No one device of production control is deemed by textile experts, both in management and in labor, as generally applicable to every branch of this vast industry. In the hosiery division, for instance, it is the belief of representatives of both manufacturers and labor that machine-hour limitation, and particularly prohibition of the third shift the graveyard shift-is necessary to regulate production. On the other hand, the carpet and rug division seems to be getting along fairly well under a system of inventory control. The National Textile Act gives the Commission power, under strict limitations and with adequate protection to the consumer, to determine and prescribe what, if any, production control is necessary in any particular branch of the textile industry. If such control tends to further monopoly or unduly raise prices, it is to be discontinued at once by the Commission.

EMPLOYEES TO SHARE INCREASED EFFICIENCY

I should like to call attention to one other device in my bill. It is partly a production-control provision and partly a wage provision. If the Commission permits the operation of three shifts in any division of the textile industry, provision is made in the bill for the employees to share in the increased efficiency by providing for a weekly bonus of 5 percent of the wages as long as the three-shift operation continues. This provision seeks to establish in industry a principle which I believe to be of great importance.

If a plant is permitted to operate on a three-shift basis-a full 24 hours a dayits mechanical devices are used to the fullest extent and its overhead and other expenses are substantially reduced per unit of goods produced.

The profits resulting from such an increase in efficiency should be allotted in part to the employees of that plant, so that they may buy an increased output of industry.

METHOD USED TO INDUCE THE MANUFACTURER TO COMPLY WITH CODE CONTAINED

IN BILL

Textile goods produced without complying with the standards of fair trade and labor practices laid down in the bill cannot receive a license from the Commission and therefore cannot be moved in interstate commerce. Where production in interstate commerce has a direct effect on interstate commerce, it is included in the jurisdiction of the bill.

The bill further provides that any person who manufactures textile goods in violation of its terms shall not be permitted to use the Postal Service to transmit or sell textile goods produced under inferior standards. All departments, bureaus, and agencies of the United States are prohibited from purchasing textile goods not produced under a license of the Commission. No loan is to be made or renewed by the R. F. C. or the United States Government or by any financial institution in which the United States, directly or indirectly, holds the controlling interest to any person who manufactures textile goods in violation of the standards set out in the bill.

As far as the provision regarding the postal system is concernea, it means this: The Government says to the textile manufacturer, "You can manufacture under any conditions you please, but if you desire our aid and want to avail yourselves of our postal facilities for the disposal of your goods, you must comply with thes minimum standards of fair trade practies and of labor."

I would like to have the committee's permission to reserve my main statement until the end of the hearing for the purpose of summing up so that upon the basis of the record which has been made I can present something on the features of the bill and endeavor to obtain the approval of the committee for the bill.

Mr. KELLER. Is there any objection?

(No response.)

Mr. ELLENBOGEN. I want to tell the committee that I did not intend to take up so much time.

Mr. LUNDEEN. You provide a 35-hour week, I notice.

Mr. ELLENBOGEN. A maximum of 35 hours.

Mr. LUNDEEN. That is only a maximum?

Mr. ELLENBOGEN. That is only a maximum.

Mr. LUNDEEN. It is not very much more than the 30-hour week. Mr. ELLENBOGEN. I personally favor the 30-hour week; but you cannot always get what you want. We felt that the opposition to the 30-hour week would be so strong that for the purpose of obtaining the other good features of the bill we were willing to compromise on 35 hours a week.

Mr. LUNDEEN. Why not fight for it?

Mr. ELLENBOGEN. I am willing to join in the fight for the 30-hour week bill; but when we are trying to put the textile industry back on a sound footing and remove the chaos in this one industry we are willing to go along on 35 hours. If we pass a general bill, of course, that would take precedence over this specific bill.

Mr. LUNDEEN. You were speaking of denying the mails to the goods manufactured under improper conditions because we own the mails. Would it not be helpful then if we owned the railroads to deny the use of the railroads?

Mr. ELLENBOGEN. I think we have the power to regulate what may be carried on the railroads in interstate commerce without owning the railroads. There may be a difference of opinion as to whether railroads should be nationalized. I don't think it affects this bill. But I think we have the power to regulate the flow of commerce on railroads without owning the railroads. In this bill we are not advocating ownership of railroads.

Mr. LUNDEEN. I understand that; but you use the idea that because we own the mails we have control over them absolutely. Mr. ELLENBOGEN. Absolutely; and also the Panama Canal, in the legislation affecting the Panama Canal.

Mr. LUNDEEN. Personally I think the more you own in the way of mails and railroads the less you will have to consider compromising with these vested interests. That condition will always obtain about every thing that should be done.

