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STATEMENT OF HERMAN CONE, TREASURER, PROXIMITY MAN

UFACTURING CO., GREENSBORO, N. C. Mr. KELLER. Will you please state your name and your address, Mr. Cone?

Mr. CONE. My name is Herman Cone. I am Treasurer of the Proximity Manufacturing Co., Greensboro, N. C.

Mr. KELLER. Is that the town where something was mentioned as to their being in competition with Mr. Steele?

Mr. CONE. No, sir. That was Greenville, S.C.

Mr. KELLER. Mr. Ellenbogen, was it Greenville, S.C. that you were talking about a little while ago?

Mr. ELLENBOGEN. Yes; it was Greenville, S. C.

Mr. CONE. There are just two things I want to talk about. One is the statement of some of the witnesses who have appeared here. One of the witnesses named a long list of North Carolina mills in a wholesale charge of wage reductions, lengthened hours, and stretch-out. I think he was mistaken about it. I believe he had some incorrect information about some of the mills mentioned by him. have been mistaken about all of them; I don't know. But I do know that he was mistaken about one group, because he called the Cone Mills at Greensboro by name. And while I am not qualified to speak for any group other than my own, I do know something about our own condition.

And I will tell you gentlemen frankly that we have not deviated from the code standards. And I challenge any man to dispute that statement.

There is just one other matter I want to mention. I think Mr. Ellenbogen mentioned something about the mill at Haw River running three shifts, and also the Burlington chain, and mills at other places. I am not qualified to speak for the Burlington, but we operate the mill at Haw River. I think the information in that respect is somewhat incorrect.

Mr. Wood. Are you sure of that?
Mr. CONE. I am sure of it, sir.
Mr. Wood. Are you sure that that information is wrong?
Mr. CONE. I think I can qualify that.

Mr. Wood. You say that they are not operating three shifts there, do you?

Mr. CoNE. I was going to say this, that the weaving and spinning mill is not operating three shifts. I am sure of that. I know that absolutely, sir.

Mr. Wood. Is the other portion of the mill operating three shifts? Mr. CONE. Yes; some parts of it; that is, the finishing plant in which we finish corduroy. I do not believe the productive machinery, that is, what is known as productive machinery according to the cone, is running three shifts. I do know that according to the new pledge which the Textile Institute has inaugurated-well, I will say that we have signed that. We did not sign the pledge; we signed a letter.

Mr. ELLENBOGEN. Then, how can you operate three shifts?
Mr. Cons. There are no looms and spindles in this finishing mill.
Mr. ELLENBOGEN. You referred to the pledge.
Mr. CONE. This is the situation about it. I want to qualify that.

This particular fabric about which I am speaking, that is, corduroy, is a seasonal fabric. Nobody wants to wear corduroy in the summertime. During the summer and fall months we operated parts of that plant three shifts. I make no apologies for that. I do not believe any of us is running three shifts today.

Mr. Wood. Was that firm operating three shifts in 1932?

Mr. CONE. We started some time back there. But I cannot say whether we were or not.

Mr. Wood. During the depression?

Mr. CoNE. Yes, sir; we started. There are some folks here who probably remember that the mill at Haw River was built away back during the Civil War. But I mean it came into our possession at this later time.

Mr. Wood. I am talking about the depression period. Were you operating two shifts or three shifts during the depression period?

Mr. CONE. When we started up the weaving and spinning mill we started it on a two-shift basis; yes, sir.

Mr. Wood. When did you start that mill?

Mr. CONE. I think it was somewhere around 1927 or 1928. I am not positive as to that date.

Mr. Wood. You were operating that two-shift during thedepression, in 1932 and 1933, were you?

Mr. CONE. Yes, sir. We started the weaving and spinning mill on a two-shift basis.

Mr. ELLENBOGEN. In 1932 how much did you pay to your weavers?
Mr. CONE. In 1932, you say?
Mr. ELLENBOGEN. Yes; in 1932.
Mr. Wood. What were the hourly wages?

Mr. CONE. We never ran over 40 hours for the employees since the code.

Mr. Wood. But how about it in 1932?
Mr. CONE. Since the code.
Mr. Wood. I am talking about before the code.

Mr. Cone. It was either 50 or 55 hours. We never ran over 55 hours before the code.

Mr. Wood. If you were working a 55-hour shift in 1932 and were working two shifts and three shifts, the depression did not bother you very much, did it?

