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commerce does not change the fact that those goods are intended for interstate commerce.

Mr. RAMSPECK. Let's get this clear in your mind as well as in ours. Suppose the cotton is produced in Georgia and it is processed in Georgia in a textile mill and is sold to a Georgia corporation, a selling agency or a wholesale dealer, let us say. Then it is your contention

: that you can regulate the manufacturing processes because that is ultimately intended to be shipped in interstate commerce?

Mr. ELLENBOGEN. Well, here is what the bill does. That sale would be perfectly valid under the bill. But if the person who buys those goods in Georgia would attempt to ship them in interstate commerce he would be stopped because those goods would not have the label or the stamp.

Mr. RAMSPECK. Are you not going directly in the face of the N. R. A. decision, because there is no interstate commerce involved in the process until the wholesale dealer, who has nothing to do with the manufacture of the goods, puts them into the stream of commerce?

Mr. ELLENBQGEN. That is when the bill applies. When the manufacturer in Georgia sells the goods to a Georgia corporation in Georgia the Commission established by this act has no jurisdiction. But when that corporation in Georgia then attempts to ship those same goods in interstate commerce we say that you cannot do that because these goods have not been manufactured under conditions fixed in the bill and, therfore, they cannot enter the stream of interstate commerce. I do not think that affects the N. R. A. decision, because in the N. R. A. decision the chickens had stopped and were no longer to enter the flow of interstate commerce.

Mr. RAMSPECK. But you propose to regulate in this bill a process which takes place and is finished before the article enters the stream of commerce.

Mr. ELLENBOGEN. No; 1 do not. I don't care what the manufacturer does. He can do as he pleases. But if those goods are to move in interstate commerce, we will stop them from so moving unless they are manufactured under certain conditions.

In other words, we do not dictate to the manufacturer. He can do whatever he pleases, so far as this bill is concerned; he can have any working conditions he pleases; but his goods cannot enter the flow of interstate commerce unless they live up to the standards fixed in the bill and he gets the label and obtains the license.

The N. R. A. went much further. The N. R. A. said to the manufacturer, “We are going to regulate the hours in your factory regardless of what you do with your goods.”

We do not do that. We do not talk to the manufacturer at all; we only say these goods are contagious; they spread a social disease; they spread a disease which will destroy the Nation and, therefore, just like any other contagious article, we are going to keep them out of interstate commerce.

Mr. RAMSPECK. I want to make myself plain to the gentleman and to the committee. I am thoroughly in sympathy with a desire of the people who want to correct the evils in the textile industry and in every other industry. I do not confine it to textiles. But it is useless for us to pass an unconstitutional law. If we cannot make it constitutional we are wasting our time and putting the people of the country to a lot of trouble and expense.

There is a series of decisions of the Supreme Court which hold that you cannot exclude from interstate commerce articles that are not in themselves harmful. Now, they have held that lottery tickets cannot be shipped in interstate commerce.

Mr. ELLENBOGEN. That is where the Supreme Court went much further in its decision than its dictum would indicate, because the Supreme Court does say in its decisions that goods, for instance, which are contagious, physically speaking, are goods whose shipment in interstate commerce Congress can prohibit. But lottery tickets do not spread any disease and lottery tickets do not even socially affect any place until their journey is ended and they are sold in th local market. The lottery decision went much further than the Supreme Court in its dictum would indicate.

Mr. RAMSPECK. They did prohibit lottery tickets?
Mr. ELLENBOGEN. Yes; they did.
Mr. RamSPECK. Or the shipment of liquor.

Mr. ELLENBOGEN. Liquor may be said to be harmful. But the package of lottery tickets in interstate commerce surely does no harm; it is the sale of the lottery in the States which might be said to do the harm, and the legislature so found and, therefore, prohibits them.

But when the Supreme Court sustained the regulation by Congress of the shipment of lottery tickets it went much further than its dictum would indicate, because lottery tickets are harmless. The ticket itself is harmless, physically speaking. They are much more harmless than the shipment of goods manufactured under such conditions as are referred to here.

Mr. RAMSPECK. Yet they did hold they could not be shipped on the theory they were harmful. What basis of constitutional law for the decision have you for the bill that can prohibit the shipment of a bolt of cloth, let us say, in interstate commerce, simply because it was not manufactured in accordance with the terms of this bill?

Mr. ELLENBOGEN. I am going to submit a brief, if I may say so to the Congressman. But the lottery ticket case decision is one that is a precedent for it, because a package of cloth is no more and no less harmful than a package of lottery tickets as such. When the Congress prohibited the flow of lottery tickets it did not regulate commerce, but it prohibited in effect the purchase of those tickets. It looked to the ultimate end and it did not look to the interstate commerce.

Mr. RAMSPECK. Wasn't the reason they prohibited the lottery tickets because they were barred by State laws?

Mr. ELLENBOGEN. Not in all of the States. Even if the State would permit it, you still could not ship them into that State.

Mr. RAMSPECK. In sections 10 and 11 of this bill you say that, "Whenever the manufacture, processing, and/or production of textile products not eligible for entrance into interstate commerce under the provisions of this act is carried on in the same plant or establishment or is otherwise intermingled or connected with, or related to, the manufacture, processing, and/or production of textile products eligible for entrance into interstate commerce, so as directly and substantially to interfere with, prevent, impeded, or obstruct effective regulation of the latter products," the Commission may regulate it. That is the regulation of a purely

. local process, isn't it?

Mr. ELLENBOGEN. That section of the bill goes further than any other section, and it is based upon this: The Supreme Court has



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 vitnesses?

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.



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. Textile and other manufacturers.
Mr. KELLER. What others?

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?

Nir. KELLER. Yes, you may do that. (The letter referred to is as follows:)


Nashville, Tenn., January 25, 1936. Hon. Kent E. KELLER, 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

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