to be some particular kind of legislation where you can appeal for assistance, like this board, if it is set up, or if the Department of Labor has the authority we can go to them and say, "Here is a violation; we would like to have you correct it", not only in the construction end of the work, the shipbuilding, the contracting end, also in the furnishing of supplies.

I have here a paper-not for the record-I just want to show you the sentiment. Here in Labor is a picture of Uncle Sam, coming out of a sweat shop with some bundles marked "Navy" and "Army supplies", and it says, "This is nasty business, but the law said I must do it." In other words, all you have to do is to furnish a bond and get a clean bill of health financially and you can do almost anything.

Labor, organized labor in particular, is backing this bill and asking you gentlemen for some kind of legislation to stop that kind of action. We know that you have got to cut down the hours of employment. We are working along those lines, but we need assistance from the Government because of the tremendous amount of money it is spending, to see that its contracts go to fair employers. We think that the general contractor should be held responsible for the subcontractor. We would like to see the bid peddler, and the gypper contractors put out of business. The general contractor with an office, fixing, material, and so forth, ought to be given some consideration; there is nothing in the law that we have that protects the better-type of contractor, and we are asking that some action be taken immediately; that is why labor asks for this bill, because of all the money to be spent.

Mr. HEALEY. You feel that decent practices and decent working conditions should be required on Government contracts?

Mr. McDONAGH. I think that it should be required on all contracts.

Mr. HEALEY. Particularly where the United States is the indirect employer?

Mr. McDONAGH. I say that where the United States is a direct or indirect employer, that should be so. I agree with Senator Walsh that the scandals that have developed under the tremendous expending of money that were reported to his kickback committee would be well worth while investigating and looking into by members of this committee, because there should be some remedy, and the only remedy that I can see is the enactment of this particular kind of legislation.

Mr. HEALEY. From your observation of the working of the BaconDavis Act, especially since the enforcement amendment, would you say that the enforcement of that law has resulted in large degree in eliminating the number of kickbacks on Government construction jobs?

Mr. McDONAGH. It has, in a way; it has smoked them out, but there has never been any enforcement act, any penalty. The BaconDavis Act is just a gesture. The Department of Labor can go out and make a set-up but the War Department, the Navy Department, and the Veterans' Bureau do not have to uphold its particular findings. There is no compulsion, and there is no way, after they go in and get a contract and make a clean-up, like they did in a camp in Savannah, Ga., to do anything about it. There the contractor

was in collusion with the captain in charge of the camp; he received the pay checks of the men and had the men endorse their pay checks and he paid the men 50 cents an hour, when the Government was paying by check the individual workman $1 an hour, and here was a contractor, through collusion with an officer in the C. C. C. camp, raking off 50 cents an hour from every one of the employees that was working there.

That was exposed and brought up before the Walsh committee, but there was not anything that you could do about it. The Department of Justice was there, but they would not prosecute; there was not anybody that would do anything to remedy it. That is why we are all in favor of this bill; we will have some plan to get action for the protection of labor.

Mr. HEALEY. Now, Mr. Leasure, we will hear from you.

STATEMENT OF HARPER SIBLEY, PRESIDENT, CHAMBER OF COMMERCE OF THE UNITED STATES, PRESENTED BY CHESTER LEASURE

Mr. LEASURE. Mr. Chairman and gentlemen, I represent the Chamber of Commerce of the United States.

Mr. HEALEY. What is your name?

Mr. LEASURE. Chester Leasure. I appear here in the place of Mr. Harper Sibley, our president, who had desired to appear before the committee to discuss this legislation with you, but in view of certain duties incident to his presidency he was unable to be here yesterday or today, and he asked me to present his statement on the bill in question, and with your permission I will be glad to read Mr. Sibley's statement to you.

Mr. HEALEY. Go right ahead.

Mr. LEASURE. His statement reads:

The Chamber of Commerce of the United States opposes the imposition of codes upon industries by administrative or executive authority. The Healey bill, in effect, provides for the imposition of codes respecting maximum hours and minimum wages in the most objectionable form, the codes to be imposed being determined by the Secretary of Labor in the Secretary's discretion.

The Chamber's position was determined by referendum, the results of which were published early in 1935. Since that time the Supreme Court has on several important occasions declared invalid delegations of legislative power less pronounced than the delegation to the Secretary of Labor contained in this bill.

Moreover, the language used in the prevailing opinion of January 6, 1936, with respect to the Agricultural Adjustment Act, would seem to apply to the proposal in this bill to use Federal contracts to obtain in the processes of production compliance with Federal regulations; for, in the prevailing opinion, fault was found with the Adjustment Act as "a scheme for purchasing with Federal funds submission to Federal regulation of a subject reserved to the States." Certainly, the principle most strongly reaffirmed during the last year is that Federal jurisdiction does not extend to production of goods in a State. It is submitted that by becoming a purchaser of such goods the Federal Government, even as to the goods it buys, should not try to oust State jurisdiction.

