Another one, from Pennsylvania, says:

Should this bill become law it will be impossible for us to continue to bid on Government business, therefore hope that you are and will continue to be against the passage of this measure.

Another one objects to the provisions:

We feel that the Government should not be in a preferred position as compared to any other industrial purchaser of equipment. The measure would only cause tremendous confusion and dissatisfaction on the part of suppliers as well as on the part of Government officials who are attempting to take care of their duties in an efficient and conscientious manner. The measure would work great hardship on all industries such as ours where high-grade machinists and mechanics are employed and where limitation of hours of labor causes serious handicap on account of the wide fluctuations in volume of business to be produced.

The CHAIRMAN. Mr. O'Leary, you made a suggestion there, a moment ago, that is rather important. How did the declaring of the law unconstitutional result in the increase of employment, so much an increase in employment?

Mr. O'LEARY. I think it was largely due to the overcoming of the caution and fear which existed in the minds of so many people, as to whether they would be able to do this or that or the other thing in their own operations.

The CHAIRMAN. Well, in the final analysis, is not the volume of machinery produced dependent upon the volume of demand for machinery to use?

Mr. O'LEARY. Yes, sir.

The CHAIRMAN. Farm machinery and all sorts of machinery?

Mr. O'LEARY. Immediately following the Supreme Court decision there was a relaxation passed over all the business world, and they began then to think, "Well, now, we have command of our own business again, I guess we will go ahead"; and they began to plan ahead, instead of being curtailed.

The CHAIRMAN. Was there any demand, for instance, for farm implements that was not ever supplied because of the existence of a code?

Mr. O'LEARY. No; the farm implements were encouraged by the A. A. A. and the Farm Credit Administration, because they were furnishing the farmer with money and he was buying farm implements. That was where they got their increase.

The CHAIRMAN. Who was it who began to do something after the code was declared unconstitutional who was not doing that thing before?

Mr. O'LEARY. Quite general; very well diversified, Mr. Chairman; all over in every line. That is demonstrated by the fact that the ordinary standard type of machine tool was beginning to be purchased more than before. The purchases of machine tools prior to that had been largely of the special type, for instance, the type that an automobile manufacturer might have designed for a specific purpose; but following it there was a very noticeable general demand for standard type of tools.

The CHAIRMAN. From automobile manufacturers?

Mr. O'LEARY. No; from general-diversified.

The CHAIRMAN. They were going to make something to sell to the public, were they not?

Mr. O'LEARY. Yes, sir.

The CHAIRMAN. But I am trying to find out, how did this Supreme Court decision affect the ordinary people scattered through the country?

Mr. O'LEARY. Because it released the restraint which they felt they were under by not having control of their own affairs because of code operations.

The CHAIRMAN. Who, for instance? What group of people? I do not want to press it too much, but you are going into it this far. Mr. O'LEARY. Any manufacturer.

The CHAIRMAN. Well, the manufacturer makes something to sell for usage?

Mr. O'LEARY. Yes, sir. He began to have confidence that he was going to have a market.

The CHAIRMAN. He had a market not because of this decision, was it, but because somebody wanted to buy for use?

Mr. O'LEARY. Well, it is very difficult, Mr. Chairman, to try to say what confidence is when you begin to try to define it, but we do know that there is an effect on people that starts them buying and encourages them to feel that they are now running their own affairs, and that they can proceed to do so; they can go ahead and buy and begin to make a little inventory.

Mr. PERKINS. Mr. Chairman, I would like to ask a question. As I understand it, business and industry does not actually wait for orders, but it gets a little ahead of the orders?

Mr. O'LEARY. That is right.

Mr. PERKINS. And as soon as you are relieved from restraint and constraint and run your own affairs then you anticipate orders and therefore can go ahead?

Mr. O'LEARY. Yes.

Mr. HESS. Isn't it true that when there has been a long period of stagnation the old machinery wears out and there comes a time when you need machinery to take the place of that?

Mr. O'LEARY. No question about that. The obsolete machinery, of course, is one of our great hopes for following through the depression.

Mr. HANCOCK. And when this decision came there was a public reassurance and everybody felt safer.

Mr. HEALEY. Do you think that was wholly responsible for increased demand, just the mere fact that there was an adverse decision against the N. R. A.?

