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Take cities like Rochester, cities like Buffalo, Jamestown, and your Pittsfield, Mass., and Springfield, Mass.--cities that are supplying materials for the Government–they will be absolutely foreclosed from doing business with the Government and you will soon have these bureaucrats down here saying, just as they are doing with the furniture business today, “Well, we will manufacture our furniture just for our own use."

Today about the only market that industries now have is the market they are getting in supplying the United States Government out of the large funds that are appropriated.

Gentlemen, I am here to protest against the passage of this bill as unfair to the taxpayers of this country and as a bill that is absolutely, on the face of it, in every particular, an un-American bill. I thank you.

The CHAIRMAN. Who else is here in opposition to the bill?
Mr. HAAKE. I am in opposition to the bill.
The CHAIRMAN. Whom do you represent?
Mr. HAAKE. The National Association of Furniture Manufacturers.
The CHAIRMAN. What is your name?
Mr. HAAKE. Haake-H-a-a-k-e.

The CHAIRMAN. We called you this morning and you were not here.

Mr. HAAKE. I was here before the committee was here. I was here before 10 o'clock. Perhaps I did not hear your call. .

The CHAIRMAN. Yes. All right. You want 10 minutes, don't you? Mr. HAAKE. All right, sir.

STATEMENT OF A. P. HAAKE, REPRESENTING THE NATIONAL

ASSOCIATION OF FURNITURE MANUFACTURERS

Mr. HAAKE. If the committee will indulge me, I am going to ask you to believe that one man who has been before this committee is not trying to think in terms of any particular selfish interest but is trying to put himself in your place and see just exactly what would be the consequences of such a piece of legislation.

After all, it seems to me and I may say it in all candor-so often there are facts and statements made to committees which are not as helpful as they might be, because the person making those statements is trying to avoid admitting things he thinks may hurt his case and say only those things that help his case. It seems to me a frank statement of exactly what happens is by far the better thing to have, and I am not afraid of doing that, in view of my own convictions with respect to this measure.

I am satisfied that the honored Senator from Massachusetts offered this measure with the highest of motives. I believe it was offered because-

Senator WALSH. May I interrupt you?
Mr. HAAKE. Yes, sir.

Senator WALSH. The bill was presented to me by the President, and it is an administration bill. My service has been simply as a Senator who became interested in the bill and became a sponsor for it. But it originated not with me, although I am very proud of my being connected with it.

Mr. HAAKE. I am very glad to have you correct me. I am more than glad to be corrected. I may say that my respect for the Senator is not diminished by learning that fact. The President can speak for himself.

The N. R. A. was a failure. N. R. A., however, was desired by business men.

I do not think it is fair to say that N. R. A. was pushed down the throat of business. That is not true. Business wanted N. R. A. And the reason business wanted N. R. A. was that for years we have been bothered by the specific thing that President Roosevelt called attention to in one of his radio talks, that 90 percent of an industry might behave itself and that a 10-percent minority could wreck the entire structure,

For 7 years or more we have been trying in a number of industries to find some way of curbing what we call “recalcitrant minorities”, so that the fellow who wants to play fair can play fair and remain in business. We tried out the Federal trade-practice conference, played it with glee, held it in Washington in the best spirit likewise. We set the thing up, and then there was bitter disappointment because we found that the good fellows observed it and the recalcitrants paid no attention to it, and that little fringe could still raise the mischief on many occasions and in many places.

N. R. A. came along and here was the President of the United States—I am quoting from what he said--assuring us over the radio—and we took him seriously—that “too long we have permitted a small minority of business to wreck the set-up for the great majority", and that we were going to make things safe for those who wanted to play fair. General Johnson promised to "crack down” on the fellows who would not behave, and a lot of fellows in the position that I am in, wanting to believe that—and, believe me, there is a lot of wisher-thinking yet, even in Congress—wanting to believe that, went out and told our fellows "At last utopia is here. We have found a way to make the recalcitrant behave."

And so we went into the N. R. A. believing that might happen, and as is so often the case in an effort to cure a minor ill, we sometimes produce evils that are far worse than the thing that we are trying to cure; N. R. A. was never enforced.

