HEARINGS BEFORE THE SUBCOMMITTEE OF THE COMMITTEE ON LABOR SEVENTY-FIFTH CONGRESS FIRST SESSION ON H. R. 238 A BILL TO REHABILITATE AND STABILIZE LABOR CONDI- IN SAID INDUSTRY; TO SAFEGUARD AND AND FOR OTHER PURPOSES TO REGULATE THE TEXTILE INDUSTRY WEDNESDAY, MAY 26, 1937 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE OF THE COMMITTEE ON LABOR, Washington, D. C. The subcommittee met in the caucus room, Old House Office Building, at 10:45 a. m., Hon. Kent E. Keller (chairman) presiding. Present: Representatives Keller (chairman), Ramspeck, Gildea, Schneider, Welch, and Smith. Mr. KELLER. The subcommittee will come to order, please. Gentlemen, we have Mr. Henderson with us this morning. Mr. Henderson, will you give the reporter your name? STATEMENT OF LEON HENDERSON, CONSULTING ECONOMIST Mr. HENDERSON. Mr. Chairman and gentlemen of the committee, my name is Leon Henderson, I am a consulting economist, and I do consultation work both for governmental and private agencies. I have just finished, for example, a private study of the silk and rayon textile-printing industry. Mr. KELLER. The silk and rayon textile-printing industry? Mr. HENDERSON. Yes; that is a part of the dyeing and printing industry, which services the textile industry proper. Mr. KELLER. What did you learn from that, that is valuable to us? Mr. HENDERSON. In the terms of the Ellenbogen bill, I would rather take a more round about approach and come to it a little later, Mr. Congressman. Mr. KELLER. Alright, take your own approach. Mr. HENDERSON. I would like to lay a bit of background for consideration of the Ellenbogen bill. We are at a period of great uncertainty as to natural economic policies, right now. The acute questions are, shall we rigidly maintain in force the assumed policy of the free competitive system; shall we abandon it, or shall we modify it at points where it most acutely has shown its inability to work effectively? If we modify competition to prevent its rigors, and prevent the elimination of the lowestcost producers, we are faced with another question as to whether or not competition can be depended upon as automatic regulation for such an intricate economic system as ours. If we resolve these questions, then we have another question as to how? Shall we do it gradually, as we seem to be doing now through the Guffey Act, the Robinson-Patman Act, the various State acts that are looking toward resale price maintenance, chain-store taxes, and things of that kind, or should we consider a modification that would be in the nature of a determination of complete national policy, such as was contemplated when the Sherman Acts and the Federal Trade Commission Acts were under consideration. I submit that, when these two major pieces of legislation were up, since they were all-embracing in character, there was a determination by Congress of what was to be continued as the economic policy, and what was to be the tests and determinations applied to succeeding legislation. Now, it is perhaps too much to expect we would have a wide inquiry into the present status of competition, in order that the Congress might develop a national policy, although I suggest it most seriously, because there are so many policies of high economic importance that ought to be tested, one against another, and against a new policy. If we did that, that would, of course, show that the laissez faire was abandoned after 1929, and we did not let the depression run its full course. I suggest just one test: In 1930, the private debt burden was $84,500,000,000. Mr. KELLER. $84,500,000,000? Mr. HENDERSON. Yes; $84,500,000,000, the private debt burden. By 1935, this had been reduced only to $73,500,000,000, which, considering the extent of the decline, is a remarkably small reduction. In that time, the interest burden fell only from $4,800,000,000 in 1930 to $4,000,000,000 in 1935. In other words, despite the extensive liquidation of the capital structure that was presumed to be taking place through bankruptcy and business failure, we found ourselves, at the end of 3 years of recovery, with only a slightly reduced capital structure and only a slightly reduced debt-service burden, which had to be applied to prices and to costs. Now, every country Mr. KELLER. Right there, what interest rate did you use in these calculations? Mr. HENDERSON. These figures I have given are computations of the Department of Commerce; and they have not assigned any interest rate; they have just totaled up the interest actually paid. Mr. KELLER. I see. All right, proceed. Mr. HENDERSON. Every country, during the depression, had to intervene to prevent depression from running its full course, and this was entirely independent of whether or not the country was on a firm gold basis or not; whether it had a highly developed industrial mechanism or whether it had a low one. It was independent of its favorable or unfavorable trade status, and it was necessarily independent of whether the country had an authoritarian or democratic form of government. The point I am making is this: The almost irresistible compulsion to Government intervention is inherent in the way we produce goods, and is entirely independent of the things which are usually thought of in terms of the regulatory acts of Government. Mr. ELLENBOGEN. At that point, the laissez-faire theory was abandoned, you mean, when we established the R. F. C.? Mr. HENDERSON. I would consider that was a modification. Mr. ELLENBOGEN. That stopped the liquidation of our debt structure? Mr. HENDERSON. That was the first gun, and the Home Owners Loan and subsequent mopping up acts of the Government was, in part, the same thing. In this country, we adopted the N. R. A. which was an overall recognition that the entire competitive process at that stage in the business cycle had to be interfered with; and as it turned out, practically avery activity in the entire industrial and business system submitted codes, seeking to modify, in some way, the things that they felt were responsible for their difficulties. Mr. KELLER. Mr. Henderson, I see that Madam Perkins, the Secretary of Labor, has arrived, and if it is agreeable to you, we will ask you to let us hear her, and then you may resume. Mr. HENDERSON. That is perfectly agreeable, Mr. Chairman. Mr. KELLER. Madam Perkins, we will be glad to year you now. STATEMENT OF FRANCIS PERKINS, SECRETARY OF LABOR Secretary PERKINS. Mr. Chairman, I am very glad indeed to appear and to discuss this bill briefly with you, and answer any questions that I can. The subcommittee print contains three distinct and separate sets of provisions intended to regulate the conditions under which competition shall operate in the textile industry. The bill provides machinery to fix minimum wages and maximum hours and to maintain certain other labor conditions and practices. In the second place, unfair-trade practices now prohibited by general statute law, are also prohibited by the bill, and procedure is indicated to prohibit other unspecified unfair-trade practices. Moreover there are provisions in the bill for flexible limitation of production. The administration of all of this is put in the hands of one commission. I think all three sets of provisions are general economic and industrial measures. It is a mistake to think of minimum wages and maximum hours as exclusively labor measures, which necessitate some other privileges being given to industry. These labor provisions are, in themselves, economic, which do not need to be offset by some special favor. The overwhelming majority of the industry will gain a new sense of security, if the law provides basic labor standards be stabilized, and, hence, removed from the arena of competition. Only if there is some uniformity of labor standards can management be assured that its particular and peculiar efficiency will be rewarded in the competitive struggle. We should regard these labor standards primarily as economic devices, however humane may be their effects upon the individual workers. They are devices for equalization or the leveling of certain areas of competition, and allowing competition in the field, in which ingenuity, ability, and specific enterprise bring rewards. Another element of security, equally important, I think, should not be overlooked-security which is part of the economic benefits for the whole industry, and these, of course, influence your establishment of fair labor conditions, in preventing and avoiding labor disputes, so that the free flow of commerce will not be interrupted, and the interests of management, labor, and the public will be benefited; and so that there can be discussions between the workers and employers, without the bitterness which is involved when any considerable number of employees is definitely abandoned to a scale of wages, hours, and working conditions below a decent human standard. These provisions in themselves would have a great stabilizing influence in this particular industry. |