some legislation to stop the downward trend and save you from destruction.

Scores of them came before our Labor Committee on the 6-hour bill. They were discussing the advisability of legislation aside from the 6-hour law or the 30-hour week bill, the Black-Connery bill. They were begging and pleading for the Government to set up machinery that would enable the trade associations to give some power to their decisions. And the administration did it.

If you could have done it better without interference, why didn't you do it before then, and why are you not doing it now?

It has been testified here before this committee that there are from 5 percent to 10 or 15 percent who would not go along. Some said. 5 percent, some of your witnesses said 10 percent, and others said there are probably 15 percent of the manufacturers who would not go along with a voluntary code. How would you compel them to do so? Have you any conceivable method in your mind that you can suggest to us here which would compel these recalcitrant employers to abide by your voluntary codes, since the N. R. A. was voided?

Mr. GUTTERSON. It was not successful under the N. R. A. to stop the chiseling, generally.

Mr. WOOD. Do you mean to say that there was no general compliance with the 40-hour week and the minimum wage?

Mr. GUTTERSON. I will not say so much about that, Mr. Congressman. I think there was quite universal compliance in those things. But there are a lot of other things involved in successfully operating an industry.

Mr. WOOD. Hours and wages are the main things involved in N. R. A. The two things involved in N. R. A. were hours and wages, and section 7a, collective bargaining. When that is said, that is practically all.

Mr. GUTTERSON. That is not the whole question of operating a manufacturing industry.

Mr. ELLENBOGEN. Mr. Gutterson, under the N. R. A. you had a code known as carpets and rugs?

Mr. GUTTERSON. Wool carpets and rugs.

Mr. ELLENBOGEN. That did not include linoleum?

Mr. GUTTERSON. No, sir; it did not.

Mr. ELLENBOGEN. Nor did it include hard-surface floor covering? Mr. GUTTERSON. No, sir; nor did it include cotton rugs and carpets.

Mr. ELLENBOGEN. So that if we put you under this bill you are in the same position that you were in at that time, are you not?

Mr. GUTTERSON. Except that the hard-surface carpets were under codes.

Mr. ELLENBOGEN. Under their own codes?

Mr. GUTTERSON. Yes, sir. If you put us under this bill and leave them out and not under a code, but we are

Mr. ELLENBOGEN. We are going to catch up with them, too, some time.

Mr. GUTTERSON. That is not the point I wanted to make.
Mr. ELLENBOGEN. But you are a part of the textile industry.
Mr. GUTTERSON. Certainly we are.

Mr. ELLENBOGEN. A weaver could go from a wool mill into a cotton mill?

Mr. GUTTERSON. I am not a technician on that.

Mr. ELLENBOGEN. You are properly a part of the textile industry? Mr. GUTTERSON. Yes, sir. Our raw product, of course, is an imported product. It is different than in the case of a great many other textiles. We deal wholly in an imported product and it is about 60 percent of the goods that go into our product.

Mr. ELLENBOGEN. You would have no objection to a minimum wage of $15 for unskilled workers in your industry?

Mr. GUTTERSON. We have had no difficulty on the minimum wage under the code.

Mr. ELLENBOGEN. There would be no objection in your industry against that minimum wage, would there?

Mr. GUTTERSON. I don't know about legislation, or anything of that sort.

Mr. ELLENBOGEN. Well, aside from legislation, would there be any objection to a $15 minimum wage? What are you paying now? What is the minimum that you are paying?

Mr. GUTTERSON. We have a $14 standard.

Mr. ELLENBOGEN. It would mean an increase of $1?

Mr. GUTTERSON. Yes; but it would mean an increase in the cost of the goods to the consumer, probably.

Mr. ELLENBOGEN. You are operating now on a 40-hour basis in your industry? At least, it is the desire of the industry to do so?

Mr. GUTTERSON. The industry is successfully operating on a basis of 40 hours. We can, under present conditions. I don't know what the situation would be with the great deal larger volume of business. Mr. ELLENBOGEN. What is the average number of weeks per year that the industry is giving employment?

You want to

Mr. GUTTERSON. That varies in respect of our orders. Mr. ELLENBOGEN. What would you say it was in 1935? Mr. GUTTERSON. I could not answer that question. know the average number of weeks we work in a year? Mr. ELLENBOGEN. Yes.

Mr. GUTTERSON. We worked every week.