N. R. A. could not be enforced. N. R. A. was dead before the Schechter case ever happened. What kind of a law is it that cannot be enforced and its enforcement is necessary to respect for the law itself?

For example, in the State of Indiana a manufacturer who was disposed to be decent violated some minor provisions of the code and paid something over a thousand dollars because of those violations. In Muscoda, Wis., a manufacturer thumbs his nose at the code authority, thumbs his nose at the administration, and gets away with it, because, in the last analysis, he has political immunity, and when N. R. A. went out of business the Compliance Division of N. R. A. had not been able to touch that man.

In a town in Pennsylvania the National Wood Pipe Co. I don't mind mentioning names—was able to escape because we were afraid to push the issue. That particular fellow owned a newspaper, a rabid, hot-headed fellow who could arouse a lot of influence, and he was not touched and we played with him and plead with him. The little honest fellow was punished, and the fellow who could afford to thumb his nose got away with it.

In other words, that thing could not work because there was not any way of making it work short of using a gun, as perhaps is threatened in Germany and done in Russia.

Now comes along this bill, and I repeat, I am so glad that Senator Walsh did not write it. I think it was written by some bright young college man.

Senator Walsh. I had only to do with rewriting it.

Mr. HAAKE. It was drafted by some bright young college man, who, like myself, before he got some practical business experience, knew just exactly how to cure all the ills of the world, and who, if he lives long enough and perhaps some day has the experience of meeting actual pay rolls, may discover that there are some things still to learn, even for bright young men who think that there is a way for a group of men to take the place of law in the operation of business.

This thing simply cannot be enforced. We are not concerned with the wages. Good heavens! I get weary sometimes when I hear men worried about the differential, for example. So far as our industry is concerned, that is not a problem. A differential does not exist in the North for furniture. Thirty-four cents is a minimum. But, believe me, there is a differential. Manufacturers today are moving from big cities to small cities, not because there is a differential in the code but because in the big cities they are able to make 60 and 65 and 70 cents an hour, and in the small towns the wages are closer to the code minimum.

I think the Senator perhaps had in mind, and I might well point out, that the bill concerns itself with minimum wages and not with actual wages, and the differential is taken care of by natural conditions. We are not worrying about that at all, because most of us are paying more wages than the codes called for anyhow.

But with respect to the hours, elasticity of hours, and the various interferences that come with business, this thing does become serious. I have heard it said-heard it said yesterday, heard the question raised by members of the committee-“Don't you think something ought to be done to stop the chiseler?” As a matter of fact, gentlemen, this bill encourages the chiseler. In our industry, for example, it is not true that the majority of the business is secured from the Government. Perhaps 10 percent, 15 percent—at a generous estimate I would say 20 percent—it comes a lot closer to 10. The man who takes a little Government business may take it to keep his plant operating for 2 or 3 months. Otherwise he has to meet wage conditions--he is meeting them now, just as we are under the code. But he has got to restrict his business, and the strait-jacket on factory operation is infinitely more serious than the matter of wages. The moment that he is subject to provisions which prevent him from getting out his orders on time, which prevent him from running his factory efficiently, he immediately is unable to compete with other manufacturers for that big chunk of the market which is to be secured from furniture stores, mail-order houses, and the like.

I will give you just one example by way of illustration : Here are a number of processes in a factory. There are a number of calculations, and there is some one little department which dce: work that is necessary to all of the rest. Under the restrictions of this measure there would be a limitation on hours for all of those men. They could not work any more unless he got another shift in, but they are not always available, and because it is impossible for the manufacturer to work perhaps a half a dozen men a couple of hours overtime some night or on Saturday morning when his 40 hours are already exhausted, he may hold up operation for 150 or 200 men and increase his cost accordingly.

Ye gods, men ! You and I know that business and production has not yet been so standardized that anyone can put down the operation on a piece of paper and A and B and C and D and E and È and G all appear according to schedule every day that that factory runs. You know as well as I do that decisions and changes and adjustments are made almost daily, and it is utterly impossible. This is not theory; it is fact; and when the facts interfered with law, the law was violated under N. R. A., and even N. R. A. didn't do anything about it, and could not do anything about it.

