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Mr. ELLENBOGEN. No; that was not the only point. But the court very significantly says in that case that the statute went further than it was necessary to go to accomplish the purpose at hand. In other words, there may have been a hundred different goods made by a mill that were not made by child labor whose shipment was just as much prohibited by that statute though the goods had been made by child labor. So I don't think that case is any precedent for the bill at hand at all.
Mr. DORR. This bill now proposed has not been before the Court. And, of course, all that the Court actually decides, I think you may fairly say is the particular thing it has before it. But what I was pointing out was that in making the decision it made, whether it had to go to the length and express the views it did or not, it did do
Mr. ELLENBOGEN. Anything contained in the opinion of the majority of the Court that does not necessarily deal with the decision is obiter dictum. Is that right?
Mr. DORR. If the Court uses certain reasoning as the basis of the decision, the courts are accustomed to regard that as precedent. But they do not have to.
Mr. ELLENBOGEN. The only precedent under the decisions of the Court is the decision. That is correct, isn't it?
Mr. DORR. In one sense, yes, Mr. Ellenbogen; and in another sense, For instance, the language in Gibbons v. Ogden is constantly used as an interpretation of the Constitution. All that was decided there was with regard to a ferry between New York and New Jersey. But it is customary to regard that case not merely as dealing with whether or not a ferry line between New York and New Jersey is interstate commerce, but it is expressing certain principles of constitutional
Mr. ELLENBOGEN. That is very true. But we are all advocates, and even when we become judges we are advocates; and when we determine upon a decision we are anxious to marshall all of the arguments that can be marshalled in its favor.
I made a study of that decision, and all that the Court decides in that case is that you cannot exclude from interstate commerce all of the goods of a mill because it happens to employ one child or more, without any relation to whether the particular goods whose shipment you are prohibiting were made by child labor or not. So there has never been a statute before the Court which limited itself properly.
Mr. DORR. I think you have to give some effect in your committee to the language which the Court uses and the reasons for its decisions. This is your problem. I am not saying what you shall do.
Mr. ELLENBOGEN. It is your problem as well as ours.
Mr. DORR. It is the problem of this committee, not mine.
Mr. ELLENBOGEN. I think it is your problem just as well as ours. I do not have the opinion before me, but there is one paragraph in the majority opinion, which indicates the Court was appalled by the fact that not only had the shipments of goods been prohibited which had been made by child labor but that the shipment of all goods made by that particular factory and, therefore, the statute in effect was a penal statute and not a statute for the purpose of prohibiting child labor.
Mr. DORR. I wonder if that is not in the second Child Labor case. Mr. ELLENBOGEN. No; the second Child Labor case is out. I have no argument on the unconstitutionality of that opinion because I thoroughly agree with the opinion of the Court in the tax case. But it is in that case there, and if I went through the majority opinion I could point out that paragraph. But you can see the distinction, can you not?
Mr. DORR. I will say this, that the Court in its language as to the power of control of Congress does not limit itself to that possible distinction.
Mr. ELLENBOGEN. That is correct. But there is a paragraph in there where the Court refers to the sweeping circle which the statute takes in, which goes far outside the needs of a child-labor statute.
I did not want to interrupt you, Mr. Dorr, but just while you were on that point I thought it would be better.
Mr. DORR. Of course, no two cases have facts which are exactly the same. Very rarely is that true. But where the court is dealing with the question of power its language with regard to that power is entitled to consideration.
Mr. ELLENBOGEN. Yes. But, of course, we must not overlook the fact that it was a 5-to-4 decision.
Mr. DORR. Yes; and I pointed that out.
Mr. ELLENBOGEN. And another Court may seize upon the opportunity of having a different statute by distinguishing the new statute from this statute and sustaining it.
Mr. DORR. I was going to come to the question of whether there had been any indication by the Court since then of a departure from the fundamental principles which were laid down.
Mr. KELLER. I would like to ask one question, if I may.
Mr. DORR. Surely, Mr. Chairman.
Mr. KELLER. You refer to the fact of the general rule that the Court only decides the immediate case before it and the immediate points presented to it.
Mr. DORR. The Court can only decide the immediate case before it, but, in its recent decision, it expresses the view as to power which would apply to other cases which are not before it. And it is from those expressions and those principles which it lays down that I suppose we have to seek our guidance as to what the law is as to those other matters.