Mr. ELLENBOGEN. I think you will hear plenty of objections, Mr. Congressman.

Mr. WOOD. Mr. Ellenbogen, have you any good reason to believe that the Supreme Court will not void this bill, if it becomes a law?

Mr. ELLENBOGEN. I can only say this to you, Mr. Congressman, that past decisions of the Court warrant me in saying that your chances for the bill being sustained are fair.

Mr. WOOD. That is the reason I asked the question.

Mr. ELLENBOGEN. That is, as to some provisions; but as to other provisions there is no doubt they will be sustained.

Mr. WOOD. The reason I asked the question was in the light of that decision. You mentioned the so-called chicken case. Now, that chicken was sick when it reached its destination. Do you think there would be any difference in the opinion of the court if the chicken had died after it had reached its destination, taking into consideration the difference between a dead chicken and a sick chicken and a live chicken?

Mr. ELLENBOGEN. I should say to you, Mr. Congressman, that there is no difficulty in the N. R. A. decision itself. It does not at all present any difficulties to me. The Court decided that that par

ticular act was not in interstate commerce. But there are certain dicta in the opinion. The Court says they are going to decide in each particular case whether it is still in interstate commerce.

Mr. WOOD. The fact of the matter is the Supreme Court decided the sick-chicken case was not in interstate commerce because it had reached its destination, whether dead or alive.

Mr. ELLENBOGEN. And the interstate commerce had ended.

Mr. WOOD. I am wondering how you can harmonize that with the former decision of the Supreme Court in the case of a large stone company at Bedford, Ind. Some couple of years ago they had a strike and had some difficulties with the employees, and the stonecutters' union placed that company on the unfair list, and the members of the stonecutters' union throughout the United States refused to handle that stone. In Kansas City, St. Louis, and the West, and in territory they were affected differently than the folks involved in the sick-chicken case. The company received a restraining order, and finally a permanent injunction restraining the stonecutters from refusing to handle the stone. There was a definite case in Kansas City with which I am very familiar where tons of stone had been delivered to a contractor by the Bedford Stone Co., and the stone was unloaded out of the cars, delivered to the building site, and it was placed upon the ground.

To my mind I can see no difference as far as the equities in the cases are concerned between the sick-chicken case and the stone case, because the chicken had been delivered and the poultryman had begun to process the chicken; the stone had been delivered to the contractor, and the stonecutters had begun to process the stone or set it.

I have been unsuccessful in getting any constitutional lawyer to tell me the essential difference between the two cases. According to the Supreme Court decision there is a very great difference in the two cases, although each product, the sick chicken and the stone, had reached their destinations. The stone company had received their money for the stone, and the chicken man had received his money for the chicken. The purchasers in both instances had paid for the product; it is set upon the ground, and someone else was handling it. The stonecutter came in to handle the stone; the chicken picker came into process the chicken.

Now, what is the difference in the two cases?

The reason I asked the question is that I don't know how anyone can say what the Supreme Court will do with this bill in the light of past decisions. Of course, I agree with you that I feel quite sure that the law is constitutional. I am not a lawyer, but it seems to me that the Federal Government has some rights; and it seems to me that the Congress should have some rights in regulating interstate competition, if at all. But I could never determine how the Supreme Court could harmonize the two cases.

Mr. ELLENBOGEN. If I might say so, I don't believe that any sound distinction can be made between the two cases. But I am not willing to accept the N. R. A. decision as overruling that case. Mr. WOOD. I am not either.

Mr. ELLENBOGEN. And for this reason, because a court that wants to, can say that the N. R. A. decision is based upon the question of delegation of power. And I think the court is absolutely correct in saying that Congress illegally delegated the power; and the Court can base the N. R. A. decision on the illegal delegation of power by Congress and say that the stonecutters' decision is still the law--and

I hope the Court will say that without finding any inconsistency between the two decisions.

Mr. KELLER. Might it be that the sick chicken appealed to the sympathy of the Supreme Court in making that decision?

Mr. ELLENBOGEN. I will say this, that had it not been for the question of delegation of power, I don't know what the decision in the N. R. A. case would have been, but it surely would not have been a unanimous decision.

But on that theory of an illegal delegation of power the decision of the court was unanimous because that was sufficient to support the decision that the law was invalid.

Mr. WOOD. There was some question about it, but some man who happened to have been there, or some of his friends, said he discovered that one of those chickens in the carload of chickens had a diamond in his craw that had been smuggled. Undoubtedly some of these chickens came from Mexico. And this gentleman asked in what category that chicken would be if that chicken had a contraband stone in its craw, that is, what would have been the legal aspect of the rest of the chickens in the car.