What has to be done will be done, and no man is going to shut down his factory just because the law says, “You have worked that man 40 hours. You can't work him 41 ”_when working another hour may keep a dozen or more men at work for a day or longer. You cannot put industry in a strait-jacket, and the only effect of the operation of that thing in our industry would be to penalize the man who tried to get Government business, because he would immediately be put out of the running for the worth-while business on the outside.

And if you want to know how much profit there is in Government business, let me show you the records of what happens to manufacturers who take the Government business. They are the fellows that send the preferred invitations to the sheriff when they get through with that business. There is no profit in Government business, and the only reason a man takes it is he wants to keep his plant going, and he is a plain, ornery fool to take that kind of business when he can get the kind of business that pays him his profit.

But he does not even have to bid for the Government business. He has got his neck in the noose already. I don't mind telling you men candidly that one of the very few common-sense measures of this administration has been the Federal Housing Administration. They have been some real help. It is well worked out. I was enthusiastic for it because I saw the possibility of providing manufacturers with additional working capital and to keep everything going. And yet I circularized our industry, with the permission of our directors, pleading with our people, "For Heaven's sake, don't make any loans with the Government. Don't even use the F. H. A., because if you do you are sticking your neck straight into a noose, and one of these days, if and when this bill S. 3055 passes, you will find that because you accepted some help you will have to operate under conditions that will put you out of business."

And it happens that in our industry the amount of money loaned from the Government is 3 percent of the capitalization, which is approximately three times that of the average industry. We did not want the fellows to use it, in order to keep their necks out of a noose. The moment that a man makes a loan from the Government, or has made one, he has either got the choice of paying it right away, which he cannot do, or wiping himself off the map so far as worth-while business is concerned. And he is not going to do it.

That means that so far as furniture is concerned the Government is going to find itself limited to a constantly decreasing number of manufacturers who will dare take the risk of bidding on Government contracts, and those who do take it will have to raise their prices sufficiently to take care of the contingencies of a strait-jacket that is poured around him; and the probable result is, the thing we are afraid of, is that some other bright young man may discover the idea that the Government should go into the manufacturing business itself and make all of its own furniture. They started out to do it with mattresses. It was not much of a program, to be sure. They were only going to make 2,000,000 mattresses, which is onethird of the total market. It does not amount to much, would not interfere much with the manufacturers.

There is no end to that particular thing. The further that you go with it the less industry is able to bear the burden of taxation, the less incomes there are to be taxed, the less industry is able to take the punishment; and by the same token, just like the vicious circle of taking a drug, you have got to have more and more Government factories producing more and more of the products, and you are killing off the very people on whom you want to lean. A lot of us want to recover.

Worse than that—in this bill there was one good feature, and that was that in the event the Government set up a plant it would have to meet the same conditions that a private plant had to meet. That has been wiped out, and Uncle Sam will acquire private factories, under this bill as it now stands, to meet certain standards of hours and wages, but Uncle Sam can do exactly as he pleases when it comes to providing hours and wages. At least that provision ought to be put back.

Now, here is another thing; after all, this is a much bigger thing, a more vital thing, than simply whether or not a particular bill, which would be a sore and a pest and a thorn in the side, shall be passed. I don't care much whether this bill is passed or not from a long-time point of view, because it cannot work.

Labor would not even benefit by it. Whenever I want to get a good laugh I think of a bill like this being of any help to labor, or even the Wagner bill. Labor was, in fact, better off when it fought its own battles and stopped getting itself into a trend toward the point where legislation of Congress would tell it what it could do. The moment that labor starts to monkey with Government and get Government to fight its battles it begins to get itself into a position where subsequently it does not dare fight, because it is going to have to take the dictates of Government, precisely as has happened in Russia and in Germany.

If labor are smart—and they are not; they are just as stupid as a lot of industrialists—if labor were smart, they would not want much help and would not ask for it. They would fight their own battles. They don't need them for collective bargaining. They fought their battles pretty well in the past, and they were getting along pretty well in the past, and if it had not been for the efforts, the stupid efforts, for recovery we would probably be a good deal closer to it right now.

Here is your choice, as I see it: You have got to choose whether you want Government industry in competition with American private industry or whether you want to see business work its way out by laws that cannot be violated. I know there are a lot of

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