Mr. CONE. We have never run three shifts.
Mr. Wood. Did you have good business during the depression?
Mr. CONE. We have not had very good business for years.

Mr. Wood. Were you doing a better business then than you are doing now, since the N. R. A. ?

Mr. CONE. I cannot say that we are very proud of any business we have done since about 1928 or 1929, to tell you the truth. But here is the point. It has been our policy whenever we gave jobs to men to try to keep those jobs running continuously. And I do not believe you will find in our organization that we have ever laid off folks on account of slack business. I mean we have cut 1 day or 2 days off of the running schedule, if we had to, on account of business conditions.

Mr. Wood. Of course, you are not expected to keep people working if you cannot sell the goods.

Mr. CONE. I think you will find the record of our company is that we have not laid them off.

Mr. Wood. You stagger it and divide the work, do you?

Mr. Cons. Yes, sir; that is, by cutting 1 day or 2 days off of the week.

Mr. ELLENBOGEN. What do you pay weavers?
Mr. CONE. I can tell you more about Greensboro than I can about
Haw River. Are you going back to the main part of our mills at
Greensboro?

Mr. ELLENBOGEN. Then, give us Greensboro.
Mr. CONE. Our best weavers earn $20 to $21.

Mr. ELLENBOGEN. Not the best weavers; but what is the average hourly wage for weavers? Is it piece work?

Mr. CONE. Yes, sir; it is.
Mr. ELLENBOGEN. How much do you pay them?

Mr. CONE. I do not have the records on that. You see, sir, we were making a lot of different fabrics. We have goods ranging all of the way from 40 picks up.

Mr. ELLENBOGEN. Then, you don't know?
Mr. CONE. I don't know the piece rate.
Mr. ELLENBOGEN. How many looms do your weavers operate?
Mr. Cons. Our weavers operate a maximum of 32 looms.
Mr. ELLENBOGEN. That is rather a big load, isn't it?
Mr. CONE. I think not.
Mr. Wood. What do you call 100,000 picks? What is a pick?

Mr. CONE. That is when the filling cloth goes across the loom one time. The cloth is made up of warp, which runs lengthwise, and filling, which crosses.

Mr. Wood. Each strand crosses?

Mr. CONE. Yes, sir. Each time that the thread that goes crosswise of the cloth goes through the warp it is known as a pick.

Mr. Wood. Do you have a speedometer or indicator which tells when you reach 100,000 picks?

Mr. CONE. Yes; we have on some of the looms.

Mr. ELLENBOGEN. Which is the operation where your weavers operate 32 looms?

Mr. CONE. That is the denim.

Mr. ELLENBOGEN. How many looms did that man operate in 1930, let us say?

Mr. CONE. I am not prepared to say as to that.
Mr. ELLENBOGEN. Would you say 16 looms?
Mr. Cons. Perhaps it was 16, or perhaps it was 14.
Mr. ELLENBOGEN. That is what they call the stretch-out, is it?

Mr. CONE. That means that that weaver may be taking more looms out, but it does not necessarily follow that he is doing twice the amount of work, beacuse when I say that it is 32 looms to the weaver, the weaver has more help to run those 32 looms; he has more help than he had before.

Mr. KELLER. We thank you, Mr. Cone.

STATEMENT OF WILLIAM J. MATTHEWS, COUNSEL FOR THE

NATIONAL ASSOCIATION OF FINISHERS OF TEXTILE FABRICS

Mr. Matthews. Mr. Chairman, I think I can eliminate many of the matters that I intended to discuss, but I have a statement which I have prepared and which I will be very glad to present.

As regards coming back Monday, I will be very glad to do that. But I cannot do it this coming Monday. If the committee is going to be in session and if they want anything further from me than what I have in this statement, I will be very glad to agree upon any subsequent date to come back here.

Mr. KELLER. I think it would be very much better if you would return some day next week, for the reason that you will then be full of pep. And I like peppy witnesses.

Mr. MATTHEWS. Mr. Chairman, this statement, in opposition to this bill, is submitted on behalf of the members of the National Association of Finishers of Textile Fabrics who comprise a substantial numerical majority of all of the finishing plants in the United States. Altogether there are a few more than 100 finishing plants. The number of employees directly engaged in this finishing branch of the textile industry is in excess of 40,000.