Mr. RAMSFECK. The difference between the Bedford Stone case and the N. R. A. case, as the Supreme Court construes it, is a question of conspiracy, isn't it? The Bedford Stone case rested on the conspiracy charge.

Mr. ELLENBOGEN. Of course, if the commerce in stone had ended and the stone had been delivered to the local contractor for building and for local handling, I would state then the conspiracy only affected intrastate commerce, and not interstate commerce. So I don't think that is a valid distinction.

The Supreme Court said it was a conspiracy which affected the interstate flow of the stone. But if it is true that the journey of the stones had ended, then that conspiracy could only affect the intrastate flow and not the interstate flow.

Mr. WOOD. Whatever might have been the reasons, in the sickchicken case it was an intrastate commerce, and so was the stone; it was an intrastate case and a case for the State courts and not for the Federal courts.

Mr. RAMSPECK. Does the gentleman think in the N. R. A. case that if the Schecter Co. was engaged in selling the chickens after they processed them, in interstate commerce, that insofar as that part of the N. R. A. Áct was concerned, that it would have been held constitutional?

Mr. ELLENBOGEN. I think it might have been. I think what appealed to the Court in that case were certain regulations regarding chickens. And all of us are swayed by our emotions in those things. I do not think the N. R. A. case is at all a precedent as regards what constitutes interstate commerce and what does not.

Mr. RAMSPECK. I assume you are familiar with the Grain Futures case?

Mr. ELLENBOGEN. Yes, I am.

Mr. RAMSPECK. Where they held that although the transactions on the Grain Exchange were purely local that they were a part of a continuous stream of commerce and, therefore, Congress could define them as being effective upon the stream of commerce and regulate. the local transactions as a part of a continuous flow.

I would like to ask the gentleman whether he drafted this bill or whether it was drafted for him by somebody else.

Mr. ELLENBOGEN. I drafted it with the aid of other people. But there is nothing in the bill for which I do not take responsibility and which I did not draft with the help of others.

Mr. RAMSPECK. I believe the gentleman said in his statement that they were not attempting to control the manufacture of textiles. But as I read page 2 it seems to me that the bill intends not only to control the manufacture of textiles, but also the flow of the raw products.

commerce.

Mr. ELLENBOGEN. The bill only intends to affect the manufacture of textile products that are intended to enter the flow of interstate The theory of the bill is this: If you, a manufacturer in one State, for instance, pay your employees only $5 a week, and I am a manufacturer in another State and pay my employees $10 a week, then you are able to cut the prices and prevent my entering the interstate market and thereby reduce the flow of interstate commerce. And the same is true of the fair-trade practices which affect it.

Mr. RAMSPECK. I am just trying to get the gentleman's own idea as to what his bill is intended to do. On page 2 in subsection 2, the bill says:

The flow of raw cotton, wool, silk, and other raw materials and supplies from certain States and from foreign countries to textile mills located primarily in the eastern seaboard and Southern States, the manufacture of such materials into various textile products, and the sale, transportation, and distribution of such textile products throughout all the States of the United States and numerous foreign countries constitute a continuous stream or current of commerce among the several States and between the States and foreign countries.

Is it intended to control that flow of raw materials?

Mr. ELLENBOGEN. No, sir. We cite the fact, for instance, that cotton from Georgia will go to Massachusetts to be manufactured into cotton goods which will flow back from Massachusetts to New York and Pennsylvania, and perhaps to Georgia. There is not a line in the bill which intends to regulate the sale of cotton in any way, except we say that that shows there is an uninterrupted flow of interstate commerce; that the raw cottons comes from one State into another to be manufactured, and the silk comes from Japan, let us say, and goes into the States and then flows into all of the States. There is no use in denying that we desire to control the conditions under which these goods are manufactured, but only insofar as those goods are designed to enter into interstate commerce. We realize we cannot regulate the manufacture of goods which are intended to remain within the same State.

Mr. RAMSPECK. In your statement you said you did not intend to regulate the retail sale of textile products. That is correct, is it not? Mr. ELLENBOGEN. That is correct.

Mr. RAMSPECK. Suppose a factory in Georgia manufactures cotton textiles and sells it to a selling agency, a Georgia corporation, and they, in turn, sell it in interstate commerce; would that product be affected by this bill?

Mr. ELLENBOGEN. It would be.

Mr. RAMSPECK. In what way?

Mr. ELLENBOGEN. Because those textile products would be intended for interstate commerce. The fact that ownership changes before the goods travel on or while they are in the flow of interstate