relations Act, we suggest that this should properly be considered along with other amendments now pending and upon which public hearings are being held.

Senator HILL. Now, the next witness is Mr. Norman Draper, director, Institute of American Meat Packers.

(No response.)

Senator HILL. Mr. D. S. Wolcott, vice president, Lukens Steel Co. (No response.)

Senator HILL. Is there any other witness waiting that wants to be heard at this time?

(No response.)

Senator HILL. The committee will stand in recess until 2 o'clock this afternoon in this room.

(Whereupon, at 11:50 a. m. a recess was taken until 2 p. m. of the same day.)

AFTERNOON SESSION

(The hearing was resumed at 2 p. m. at the conclusion of the recess.)

Senator HILL. The subcommittee will come to order. Mr. William J. Kelly, we will be glad to hear your statement.

STATEMENT OF WILLIAM J. KELLY, PRESIDENT, MACHINERY AND ALLIED PRODUCTS INSTITUTE

Mr. KELLY. My name is William J. Kelly. I am president of the Machinery and Allied Products Institute.

The Machinery and Allied Products Institute is a federation of trade associations that represent various industries falling within the capital goods industries. We represent such associations as machine tool

builders, Diesel engine manufacturers, conveyor machinery manufacturers, and other interests that happen to be in large number which sell to the Government.

The Machinery and Allied Products Institute has had an opportunity to study Senate 1032 and we are going to ask for the privilege of giving a statement at more length which will outline our views for opposing the measure.

A year ago when a similar bill was up in the Senate and the House, we spoke our opposition and we feel that these amendments are no improvement over the amendments that were at that time offered; in fact, we have about reached the conclusion or at least we have formed the conclusion we reached at that time, that the experience with the Walsh-Healey Act is so limited that there is no indication of what its future effects will be. When the original Walsh-Healey bill was introduced a few years ago, I think one of the principal arguments advanced, perhaps the most serious arguments advanced at that time in favor of the proposed measure were all arguments that the Fair Labor Standards Act overcomes by its terms, and I would appreciate it, Senator, if I may just be allowed to state our position to this extent in order to save the committee's time, and I ask for the privilege of extending these remarks in the form of a statement. Senator HILL. We will be glad to have you do so. Mr. KELLY. Thank you. Are there any questions? Senator HILL. That is all you care to do at this time? Mr. KELLY. Yes, sir.

Senator HILL. Your statement will be printed in full. (The statement above referred to is as follows:)

SUPPLEMENTARY STATEMENT OF WILLIAM J. KELLY, PRESIDENT OF MACHINERY AND ALLIED PRODUCTS INSTITUTE ON PROPOSED AMENDMENTS TO THE WALSHHEALEY ACT

MAY 22, 1939.

To Members of the Subcommittee on Walsh-Healey Amendments of the Senate Education and Labor Committee:

GENTLEMEN: While appearing before your subcommittee at a public hearing held Friday, May 19, I was accorded the privilege of extending my remarks in opposition to S. 1032. The comment I wish to offer on behalf of the Machinery and Allied Products Institute follows. Senate bill S. 1032 proposes amendments which would make far more drastic the application of the Walsh-Healey Act (Public, No. 846) and thereby bring more forcibly to bear the coercive power of Government purchasing toward accomplishment of Federal control over hours worked and wages paid in private enterprise.

In our judgment such amendments as those proposed would

(1) Heavily penalize the small employer in competition with the larger employer. (2) Work deprivation upon many more workers than they will benefit. (3) Interfere with the Government's national defense program.

(4) Unnecessarily increase prices on purchase contracts of the Federal Govern

ment.

(5) Cause the Government large expense in administrative and policing duties that are not essential to the preservation of fair labor standards.

As to why we thus conclude I should like to call the subcommittee's attention to the following:

1. EXPERIENCE WITH WALSH-HEALEY ACT LIMITED AND NOT YET INDICATIVE OF FUTURE EFFECTS

The Walsh-Healey Act thus far has been confined almost entirely to the regulation of hours.

Wage determinations have been made by the Secretary of Labor for only a few industries.