Mr. ELLENBOGEN. You do not average 40 hours a week throughout the year, do you?

Mr. GUTTERSON. No, sir; I should say not.

Mr. ELLENBOGEN. In fact, your work is quite seasonal?

Mr. GUTTERSON. Yes, sir; our industry is seasonal.

Mr. ELLENBOGEN. And there is a great deal of seasonal employment in your industry?

Mr. GUTTERSON. I could not say there is a great deal of seasonal employment in our industry.

Mr. ELLENBOGEN. What would you say?

Mr. GUTTERSON. I do not think there is a great deal of seasonal employment. I think that that is an exaggerated expression. Mr. ELLENBOGEN. What would you call it?

Mr. GUTTERSON. Mr. Knowland, can you give us an idea whether there is any large seasonal unemployment?

Mr. KNOWLAND. No; there is not. Such unemployment as does come, Mr. Chairman, comes through the exigencies of trade on rare occasions. Generally speaking, the mills run almost steadily the year 'round.

Mr. ELLENBOGEN. If the Government goes through with the housing program, there would not be any difficulty about your industry operating at top speed, would there?

Mr. GUTTERSON. It would be very helpful, Mr. Congressman. Mr. ELLENBOGEN. Well, I have one housing bill in.

Mr. SCHNEIDER. Mr. Gutterson, I would like to ask you to what extent your industry meets foreign competition.

Mr. GUTTERSON. Do you mean the importation of foreign fabrics? Mr. SCHNEIDER. Yes; I do.

Mr. GUTTERSON. Under ordinary circumstances we do not have any difficulty with this situation because the importations have been very small. We are now faced with a potential possibility of having serious competition of a foreign nature.

Mr. SCHNEIDER. With what particular country?

Mr. GUTTERSON. If you want me to say one particular country, I would say Japan at the moment. And there is the risk of the possible reciprocal trade agreements being made by the Department of State.

Mr. SCHNEIDER. As to the tariff agreements which are now in effect, do they permit imports under lower rates?

Mr. GUTTERSON. Not any specific fabric. You mean whether the trade agreement has reduced the tariff, do you?

Mr. SCHNEIDER. Yes; that is what I mean.

Mr. GUTTERSON. Not as yet on any absolute fabric that we make. Mr. SCHNEIDER. Then your industry is not menaced by present importations?

Mr. GUTTERSON. Not by present importations. But a country like Japan is equipped with machinery which it can shift from one type of fabric to another very quickly, and at any moment they might undertake to make similar products and bring them in in as large quantity as they now do with the hooked rug, which is highly competitive with our industry.

Mr. WOOD. What was the occasion of these three or four strikes up in your factory there now?

Mr. GUTTERSON. The institute does not deal as a unit in connection with labor questions. It is one of our policies to leave it to the individual mill to handle.

Mr. WOOD. Are you a manufacturer yourself?

Mr. GUTTERSON. No, sir; I am not. I am a lawyer. I have been in the manufacturing business in my life. I have been in the manufacturing business and I had been in a mill

Mr. WOOD. Have you been in this type of manufacturing?

Mr. GUTTERSON. No, sir.

Mr. WOOD. You are an attorney, are you?

Mr. GUTTERSON. Yes, sir, I am.

Mr. WOOD. You don't know about these four or five or six strikes in progress now in the New England States? I am informed that these strikes are in progress due to the fact that there has been a reduction in wages and a stretching of hours in all these plants. Of course, it is perfectly natural that that would be the cause of all these difficulties.

Mr. GUTTERSON. I know that there are some labor difficulties at the present time in one or two isolated spots in our industry, but I do not think, Mr. Congressman, they involve the facts which are

established in this bill as justifying regulation of this industry as a menace to the citizens of the United States.

Mr. WOOD. Well, I wanted to ask you about those factors, but you say you are a lawyer, so I will not ask them.

Mr. SCHNEIDER. Is Mr. Smethurst present?

STATEMENT OF R. S. SMETHURST, REPRESENTING NATIONAL ASSOCIATION OF MANUFACTURERS

Mr. SCHNEIDER. Will you please state your name and whom you represent?

Mr. SMETHURST. My name is R. S. Smethurst. I am assistant counsel, National Association of Manufacturers.

I know there are other witnesses waiting to be heard, and I will try not to take more than 10 or 15 minutes.