Mr. KELLER. Has the Court ever done the latter thing until the N. R. A.? I mean where they reached out and destroyed a whole act in deciding one point, when the whole act was not presented to them? Was there any case before that when that was done?
Mr. DORR. I think the Supreme Court customarily, in deciding particular facts before it, lays down principles with a breadth which would apply not merely to the particular and specific facts in that case but to broad principles, particularly where it is dealing with the existence and nonexistence of powers of Congress. Otherwise its opinions would not be very clear or very helpful. Of course, that is more or less a matter of opinion.
Mr. KELLER. In the N. R. A. case they reached over into other cases as well as making a very sweeping decision, whereas, if they had applied the rule strictly, which I understand has always been the rule of the Court, they would not have gone nearly to the extent
of voiding the entire National Industrial Recovery Act that they did go to. Am I right or am I wrong in my suggestion that that had not been done before that time?
Mr. DORR. Frankly, it does not seem to me that the Court in the N. R. A. case went beyond what it has been the custom to do. I will have something to say about that when I come to it.
Mr. KELLER. All right, then. I want to get clear on it myself.
Mr. DORR. Frankly, it is a question of opinion. I am not going to express an opinion as to the propriety of the Supreme Court's giving its reasoning in a certain case.
Mr. KELLER. Why not? I do it.
Mr. DORR. I think that is a matter for its judgment and its sanctioning. If it will save the time of the committee, I am perfectly willing to put in a few pages about one or two things. That is entirely agreeable to me. Suppose I follow Mr. Matthew's example.
Mr. WELCH. There is no use propounding a lot of legal doctrines to laymen who do not know much more about it after you are through than before you started.
Mr. ELLENBOGEN. The committee will be glad to have your legal authorities, Mr. Dorr.
Mr. DORR. We will be glad to do that, Mr. Ellenbogen.
Mr. KELLER. We are going to separate the factual statements from the legal considerations.
Mr. ELLENBOGEN. Mr. Dorr, you are the chairman of the board of the Cotton Textile Institute, are you?
Mr. DORR. Yes, sir, I am.
Mr. ELLENBOGEN. And Mr. Murchison is the president?
Mr. DORR. Yes, sir.
Mr. ELLENBOGEN. That is the same organization, is it?
Mr. DORR. Yes, sir.
Mr. ELLENBOGEN. Has the Cotton Textile Institute appointed a special strategy committee, or whatever you call it?
Mr. DORR. A special what?
Mr. ELLENBOGEN. A strategy committee, or whatever you call it, to fight the enactment of this bill.
Mr. DORR. No, sir. They asked certain representatives or certain members of the industry whether they desired to appear here, and certain of them have appeared. Mr. West and Mr. Cone have appeared.
Mr. ELLENBOGEN. The Daily News Record, under today's date, carries a story that the Cotton Textile Institute has appointed a strategy committee to combat this bill.
Mr. DORR. No; I don't think that is an accurate statement. not to my knowledge.
Mr. ELLENBOGEN. What has the committee done?
Mr. DORR. Mr. West and Mr. Cone appeared here, and we considered the facts with regard to the industry, and so on, part of which had been presented to you by Mr. Murchison, Mr. West, and Mr. Cone; and others will be presented to you by Mr. Munroe as soon as I leave the stand.
Mr. ELLENBOGEN. Has Mr. Henry been appointed a member of the committee?
Mr. DORR. Mr. Henry was one of those who was considering testifying. He would have testified here on Thursday but for the
fact that he was a witness in a trial in Greenville. Much to his regret, he was unable to remain and appear here on Thursday.
Mr. ELLENBOGEN. How much money has the institute appropriated in this matter?
Mr. DORR. It has not appropriated any. It has very little to appropriate.
Mr. ELLENBOGEN. Has the Cotton Textile Institute mapped out a fight to permit the cotton-textile manufacturer to retain the processing taxes that had been impounded in the courts and that had been passed on the consumers?
Mr. DORR. No, sir; if you want to go into that, which does not have anything to do with this, I will be glad to go into it, because we want your help in a very serious situation. I was speaking to Congressman Keller about it the other day; and I am glad you raised the question, Mr. Ellenbogen.
Let me tell you just what our situation is.
Mr. ELLENBOGEN. Just tell me if you have done that.