Finishing, as such, consists principally of bleaching, dyeing, mercerizing, and printing textile fabrics. Most finishing plants merely finish the goods for others who own the goods and sell the finished fabrics. The job finishing plant neither buys nor sells the goods, but only renders the finishing service pursuant to instructions specified by the

owner. These finishing plants are located almost entirely in the New England and Southeastern States.

This statement will be confined almost exclusively to its legal aspects, which necessarily involve the powers of Congress under the Federal Constitution.

The powers of Congress to enact legislation of this character may be briefly, and somewhat generally, enumerated, as follows:

(1) To collect, spend, or loan money; (2) to regulate commerce and prohibit shipments in interstate commerce; (3) to limit the use of the mails; (4) to regulate intrastate commerce which directly affects interstate commerce.

The declaration of policy purports to make certain findings of facts and the factual conclusions are used as a basis for justifying the constitutional validity of the regulatory provisions of the bill. These conclusions, as regards the existence of certain economic conditions, are further used for the purpose of differentiating court decisions, on the theory that decided cases, limiting the powers of Congress when dealing with matters involving these constitutional questions, are not applicable or controlling to the new conditions recited in the bill. These findings state, among other things, the following:

That the production and distribution of textile fabrics are affected with a national public interest. In other words, under the conditions set forth, the making and distributing of textile fabrics is in the same class as a railroad or utility company and, therefore, subject to regulation by the Federal Government. That the manufacture, sale, transportation, and distribution of these goods between and among the States is a part of a continuous stream or current of commerce. Consequently, all is a part of interstate commerce. The phrase "continuous stream or current of commerce" was used in two decisions of the Supreme Court and is here featured to enlarge the scope of the commerce clause of the Constitution. Further comment with reference to that particular phrase and those cases will be made presently.

Also, because of excessive and unfair competition with reference to wage rates and labor costs, and other conditions of employment, denial of the rights of employees to organize and bargain collectively, there has resulted, throughout the textile industry, destructive conditions and severe price instability.

In order to prevent the evils claimed to exist in the industry, and in order to compel observance of the provisions of the act, it is the declared policy of Congress, through this bill, to deny the use of the channels of interstate commerce and to deny the use of the mails, the benefits of Government purchases, contracts, loans, grants, and the privilege of registration of securities to any person producing tex. tile products under the conditions described in the declaration of policy or contrary to the standards set forth in the act.

Obviously, the statements of fact, or conclusions contained in the findings of policy are not conclusive and binding upon the courts. Naturally, they may be taken into consideration in determining the real intent of the act, but in an actual case the Court will be called upon to determine whether the enforcement of the act will deprive one of his rights guaranteed by the Constitution. In doing so, necessarily the Court will determine whether the facts in the particular instance are reconcilable, or in conflict, with those recited in the declaration of policy. Such questions are always open for the determination of the Court; otherwise, there would be practically no limitations to the subjects upon which Congress might legislate. For example, because juries might, in certain instances, acquit one charged with a crime, Congress may declare, as a national policy, that it would conduce to the prevention of crime to abolish the right of trial by a jury.

Éven so, the recitals in the findings of policy of the bill present nothing basically new or novel and have been invalidated by an uninterrupted continuous stream and current of decisions. Except the proposed bill, as regards the means declared to be the policy of Congress to use in compelling observance, shows more clearly upon the face of the bill the extra-legal purposes intended and, under the authorities, when such illegal purposes appear upon the face of the bi'l, the courts always inquire into the motives whlch prompted the legislation.

Power to raise and spend money. This phase of the bill needs little comment. Unquestionably, Congress has power to levy taxes for revenue purposes. Possibly this taxing power could be exerted through an appropriate charge for labels and stamps, and use the money for defraying the expenses of administering the bill. The charge for the labels is not called an excise tax, or any other kind of a tax, but is designated as a fee for the labels or stamps.

In the recent decisions of the Supreme Court (Hoosac Mills and Rice Millers cases), the processing tax was not regarded as a true tax and, in one instance, was referred to as an “exaction.” The decision of the Supreme Court in the Hoosac Mills case makes it perfectly clear that money cannot be either collected nor spent by the Government for the purpose of controlling or regulating matters beyond the jurisdiction of the Federal Government. Consequently, any of the provisions of the bill relating to the collection and spending by the Government of money, including the requirements for the purchase of labels or stamps, depend for the validity upon the purposes for which such money is collected and used. As stated in the Hoosac Mills decision, the collection of the claimed tax and the pay

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