determined that the Congress may regulate, or the Interstate Commerce Commission as the agency of Congress may regulate, the rates for purely intrastate shipments where such rates are directly and substantially affecting, or will directly and substantially affect, the rates for interstate shipments. That is, where they are so commingled that you cannot differentiate one from the other. And the language in there, "directly and substantially", brings it directly in line with the Supreme Court's decision. And then it would be for the Commission, ultimately for the Court, I might say, to say whether there was a direct and substantial effect upon interstate commerce. Mr. RAMSPECK. One other question and then I shall have finished, Mr. Chairman. Mr. Ellenbogen, you said the A. A. A. decision did not apply to anything in this bill; yet in your statement, as I recall it, you said there was a provision in here that any State that got relief funds could not buy any products not manufactured in accordance with this bill, and any bank in which the Government owned the stock or controlled the stock could not buy any products not manufactured in accordance with this bill. Isn't that in direct conflict with the decision in the A. A. A. case, in which they said that the Government could not by bribing compliance, or by bringing about compliance through bribery, as they expressed it, control a local action which otherwise the Constitution gives no authority and control over? Mr. ELLENBOGEN. I think a legitimate distinction can be made between an individual like a farmer who is engaged in that business and involved in the A. A. A. decision, and a public agency like a State. For instance, I do not think there is any doubt about the power of Congress to say in grant-in-aid laws, "We will give you so much money for road construction if you will live up to certain conditions we prescribe." The A. A. A. decision says we cannot deal with the individual. In the A. A. A. decision we deal with the farmer; we do not deal with the States. I still believe, for instance, that our grant-in-aid laws for road construction or for old-age pensions are clearly constitutional. I will say frankly I am not so sure about the old-age insurance and the unemployment insurance in the social security bill, but I feel safe on the old-age pensions sections. Mr. RAMSPECK. You rely on the distinction between controlling the act of the individual citizen and controlling the act of the State or municipality. Mr. ELLENBOGEN. Yes. In other words, we say to the State, "If you want to cooperate with us in building roads under certain conditions, we will contribute a part of the funds." The same is true as to old-age pensions. The Supreme Court said, "You can't do that with individuals." Mr. RAMSPECK. The bank is a citizen. How are you going to distinguish that? Mr. ELLENBOGEN. If we control the majority of the stock of a bank, then we can formulate the policy of the bank. I mean our representatives on the board of directors can say that we will not give any loan to Mr. "A" because he is an unfair manufacturer. I think that is legal. It is simply by decision of the board. Mr. RAMSPECK. That is all, Mr. Chairman. Mr. ELLENBOGEN. Mr. Chairman, may I present to the chair and to the committee Mr. Francis J. Gorman, who is vice president of the United Textile Workers of America? Mr. KELLER. Mr. Hartley wants to ask some questions. Mr. HARTLEY. In this bill you have certain unfair conditions. Is that peculiarly and particularly true in the textile industry? Mr. ELLENBOGEN. I believe that the textile industry is in a much worse condition, for instance, than the coal industry. Conditions in that industry-and I think the witnesses will present facts to the committee to show that are very bad. The textile industry is in a much worse or much more chaotic condition than even the coal industry. And that is saying a great deal. It is the sickest industry in the entire United States. Mr. HARTLEY. Has there been any attempt on the part of employers in the textile industry to prevent collective bargaining? Mr. ELLENBOGEN. I am quite sure there has been. But I would prefer to have some of the other witnesses answer the question, because they are much more familiar with it. Mr. Gorman, I am sure, can answer that question when he testifies. I say that there is, but I am sure Mr. Gorman can supply any number of detailed cases if you ask him the question. Mr. HARTLEY. Would you say that the conditions in the various branches of the textile industry are about the same, that all are equally guilty of the violation in the matter of fair treatment? Mr. ELLENBOGEN. No; I would not say that they are equally guilty. In some branches of the industry the conditions are much better than in others. Mr. HARTLEY. Take the cotton branch. Is that guilty of unfair treatment of labor? Mr. ELLENBOGEN. I think that is the worst one, isn't it? Mr. FRANCIS J. GORMAN. Yes, it is. Mr. ELLENBOGEN. Conspicuously so. Mr. KELLER. Now, will you let me have your list of witnesses? I am going to conduct the hearing in this way. I am going to take the privilege, if I may, of calling Mr. Gilbert, from Tennessee. STATEMENT OF C. C. GILBERT, SECRETARY, SOUTHERN STATES INDUSTRIAL COUNCIL Mr. GILBERT. Mr. Chairman, I just want to file a brief without taking up the time of you gentlemen by reading it. Mr. KELLER. On behalf of whom? Mr. GILBERT. On behalf of the Southern States Industrial Council, an organization comprising industrialists in 14 Southern States, 12,000 members, and speaking for that organization in opposition to this bill. Mr. KELLER. Are they all textile manufacturers? Mr. GILBERT. Every line of industry. The Southern States Industrial Council is made up of industry in every line, not only textiles but woodworking, ironworking, coal mines, and other industries. Mr. WOOD. May I ask what connection that has with the National Chamber of Commerce and the Manufacturers' Association? Is that a subsidiary organization? Mr. GILBERT. No, sir; it is not. It is strictly independent. It is functioning as an independent organization and is comprised of manufacturers of these 14 Southern States. Mr. KELLER. May I suggest, then, that I thought you were Mr. Mitchell? Mr. GILBERT. No; I am C. C. Gilbert. Mr. KELLER. I am going to make this suggestion to you and to the rest of those present. This committee