The bill may appear to have a narrow scope because of limitation in its mitial application to contracts made by agencies of the Federal Government for articles, materials, or construction. That limitation, however, is expanded to include subcontractors and suppliers, with the principal contractor responsible for their compliance unless he has given them actual notice of their obligations. Besides, the limitation is more apparent than real, for two reasons. In the first place, the number of plants with Government contracts

has become large, and by reason of the great diversity of materials and articles now purchased, these plants are in practically every field of production and most of the communities of the country. In the second place, the processes of production of materials and articles are such that a plant cannot, under the conditions of modern industry, follow one set of hours and one set of wages in turning out articles for delivery under a Government contract and another set of hours and wages for production of like articles in the same plants for sale to the public through the usual channels of distribution. Bringing under Federal regulation plants with contracts would place such plants at a disadvantage in their competition in the market with plants that do not have contracts and do not come under this regulation.

These consequences would be produced, it should be emphasized, not only for contractors but for their subcontractors and suppliers. In other words, if the contract was for electric motors, the bill would appear to relate to all concerns furnishing copper, rubber, steel, paint, and other materials needed by the contractor to build and complete the motors.

The difficulties of obtaining effective administration of such a measure would seem to be insuperable. Without effective administration conscientious manufacturers would be subject to most unfair competition from the evasive and the unscrupulous. The task of policing compliance would, in fact, be but the lesser part of a task too great for proper accomplishment.

No Government agency, however large and however competent its staff, could adequately perform the function of fixing equitable wage scales and proper hours of work for plants in different parts of the country and in communities of different size, with varying conditions. Years ago, when opponents of State regulation in a particular industry argued that regulation belonged to the Federal Government, the Supreme Court, in a unanimous decision, rejected the argument and took the position that Federal supervision would require "not uniform legislation generally applicable throughout the United States, but a swarm of statutes only locally applicable and utterly inconsistent. Any movement toward the establishment of rules of production in this vast country, with its many different climates and opportunities, could only be at the sacrifice of the peculiar advantages of a large part of the localities in it, if not of every one of them" (Kidd v. Pearson, 128 U. S. 22). A dilemma in administration is therefore presented. There would have to be a choice, on the one hand, between an administrative undertaking incapable of accomplishment by reason of the extent and diversities of American industries and, on the other hand, an administrative procedure resulting in uneconomic rigidity that could cause only detriment for everyone. The first of these devices would appear to be required by the stipulation in the bill that all minimum wages must be such as are fairly and reasonably commensurate with the value of the service or class of service rendered. This would seem to contemplate detailed investigation of current working conditions throughout an industry, and its sources of material and supply, before the specifications are prepared for each contract. Because of the flow of Government contracts this detailed examination would have to be practically continuous for all the important industries of the country. The requirement of the bill could be met, it would seem, only by the Secretary prescribing separate schedules to be applicable to each individual contract if performed in communities of varying size and in different parts of the country.

The other choice would be a procedure in which the factors specified in the bill are largely ignored and uniform minimum wage rates and uniform maximum hours are established for all concerns, wherever located, throughout entire industries and for considerable periods of time. The result would be rigidity in terms of employment. Experience has shown that such rigidity is detrimental to everyone concerned.

The administrative tasks under the bill, and the forces of investigators and inspectors that would be needed, suggest the undertakings of N. R. A. and the staff it built up. The deficiencies of the N. R. A. with respect to performance of administrative activities have been too frequently recorded to require discussion here. Experience under N. R. A. should be a standing warning against repetition. In this connection it should be recalled that besides the 6,000 or more employees on the N. R. A. staff there were large numbers of executives and employees of business enterprises, of trade associations, and of code authorities constantly engaged in matters of code administration. In fact, the direct cost to industry of administering N. R. A. codes was officially estimated to exceed $40,000,000 a year.

If this bill were not objectionable upon other grounds, it would be objectionable because of the powers which are conferred to summon witnesses and to make findings. Unless accompanied by provision for protection of contractors, subcontractors, suppliers, and others in their just rights, such powers should be given to no official or official agency.

As the bill reads, a representative of the Secretary could summon from any part of the country any person whose testimony is wanted about matters relating, for example, to wages that in his locality are fairly and reasonably compensatory. The bill does not limit summons issued by the Secretary on the Secretary's own motion, or by a representative of the Secretary, to witnesses whose testimony is needed in connection with an allegation of noncompliance with labor stipulations in a contract.

