The effect of these amendments upon such manufacturers is clearly evident from the results of the law as now administered. The present Walsh-Healey Act and the amendment proposed by Senator Walsh (S. 1032) provide that all persons employed will be paid not less than the minimum wages determined to be the prevailing minimum wages for persons employed on similar work or in the particular or similar industries currently operating in the locality. The act does not contain a provision similar to the wage-hour law which states that "no minimum wage rate shall be fixed solely on the regional basis," but shall take into consideration "competitive conditions as affected by transportation, living, and production costs."

While it might well be assumed that the words "in the locality" contained in the Walsh-Healey Act cover in different language the same idea which Congress had in mind when it spoke of "competitive conditions" in the Wage-Hour Law, yet in administering the WalshHealey Act the Public Contracts Board, in its recommendations covering the iron and steel industry, puts its own definition on the word "locality" by drawing a line around the southeastern States including Texas and Louisiana, creating two areas the Southeast and the rest of the country. This makes the definition strictly regional, as frowned upon in the wage-hour law, and is a division which is in no sense a "locality" as required by the law which they are helping to administer.

The result is to bring about a very unfair condition as it affects smaller mills and industries located in smaller cities. The same real wages can be paid with less money in the smaller towns and this is not unfair to the city manufacturer because he has offsetting advantages of better transportation conditions and nearness to market. Smalltown industry cannot meet this requirement on all of its business; neither can it practically meet it on public business alone. It can, therefore, only surrender the chance for public business; and in the first instance all that such a ruling accomplishes is to deprive the small town of all Federal business.

I desire to strongly emphasize that it is vitally important that legislative determination of the meaning of the word "locality," or local area, should be made to protect industry against misadministration.

Moreover, in its administration of the Walsh-Healey Act, the Board has assumed to define "similar work" with respect to the class of employer rather than the class of work performed, whereas it is the very evident intention of the law to base rates upon similar work in the locality, giving particular attention to similar industries, if there are any in that locality.

It is submitted, also, that the act in its present form does not seem to hold its administrators down to a classification of industries closely enough. The classification should not be too broad or it defeats its own object. As an example of this, and pertaining to one phase of the business with which I am connected, plants which reroll rails and car axles have been put in the same category with the general steel industry. These plants are essentially reclamation and salvage processes, do not lend themselves to improved technical methods to the extent that the steel-manufacturing industry does, and therefore could not pass on as much benefit from technical savings to its employees as a distinctly different method of manufacturing might be able to

do. An amendment to the law should guard against any unreasonable classification which might practically legislate out of existence an industry which occupies a distinct position and renders a very valuable special service to the industrial economy.

In concluding, Mr. Chairman, let me again remind this committee that the Walsh-Healey Act was enacted to salvage labor standards. required under N. R. A. codes. These standards have now been supplanted by a general law prescribing detailed minimum wage, maximum hour, and child labor standards which unquestionably apply to the vast majority of manufacturers bidding for Government contracts. In view of these changed conditions, I respectfully urge that this committee seriously and objectively consider the present need for the Walsh-Healey Act. If you will do so, I sincerely believe you will conclude, as we have, that there is no longer need for its continuance.

Senator HILL. There is this about it, though, is there not, Mr. Moore, that your prevailing wage in a particular locality might be somewhat higher than your standards set up in your Fair Labor Standards Act, isn't that true?

Mr. MOORE. If we are going to have it at all, I think it would be undoubtedly in certain cases, but you can see how impossible the situation becomes when, as in the steel case, for instance, they determine that the minimum standard is 621⁄2 cents, and apply that practically to the whole country with the exception of a small section of the South. It runs right along with the very act, the other act which prescribes a minimum of 25 cents. Undoubtedly that is too low-I mean by that, that people would actually be paying considerably more than 25 cents, but to apply that 62%1⁄2 cents to the whole country and at the same time apply the 25 cents, of course it just wipes out the effect of the other act entirely.

Senator HILL. It only wipes out the effect of the other act so far as the Government contract with that particular industry or business is concerned?

Mr. MOORE. That is right.