is sitting not only for the purpose of gathering all of the facts that we can gather, but for the purpose, if possible, if we find the present bill is not constitutional in the judgment of the committee, that the committee may present its own bill in this matter. Therefore, I suggest that your organization, including as large a representation of manufacturing interests as it does, might do exceedingly well to wait until toward the end of the sessions of the committee and present your arguments, because you might find a totally different bill involved. I make that suggestion for this reason: There is a possibility—and I say a possibility-at least of our being able to take what the Supreme Court has decided and write a law that will beat them to it. We just want to put it in plain language. And that is probably what this committee will do before this hearing is over with. Therefore, I say to you that your argument at the present time may not be as conclusive as you would like I have it. I would suggest to you that later on we would be glad to have you come back before this committee and give any additional testimony or additional information that you may desire to give. Mr. GILBERT. I understand that. But you understand this argument is based upon the bill which Mr. Ellenbogen has introduced. May I leave this letter from Mr. John E. Edgerton? Mr. KELLER. Yes, you may do that. (The letter referred to is as follows:) Hon. KENT E. KELLER, SOUTHERN STATES INDUSTRIAL COUNCIL, Chairman, Subcommittee House Labor Committee, Washington, D. C. DEAR MR. KELLER: The Southern States Industrial Council, embracing a constituency of approximately 12,000 industrial units in 14 southern States, wishes hereby to respectfully record its unqualified opposition to House bill 9072, introduced by Representative Ellenbogen and known as the National Textile Act. This bill is an undisguised attempt to saddle upon the textile industries practically all of the provisions of the now invalidated National Recovery Administration, and in addition thereto, place that industry and the details of its operations under the direct supervision and control of Congress. As far as the South is concerned, it constitutes the greatest threat to the development and continued prosperity of its textile industries that has yet been faced by southern mills. In the opinion of the council, there is less need for Government regulation of the textile industry than any other industry we know of. That industry through the analyses and studies made by its own trade organizations, knows the difficulties that must be overcome if the textile industry, including its employees, is to prosper in the future. Consequently, there is perhaps no other industry in the country that has retained to a greater degree those provisions of the National Recovery Administration which were helpful. Among these are included the labor provisions. The council can, therefore, see no need for Federal control and the unjustifiable interference which such control carries with it. We need but to point to the disturbing effect which the Guffey Act has had upon the coal industry to realize the havoc which would be wrought by a similar bill governing the textile industry. It is generally conceded throughout the coal industry that the Guffey Act is unconstitutional. This fact alone has caused a large percentage of the coal operators to raise objections to complying with its provisions. Many of the provisions of the Guffey Act are being challenged in the courts. As a consequence, the whole industry is in a most unsettled state not conducive to recovery and the reemployment of the thousands of miners still out of work. We consider the National Textile Act to be thoroughly unconstitutional. Its cleverly disguised evasions of the unconstitutional features of the National Recovery Administration are nothing more or less than a subterfuge. Its attempt to get around the concepts of law adopted by the Supreme Court in invalidating the National Recovery Administration constitutes a deliberate evasion of the point of view of the Supreme Court in rendering its opinion on the National Recovery Administration. The council is particularly concerned with the labor provisions of this bill which clearly carry their own identification of origin. Such one-sided, unjust provisions could not have proceeded from any other source than the labor group whose leadership is manifestly endeavoring to establish by law its dictatorship in this field of American industry, as well. But as great a threat as this labor domination constitutes, the industry in the South is faced with even a greater threat from within the industry. For the past decade or more, the textile industry has gradually shifted from the North to the South where economic and natural advantages offer an opportunity for a more profitable development of the industry. The arbitrary and unjust demands of the highly organized labor groups in the North made it practically impossible to manufacture products that could be sold throughout the Nation to workers who were receiving a more equitable wage. In our opinion, the textile industry will never shift again to the North unless the interests of that section can succeed through such an act as the National Textile Act to artifically create the same unfair conditions in the South as have been inflicted upon them. If there was one thing which the National Recovery Administration proved, it was this fact, that if we are to decentralize industry and encourage and protect the growth of small industry, it is absolutely imperative that there be no setting of uniform wage rates throughout the country. There can be no doubt that this bill, if enacted into law, would be almost murderous in its effect upon southern industry and other sections whose economic life is governed by similar conditions. To substantiate these contentions, we respectfully submit herewith a brief which was presented by the council before the labor provisions hearing of the National Recovery Administration about a year ago. Very sincerely yours, JOHN E. EDGERTON, President. BRIEF RELATING TO EFFECT OF LABOR PROVISIONS OF CODES UPON SOUTHERN INDUSTRY PRESENTED BEFORE LABOR PROVISIONS HEARING OF THE NATIONAL INDUSTRIAL RECOVERY BOARD IN WASHINGTON, D. C., JANUARY 30-FEBRUARY 2, 1935 (By John E. Edgerton, President) EFFECT OF LABOR PROVISIONS OF CODES