If there has been such an allegation, and the investigation in fact relates to a question of noncompliance, there is nothing in the bill which requires that the contractor is to receive any notice while the investigation is going on. The Secretary's representative may listen only to disgruntled employees or disappointed competitors, and solely upon their testimony, untested by such cross-examination as the contractor could give and unaccompanied by testimony from the contractor, the report may go to the Secretary. It is only when the Secretary contemplates making findings that are to be conclusive upon all agencies of the United States that the bill makes a minimum and inadequate provision for notice and hearing. There is not even assurance that the contractor will be notified of the complete case against him or the testimony upon which it is based. In short, the bill would permit findings being entered without full and fair opportunity for the contractor to be heard and to face his detractors, and would allow such findings to cause

1. Cancelation of the contract, regardless of the loss entailed for the contractor;

2. Ineligibility of the contractor to receive any Government contract in the future;

3. Penalties for the contractor that might run into amounts ruinous for him. Without attempting to discuss further the provisions of the bill which is before this subcommittee, I believe I have made clear the opposition of the chamber and the business men's organizations constituting its voting membership. It is my belief, and this is in accordance with declarations of policy made by the chamber's members, that there are much more appropriate ways to deal with any situations causing concern to the Government as a buyer of articles, materials, and construction. The present bill suggests that the concern is due to persons obtaining contracts by being lowest responsible bidders and then proceeding to fulfill the contracts by using wages and hours and other working conditions that are substandard for their industries. In the normal course of things, such concerns would not get contracts if they were not substandard among their competitors.

There would seem to be a fairly easy remedy in legislation which would make the word "responsible" have its normal meaning, in connection with Government contracts. It has in some instances undoubtedly been forced into a special meaning in connection with these contracts, being limited to financial responsibility, in the narrowest sense of the word-something which is pretty well assured, anyhow, by reason of the performance bond which the Government always requires.

In the business world the word "responsible" has no such narrow meaning. It has a content which includes fair dealing with the public and fair dealing with employees and such a record for reliability in all of its relations that its methods of performing a contract are known in advance. A responsible concern can also be described as a concern that can be depended upon to comply at least with the average standards which at the time prevail in its own industry.

Every abuse which all of the elaborate machinery in this bill might reach, if the machinery ever proved workable, would be directly and easily removed, it is submitted, if contracts were limited to concerns which show this broader responsibility. This would mean that contracts would be limited to concerns which are found to be using standards not less than those standards which are the average standards of good practice in the industry. The only administrative function which would be needed would be the simple quasijudicial function of ascertainment whether or not different bidders who submitted tenders for a particular contract qualified through their being found actually to meet the standards which their own industry has set by common consent among the preponderant part of its membership.

Gentlemen, that ends the statement. I thank you very much. Mr. HEALEY. This statement was a statement of Mr. Sibley? Mr. LEASURE. Of Mr. Sibley.

Mr. HEALEY. And, of course, I suppose that you do not care to be questioned about it?

Mr. LEASURE. I could not go beyond his statement.

Mr. HEALEY. We understand that, and we will excuse you.

Mr. LEASURE. Thank you very much.

Mr. HEALEY. Now, Miss Anderson. Is she here?

STATEMENT OF MISS MARY ANDERSON, DIRECTOR, WOMEN'S BUREAU, UNITED STATES DEPARTMENT OF LABOR

Miss ANDERSON. Mr. Chairman

Mr. HEALEY. What is your full name?

Miss ANDERSON. I am Mary Anderson, Director of the Women's Bureau of the Department of Labor, and I wanted to place in the record for the committee, a few complaints that we have had in the Department of Labor in regard to Government contracts being let to contractors with low paid workmen.

Mr. HEALEY. Have those complaints been investigated?

Miss ANDERSON. Most of them are complaints, and some are investigations, not investigations in regard to Government contracts, because we have not investigated that, but this is what has come out during investigation.

Here is one respecting laundry work in southern Illinois. Illinois adopted a minimum wage law, and the minimum wage commission was set up, and they set a certain wage throughout the State for the laundries. Then came the Government contract to be let for seven C. C. C. camps, and this contract was let through a small dry cleaner who lived in Illinois, but who let out the work to Kentucky, where there were no labor standards or where there was no legislation or no minimum wage. They underbid the Illinois laundrymen all the way through, and they complained to the minimum wage commission in Illinois, and said that fully 50 percent of the $8,000 would have gone to labor if the contract had been let to the Illinois laundrymen. Then they go on and say-this is the complaint of the southern Illinois laundrymen:

While the Government seems to want to raise wages, they are the worst offenders We have given you every cooperation in this entire matter, and we are now asking relief through your influence. At least 40 employees in southern Illinois will lose their jobs and some will go on relief.

This was in 1935, and just a very few months ago that contract was relet to the same laundryman that had it before, through this man in the small dry-cleaning establishment.

Then we go on to Pennsylvania. In July 1935 a worker in a garment factory in Pennsylvania, employed on a Government contract, asked the Secretary of Labor to do something about conditions under which the girls work, from 8 a. m. to 6 p. m. and most of the time to 8 p. m., being paid as low as $3 a week, and sometimes $6, $9, or $13. Refusal to work until 8 p. m. means loss of job.

Then we have another one in New Jersey, on a Government contract for pants. In July 1935 a worker in a New Jersey plant mak