Senator HILL. They predicate it on different grounds, I mean the fixing of those wages, are they not? Your 25 cents is a wage for all industry where they are producing any goods moving in interstate commerce, whether it is steel, lumber, textiles or whatever it may be. The prevailing wage, however, applies more directly to a particular locality.

Mr. MOORE. If they applied it to a particular locality, it might become reasonable, fair, and equitable, but to apply it to the whole country, as the administrator of the law has done, it seems to me it defeats the whole idea. I can hardly conceive that Congress intended to have two such absolutely inconsistent laws in effect at the same time.

Senator HILL. Your thought is that so far as your personal observation has been, that the prevailing wage has been determined not so much upon what the prevailing wage is in any one particular locality or district or region, but more on the basis of the whole country?

Mr. MOORE. I think that that is the most important objection to the bill as carried out by the Secretary of Labor, that they have construed the word "locality" to mean the United States of America; in other words, practically with the exception of a little bit of the

South, so that it practically nullifies the meaning of that phrase in the way that it has been administered, and it would seem to me that if Congress wants to continue in effect the Walsh-Healey Act, it is quite vital that they define "in the locality"-what it means. It seems to me it has got to be applied to a relatively small area or it really defeats the whole thing.

As you know, the small town over the past 15 or 20 years has developed into something of considerable importance. Years ago, in order to get the benefit of doctors and lawyers and banks and other advantages, you had to live in a big city.

Senator HILL. You had to send to the city to get them.

Mr. MOORE. Yes, but now with the advent of good roads and cheaper automobiles than they were originally, that has changed a good deal, and the rural communities and the outlying districts can come to town and can support a relatively small town somewhere, or a small city, or partially support it, but that small city must have in addition to support it, in order to have the conveniences, so-called, industries, and it seems to me that the industry of the smaller town is the thing that must be protected.

With your permission I would like to add a few words on that.

Residents of large cities have readily available to them shops, banks, entertainment facilities, doctors, lawyers, good railroad service and the thousand things which not only make modern life comfortable but without which it would be inconvenient, crude, and insecure.

For generations many farmers and rural residents could not enjoy these conveniences and necessities, although they were available to metropolitan residents. But with the advent of good roads and lowpriced automobiles, it became possible for them to enjoy easy access to modern trade, health, and amusement, if not separated from these advantages by too great a distance.

But the patronage of the rural folk alone will not attract these things to a small town. There is required also a nucleus of industry which will support a town population large enough to attract professionals, tradesmen, and service organizations who are good in the modern sense.

To provide this nucleus of industry, it has been necessary to compete with the large city for industrial enterprises. The city had most of the advantage in this competition, to wit, nearness to markets, nearness to supply, quantities of labor, main line freight transportation, frequent switching service, low power rates, and the like.

What had the smaller town to offer which would offset these advantages to the manufacturer or processor? Only one thing. The small town could give the workers a better living for less money. They could give them better homes for lower rents, better food at lower prices, and social contacts without transportation charges.

To put it another way, the small town has said to the entrepreneur, "In our community it is true that you will have many additional costs and many expensive inconveniences which you would not have in the big city, but you can pay your employees a better living in our town and still offset these expenses which would otherwise make such an enterprise economically and competitively impossible.” This argument has prevailed in a small proportion of cases where the city advantage was not too great and small towns have gathered, for

themselves and the nearby rural populations, the blessings of life so long denied others than "city folks.'

Undoubtedly the small-town manufacturer pays less in dollar wages than the city manufacturer, but he provides this better living for his workers. Without the ability to do so, he could not operate at all in a small town. There would be little social life and few conveniences attached to existence in such communities.

By reason of this our country in recent years has grown from cross-road stores and into a dotted pattern of thriving communities which have brought modern comfort and security to a large part of our population. The appellation "hick town" has disappeared from the American lexicon. Life and business have built themselves into this pattern and any artificial influence which disturbs it will relegate country living almost to the level endured in the 1890's.

Such an artificial influence is now apparent in an endeavor to insist upon a parity of dollar wages between the city and the small town. If wages are expressed in standards of happy living, the small-town worker is probably leagues ahead of his city brother. But the apparent endeavor is to center his attention not upon the real blessings of life but enviously upon the fact that his counterpart in the city is permitted to have more money pass through his hands in a given time, regardless of what he gets for it.