We have approached this bill with the realization that it is permanent legislation and not temporary legislation, such as the National Industrial Recovery Act. It is not designed to meet any emergency; so we have adopted what we consider to be a realistic attitude or approach.

With that in mind, we have prepared a rather comprehensive brief on many legal questions presented by the bill in the broader aspects, together with specific objections to particular provisions in the bill. But, with your permission, Mr. Chairman, I would like to summarize what we have done in this brief, and then submit it to you. The substance of our approach to this bill can be outlined as follows: The first point we wish to make is that the production and distribution of textile products is not affected with a national public interest in a legal sense. Unless there is some question about that, I will not develop it.

Mr. SCHNEIDER. National public what, please?

Mr. SMETHURST. With a national public interest.

In the "Findings and Policy", paragraph 1 declares that the production of textile products in the United States and the distribution throughout the United States and foreign countries is affected with a national public interest.

It is our contention that the textile industry, whether in the production or distribution, is not so affected. I can develop that point if there is any desire that I do so.

In the first place, I might point out that in the Cabinet committee report it is clearly indicated that the textile industry as such is in no different a situation than the great majority of other industries in the country.

And for purposes of getting it in the record, I would like to read the following from the Cabinet committee report on the investigation of the textile industry:

Despite the various differences that distinguish the cotton-textile industry from other industries, to a considerable extent the problems faced in the cottontextile industry are common to all industries operating under conditions of competition in periods of rapid change. Such differences as exist, important as they are, are largely differences in degree. Many industries, other than cotton, face sharp regional shifts analogous to the decline of the cotton-textile industry in New England and the rise of the industry in the south. In like manner it is the common lot of most industries in modern times to face the sharp competition of substitute products. Moreover, most industries have a capacity for output in excess of what may be regarded as normal or average. In the textile industry,

as in many other industries, overcapacity is in part the result of shifts from old to newer regions, creating a condition of overcapacity in the declining region. In addition, all industries are confronted with a measure of overcapacity owing to rapid technical strides which render obsolete each year some considerable fraction of the available equipment. Finally, the excessive optimism of competitors with respect to the share of the market which each can get and hold, together with the mistaken judgment of individual units with respect to the size of the available market, are everywhere causes of overcapacity.

Likewise, the losses suffered by a considerable section of the industry even in good years is a characteristic common to all industry. As is shown elsewhere in this report, the cotton-textile industry reveals an array of costs varying from mill to mill and ranging from low through intermediate to very high cost firms. A tendency for weak firms to cause distress competition is present in greater or less degree in all industry. It must, therefore, be frankly recognized that many of the things complained of are basically unavoidable if we are to retain the advantages of competition and the stimulus which it affords.

Mr. WOOD. Why do you read that portion of the report from this committee?

Mr. SMETHURST. For the simple reason that I think it points out definitely that if there is a national public interest relating to any industry it relates to all industries. The textile industry is in no different situation.

Mr. WOOD. What would you say as to the textile industry compared with the coal industry?

Mr. SMETHURST. I am not an economist and am not acquainted with the conditions in the textile industry as related to the coal industry. I am relying upon this Cabinet committee report, which committee did make a very comprehensive study.

Mr. WOOD. The Cabinet committee did not deny that the coal industry was one that had a public interest, as well as the textile industry?

Mr. SMETHURST. They were not studying the coal industry, Mr. Wood. This bill relates to the textile industry. And, in order to do no injustice to either industry, I think I should not say anything about a comparison. I think undoubtedly there are many differences. One is certainly a natural-resource industry all the way through.

Mr. WOOD. Do you contend that the manufacture and the distribution of textile goods in these United States is not in any wise connected with a public interest?

Mr. SMETHURST. That is a different thing, Mr. Wood. I am speaking about a public interest in the legal sense, which is the basis of this legislation. A business may be affected with a public interest in a legal sense to justify a certain degree of regulation by a State. And that purports to be the basis of this bill.

Mr. WOOD. If it affects the public interest as an actuality it naturally goes without saying that there are certainly some legal methods we could employ to remedy any practice that might be against the public interest?

Mr. SMETHURST. That is the question, Mr. Wood. We do not deny that there is a public interest in the textile industry. But there is a distinction between the general public interest in an industry and a public interest in the legal sense which justifies regulation of that industry, not by the States, but by the Federal Government. And in order to justify that regulation by the Federal Government you have to find within the Constitution the power so to regulate. I think that that will be developed in these other points.