UPON INDUSTRY IN THE SOUTH GENTLEMEN OF THE BOARD: Although I am both an employee and employer, as chief executive of a manufacturing establishment, also a hard-working and an honest laboring man from among the 45 millions of workers in this Nation who do not appear to have any authorized representation at this important hearing, I address you primarily on this occasion in my capacity as president of the Southern States Industrial Council. This organization embraces a directly affiliated constituency of 8,000 industrial concerns, of all trades and sizes, plus 2,000 banking and commercial units, scattered through the geographic area traditionally known as the Southern States. The question of wage differentials as between these States as an economic unit and those of cther sections is the one with which this council is the most concerned, and to which matter, I shall largely address myself at this time. This might not be necesssary if it did seem to be a fact that in the making of the codes, and in the changes which have been taking place from time to time, there has been a quite manifest tendency to either disregard or to discount the importance of the conditions which necessitate such differentials. But, in the beginning, I wish to emphasize the utter truth of the following statement in the preamble of the declaration of policy of the Southern States Industrial Council: "The purpose of the council is not only to cooperate with all other agencies in the common task of restoring prosperity to our Nation, but fearlessly and aggressively to advocate those things which are interpreted to be best for the South, without injury to the rights or legitimate interests of any other section. It is, and will continue to be, strictly nonpartisan in all of its considerations and activities. It abhors sectional prejudices from whatever source, and will stand firmly and always for our established American institutions and for a national unity based upon a just consideration of all interests." In other words, we proceed in our considerations upon the well-known fact that every section of this tremendously large and widely diversified country is governed by very distinct bodies of conditions which make extremely difficult, if not impossible, any program of national standardization, except as to the broadest and most fundamental principles which govern national political units. We disavow, therefore, everything of a narrowly partisan or invidious spirit. We feel that the proper treatment of this vital question is absolutely essential to the very life of southern industry. While the National Recovery Administration has recognized, in one of its policy positions, the fact of the relationship of wage differentials to our industrial welfare, we want to submit to you what we believe is convincing evidence, after 18 months' experience under the codes, that the subject is far more important than appears to have been realized in administrative circles. Previous to the enactment of the National Industrial Recovery Act, the operation of natural and economic laws had established certain differentials in wage rates as between the South and other sections, as well as between smaller competitive units in the same section. Differences in climate, in supplies of trained labor, in degrees of mechanization, in population distribution, in remoteness from consuming markets, and the existence of a freight rate structure discriminating against the South, represent the major factors in the determination of wage differences. Apparently, on the theory that these wage differences were arbitrary, and were not the result of natural and economic forces, and that the South is a low-standard section which constitutes it a particular candidate for social reform, what appears to be a very determined effort has been made to wipe out these natural effects of natural causes, and thereby ostensibly "lift" the South to the same economic level as the rest of the country. This program of standardizing wage rates in industry without reference to the prevailing general wages in a locality, has been largely at the expense of the South. During the 18 months under code operation, there has been a gradual decrease in activity in certain of the larger southern industries, directly traceable to a disturbance of competitive conditions between the South and other sections. This is a direct result of tremendously increased labor costs without corresponding increases in the same costs of competing areas. Reference to the study made by the Bureau of Labor Statistics into the "Wages, Earnings, and Hours in the Cotton Textiles" shows that the average median weekly earnings in August 1934 as compared with the previous year had decreased to a greater extent in the South than in the North. In August 1934, the ratio of average earnings in the South to those of the previous year was 83.2 percent for male, and 82.2 percent for female; while in the North, the ratio was as high as 91.9 percent for male, and 90.8 percent for female. In other words, where average weekly earnings in the South had decreased 18 percent, the decrease in the northern mills was only 9 percent. "This difference in the extent to which earnings dropped in the North and South between August 1933 and August 1934 was due in part to the exceptions granted by the curtailment order;" but, since August it has become apparent that the difference was also due to a shift in production. This shift was not immediately noticeable, since there was a great rush to buy after the textile code was put into effect, and the mills throughout the country were able to dispose of stocks on hand. During the intervening year, it has, of course, been necessary to replace these stocks under the increased costs imposed by the code. As a consequence, we find a shift of business to northern mills due to a disproportionate increase in the production costs of the two sections. Another outstanding example is the situation in the coal industry. The weekly coal-production reports of the Bureau of Mines, Department of Interior, show that from January 1, 1933, to September 30, 1933 (9 months prior to the introduction of the Bituminous Coal Code), the total production in the southern coal fields of Alabama, Tennessee, western Kentucky, eastern Kentucky, Vir1 Wage Rates and Weekly Earnings in the Cotton Textile Industry, table 11, p. 48. |