Mr. ELLENBOGEN. Haven't you engaged in a concerted effort to bring about a situation which will permit the cotton-textile manufacturers to retain the processing taxes they collected as the agent of the Government and which they have passed on to the distributors and to the customers?
Mr. DORR. I will tell you what they have done, Mr. Ellenbogen. Last summer, when the Hoosac case was decided by the Circuit Court of Appeals
Mr. ELLENBOGEN. That was not last summer; it was last month. Mr. DORR. I mean when it was decided by the Circuit Court of Appeals and the Circuit Court of Appeals held the A. A. A. Act unconstitutional, our industry was confronted with a tremendously difficult situation. We are accustomed to doing business on longterm contracts. Our buyers immediately saw this situation: Suppose that the Supreme Court decides the same way as the lower court did in the Hoosac case, then there will be an immediate drop in the market price of cotton goods because of the invalidity of the processing tax. Consequently, buyers just stopped buying, because they did not want to tie themselves up with contracts that would extend beyond the period of the Supreme Court decision, which would leave them with stock on hand which had been bought at a price which might include the tax, or most of it, at any rate, and on future deliveries it would be higher than the market price. It was a very serious situation for customers, and they stopped buying. Consequently, in order to meet that situation, which was a very critical one to the industry, the industry, in conference with its buyers, adopted a clause under which they agreed that if the Supreme Court held the tax invalid, then the seller would make an adjustment on deliveries which had been made during this interim period, crediting back the amount of the tax, and on contracts which extended beyond the period of the A. A. A. they would make a similar reduction in price. The day after the Supreme Court decided it, Mr. Ellenbogen, there was an immediate drop in price, and the cotton industry reduced the price by the amount of the tax on the goods, those goods having been manufactured before. Since that time they
have been endeavoring to work out a plan for the adjustment of back contracts, and that is now going forward.
Now, Mr. Ellenbogen, the industry does not feel that it would mean the closing down of mills and general bankruptcy if now Congress should pass a retroactive tax as to the goods which have been manufactured in the 5 months because in that event we were under contracts with our customers and would have to pay them the amount of tax and then also pay that into the hands of the Government. You can see the seriousness of that situation.
Mr. ELLENBOGEN. You are organizing a lobby to fight the enactment of the statute that will prevent it and thus enrich these textile manufacturers, are you not?
Mr. DORR. No, sir.
Mr. ELLENBOGEN. Didn't the Cotton Textile Institute under date of January 24 send out a circular letter in which they asked the manufacturers to withhold the cotton processing taxes that they had collected and not to return them?
Mr. DORR. They suggested that until a conference be held
Mr. ELLENBOGEN. You can tell us whether they sent a letter, and then you can explain it later.
Mr. DORR. I will tell you exactly what happened, because I know you are interested, and we are interested in getting this matter before you because we want your help. You are interested in the industry, and you do not want something to happen which would not merely be serious to the mills but serious to those who are employed in them. Mr. ELLENBOGEN. Most certainly not. But I do not want the manufacturers who have passed on the tax to retain the tax to the tune of $50,000,000.
Mr. DORR. Well, I can assure you that that is not what is being done, because we are paying it back.
Mr. ELLENBOGEN. As to paying it back, you have contracts as to paying it back for 4 months. Is that correct?
Mr. DORR. The period extends 120 days prior to the act. ·
Mr. ELLENBOGEN. That is 4 months.
Mr. DORR. Yes; 4 months.
Mr. ELLENBOGEN. What are you going to do with the taxes that were impounded prior to that time?
Mr. DORR. I suppose a large part of that money will be used in making this adjustment.
Mr. ELLENBOGEN. There is no obligation on the part of the manufacturers to make an adjustment, is there?
Mr. DORR. You mean as to the goods sold prior to that time? Mr. ELLENBOGEN. Yes; as to goods sold prior to that time. Mr. DORR. The goods sold prior to that time were goods which had been manufactured during a period, for the most part, when the mills were paying a tax. You see there is quite a lag.
Mr. ELLENBOGEN. There is always a lag. As a matter of fact, there are very few mills that paid any tax subsequent to February, aren't there?
Mr. DORR. Of yes; most mills did.
Mr. ELLENBOGEN. They paid it, but the tax is not paid by everybody.
Mr. DORR. No; I think you will find some mills paid taxes, Mr. Ellenbogen, considerably after that, and some of them until September.