This theory of measurement, if allowed to continue or spread, will do unalterable damage to a large section of our national life. Its current manifestation is in connection with the Walsh-Healey Act. This law may have had fundamental justice as its prompting, but it can be administered to bring about rural chaos.

The act provides that the Secretary of Labor shall determine from time to time the prevailing minimum wages, by types of work and localities, and that no one shall be favored with Uncle Sam's substantial patronage unless he shall conform to such minimum standards of pay. It sounds all right.

But then we begin to administer it, and the administrators begin to interpret it. We have now the suggested interpretation for the steel industry. Instead of placing a fair and reasonable interpretation upon the word "locality," they propose to define it as relating to two distinct districts of the United States-the Southeast and the rest of the country. Here is no appreciation and no recognition of the peculiar position of the small community and the rural population.

Following this they search for the prevailing minimum labor rate. Naturally the greatest concentration of workers is to be found in the large cities. Naturally they outnumber the rural workers many times. Hence the administrators plan to announce that the city wage is the prevailing wage in the "locality" which they have themselves defined. It would be gross misadministration. They plan in effect to say to rural communities, "You are unfair to your labor, and Uncle Sam denies to you the benefits of his patronage. You may not die for want of it, but we have instilled into the minds of your local labor the thought that they are unfairly treated, and if you do survive our desertion of you as a customer, they will eventually ruin your community as an economical productive site for manufacture. And if they do not exterminate your industrial life, you may be sure that we will, by more legislation and administration, extend these principles to other than Federal business and complete the extermination in that way."

This is apart from any question of whether or not Government ought to lend its power to the regulation of wages. Even though that phase of the present policy be wise, it is certainly neither wisdom nor equity to ignore conditions of industrial cost and conditions of personal living cost which must enter into any consideration of the relative value of wages. The other extreme of this type of reasoning would be to promulgate regulations that city rents, city food prices, and city retail prices should be no higher than those in the small

town.

Another law known as the Fair Labor Standards Act provides that no regulation shall be issued which gives a competitive advantage to any group in industry, curtails employment, or is fixed solely on a regional basis. The other law also provides that the Administrator shall consider "competitive conditions as affected by transportation, living, and production costs." It is inconceivable that Congress intended an inconsistency between these two laws, and it is unthinkable that any Administrator should assume that they intended any such inconsistency.

The proposed interpretation of this act will not only accomplish this violence to rural development but it will reduce rural purchasing to an incalculable degree. The factor of purchasing power is of no avail if the opportuuity to purchase is thus curtailed.

I have been a little lengthy, and I am sorry about that.
Senator HILL. We are very much obliged to you, Mr. Moore.

STATEMENT OF G. O. HODGE, PHOENIX IRON CO., PHOENIXVILLE, PA.

Mr. HODGE. Senator Hill, I may be slightly deliberate because of the fact that I am going to speak entirely from notes and give a few facts.

My company was incorporated in 1855 as a one-product company. We manufacture a range of structural steel sizes, practically the only independent structural steel manufacturer left in the East, in competition necessarily with the larger companies.

We are particularly interested in S. 1032 because the original act covered contracts of $10,000, but this amendment seeks to reduce that to $2,000, and apply the principle of the act to subcontractors. Under the original act but 11⁄2 to 3 percent of our business was affected as general contractors. Under this amendment, practically 80 percent of our business would be affected because we become subcontractors, and with the available work today, much of which is Government-financed, it immediately throws us into the place where we become subcontractors and come under the act.

I might just briefly compare our company with the larger companies. We have not been able to make the modern installations of machinery-continuous mill operations, and they are not known to us. It would be impossible for us to do so because of the large capital necessary to modernize our plant. Machinery of that type, to my mind, while it does cut production costs to a large extent, enabling the company to produce lower, naturally also to sell lower if necessary, it does at the same time create a condition of unemployment whereby machinery can replace men, which we have heard so much about in the last 10 years as being much of the cause of our present economic condition.