Mr. O'LEARY. I don't think entirely; no. and an important factor.

I think it is a factor,

Mr. LLOYD. I am wondering if this is not true: With the passing of N. R. A. did not machinery become a little cheaper?

Mr. O'LEARY. With the what?

Mr. LLOYD. With the passing of the N. R. A.; with the Supreme Court decision did not machinery become a little cheaper, and when it became a little cheaper people could afford to buy it? Isn't that true?

Mr. O'LEARY. Well, in some cases; in standard lines, yes, it did become a little cheaper.

The CHAIRMAN. How much?

Mr. O'LEARY. Oh, very little. Machinery never had advanced much, Mr. Chairman. That was one of the difficulties. The addi

tional cost as put on by code operation never could be passed on to the consumer, as you would in ordinary consumption goods.

The CHAIRMAN. Mr. O'Leary, was not one of your main troubles that you had your mbore or less fixed overhead, you had your entire factory and you had such a small percentage of capacity production? Mr. O'LEARY. That is right.

The CHAIRMAN. That your unit production was higher?

Mr. O'LEARY. That is right.

The CHAIRMAN. And you had to go into volume production?

Mr. O'LEARY. Right. As the volume increased of course we could decrease prices but we could not increase them, unfortunately. That is why there is so much red ink in the heavy industries during these years of depression. The losses, of course, have been tremendous, the diminution of surplus in the market.

Mr. RAMSAY. Is it not true that the N. R. A. did put a great many men in employment that had formerly been out of employment? Mr. O'LEARY. No; I think not.

Mr. RAMSAY. You think that is not correct?

Mr. O'LEARY. No.

Mr. RAMSAY. Do you know about the mining business?

Mr. O'LEARY. No. I am speaking of our business.

Mr. RAMSAY. Well, you sell a lot of machinery to mines, cutting

machines?

Mr. O'LEARY. Yes.

Mr. RAMSAY. Electric machines of all kinds?

Mr. O'LEARY. Yes.

Mr. RAMSAY. Is it not true that under the N. R. A. the volume of the coal business developed to a greater extent than it had in 15 years?

Mr. O'LEARY. As I say, I am not familiar with the coal.

Mr. RAMSAY. Not familiar with that. Is it not also true that the reason there is a bigger demand now is that there is more purchasing power among the people through the advantage the farmers had under the A. A. A. and different legislation, and also that after the N. R. A. they commenced to cut wages and make things cheaper; isn't that right?

Mr. O'LEARY. No. The cut in wages-I think these letters that I have been reading to you give an indication of what there have been. There has not been a cut in wages nor increase in those except, as I say, in the case of flexibility at emergency times. I have a study on that. I find it is not here. I thought I might put it into the record, Mr. Chairman. At the time there was being considered by N. R. A. the question of policy on employment provisions in the codes we made a study of the employment, the difference in employment, and what it was due to, and in the durable goods our figures showed in round figures something like 600,000 increase in employment, of which all but 26,000 was attributed to P. W. A. operations. In other words, we could not find the increase in employment due to the code operations in those particular industries.

Now, you speak of another industry. I could not answer that. Mr. DUFFY of New York. May I ask you one question, Mr. O'Leary? As I take your argument, after the decision of the

Supreme Court your industry seemed to be released from a restraint, a strait-jacket?

Mr. O'LEARY. Yes.

Mr. DUFFY of New York. Now, as I follow your argument in regard to this bill, which only applies to Government contracts, child labor is not a factor?

Mr. O'LEARY. Right.

Mr. DUFFY of New York. Convict labor is not a factor?

Mr. O'LEARY. Right.

Mr. DUFFY of New York. Minimum wages are not a factor.

Mr. O'LEARY. Correct.

Mr. DUFFY of New York. So there is only one factor that would be involved here, and that is maximum hours?

Mr. O'LEARY. Yes.

Mr. DUFFY of New York. Now, how much more restrictive than that is the code?

Mr. O'LEARY. The code during the period of the code operations there was a possibility of increasing, and if the N. I. R. A. had continued we would have asked for greater flexibility and tried to have incorporated in our codes a maximum hours which would permit of that flexibility. That was our suggestion at that time, that for our type of industry that be done.

Now, this bill would freeze what we had concluded was the wrong thing for recovery in our industry, because it settles on what it was when we knew at that time from experience that that was not what was the best thing for the industry.

Mr. DUFFY of New York. As I understand your argument, the only thing that would be touched by this bill, and then only on Government contracts, are maximum hours?

Mr. O'LEARY. Ah, but you are talking now only of hours and wages. Of course, the fact is we go on beyond that. I have not tried to repeat the things that Mr. Bardo brought out this morning. Of course, the thing that bothers us as much as the hours is this responsibility. It carries us back to the supplies all the way back to the primary products. And that in itself is enough to warrant us in feeling that we could not go on, although we need the business very badly. We could not go on with the Government stuff. The need is great for this business, and as I have said, the largest opportunity for reemployment comes in the heavy industries and in the durable goods if we could just get a chance to let things go for a while.

The CHAIRMAN. Mr. O'Leary, if the committee should perchance decide to vote the bill out, would you have any constructive suggestion to make as to what arrangements should be made that would prevent this delay that you say resulted when you wanted some flexibility to operate on and you could not get it until after the need for it was gone, the occasion had gone?

Mr. O'LEARY. Mr. Chairman, I am sorry I cannot see a practical way out of it. That is the trouble. That is one of the difficulties with this type of legislation, that you cannot write a uniform ticket for all industries. And it just won't work, never will work.

Mr. RAMSAY. May I ask you a question: Have you read the bill? Mr. O'LEARY. Oh, yes, I read it all the way through.

Mr. RAMSAY. You are discussing some parts of it that are not in the bill.

Mr. O'LEARY. Well, I apparently got some of this material that I got out of the earlier copies of the bill. I read the copy that was passed by the Senate, but I have not checked on it yet.

Senator WALSH. Mr. Chairman, may I suggest to Mr. O'Leary that he has more opportunity under this bill than he ever had under the code. Whenever the Government is going to purchase steel the whole steel industry can petition the department of the Government and suggest in their written proposals that they put the hours at 48 or 46 or 40 instead of 36. You have every opportunity to make the written request to present what you think ought to be the hours.

Mr. O'LEARY. I understand that, but our experience in trying to do that under a complete and experienced organization is such that we really haven't the courage to attempt it. We may have to do it if the bill passes.

The other thing, Mr. Chairman, that we would hesitate to try to work out anything on that, is as I say, we do not see how practically you can divide it into a law. It needs some greater flexibility than the law will permit.

I have other letters here which, because of the time, I will not read, but they come from, as I say, Wisconsin, Indiana, and a number of the other States-Ohio and Michigan, Pennsylvania-and all of them are indicating their great concern over the passage of this

act.

But passing those over, I will put them in the record if I may, Mr. Chairman, and proceed to my closing.

The CHAIRMAN. You may; yes, sir.

Mr. O'LEARY. I will not discuss the legal questions raised on this bill, its constitutionality. In view of the Supreme Court decision on N. I. R. A. there is grave doubt. I have added on this same page the comments of our own counsel on that question. I am sure the committee has given that every consideration.

The CHAIRMAN. We would like to have that. I see you have the page there. We would like to have that.

Mr. O'LEARY. It is not very long. He just touches on it. He

says:

As to any money which the Federal Government expends for its own proper purposes, such as building warships, customhouses, etc., Congress itself has the right to impose any conditions on such expenditure. Congress could itself fix the wages and hours, or it could delegate to others the right to fix wages and hours, according to some definite rule or standard set up by Congress itself.

This bill does neither. It delegates to hundreds of "agencies" the right to fix wages and hours, with no standard or guide of any kind.

That is in his judgment.

Each " agency is to exercise its own uncontrolled discretion. Under this delegation, 50 different "agencies" each independent of the other, might make contracts for supplies, materials or construction, in the same local area, and each fix a wage and hour scale different from the other.

The courts should, and probably would, hold the entire act unconstitutional as an unlawful "delegation " of legislative power.

Assuming (for the purpose only of this analysis) that the Government has the right to make loans or gifts to States, and lesser local political entities, for projects which are purely local and not for the general welfare" of all the people, the question then arises whether, as to such localized expenditures,

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