Mr. MUNROE. Perhaps I should have said oppressive. I will take back the word dictatorial so far as Congress is concerned and I will say that it is oppressive.

Mr. ELLENBOGEN. Where is the oppressive feature of it? Now, just point that out. What are the features of the bill that you

consider oppressive?

Mr. MUNROE. I have just referred to one.

Mr. ELLENBOGEN. The minimum wages?

Mr. MUNROE. No; not as a minimum wage but as a minimum wage for all textile mills.

Mr. ELLENBOGEN. The minimum wage is one oppressive feature. Now, what is the next?

Mr. WOOD. The bill does not provide for a uniform minimum wage in all classes and types of the textile industry; it simply establishes a base of $15.

Mr. ELLENBOGEN. And a minimum base of $15.

Mr. Wood. And from that on up according to the ability of the employee to produce according to his skill.

Mr. ELLENBOGEN. And that is what he calls oppressive. And that will be decided upon between the employee and the employer and the Government.

Mr. WOOD. You spoke about 95 percent good manufacturers and 5 percent bad employers in the same strait jacket. Of course, after the N. R. A. was established the employers' organizations throughout the country, not only by action in their conventions here in Washington, that is, the National Chamber of Commerce and the National Manufacturers' Association, and through their trade associations, both by resolution and by action, placed themselves on record on numerous occasions and used their organizations to carry out the intents and purposes and meaning of the resolution that they had adopted, which was that whenever the majority of the employers in a given industry agreed to certain conditions under the code that even though an employer in that industry did not belong to the trade association and they were not compelled to join their trade associationhe was compelled to abide by the action and by the decision of a majority of employers in the industry, which took action through their trade association to establish certain uniform conditions in the industry. Their view was shouted to the housetops that where a majority of the employers adopted certain codes and certain rules and regulations that the minority would be compelled to live up to the decision of the majority. And that is all right. I agree with them. That is the only way in which you could establish conditions which were established under the N. R. A. Now, almost all will admit, as you have admitted here, that 5 percent of bad manufacturers can destroy the price structure of the industry. And it doesn't make any difference what the percentage is, whether it is 5 percent or 6 percent or 7 percent.

Don't you know that 5 percent of the employers in any given industry can destroy the price structure of that industry? It doesn't take a very large percentage of bad employers to destroy the price structure of an industry through cutthroat competition. That has been agreed to.

Mr. MUNROE. I would say, Mr. Wood, that we have been through that sort of experience with the price structure. But, in my honest opinion, it takes-and I am viewing this back, having seen the thing

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.

repair shops it is 51 percent; for nonferrous metals and their products it is 92 percent; for lumber and allied products it is 57 percent; for stone, clay, and glass products it is 57 percent; for textiles and their products it is 98 percent.

Now, why should we be picked out to restore employment? We are nearer 100 percent than any other industry listed there. Why pick us out to restore employment.

Mr. Wood. You admit that your industry is slipping back since the National Industrial Recovery Act was voided.

Mr. MUNROE. No; I have not said a word about employment. I am coming to that subject of employment in my direct testimony. Your committee and the Congress are asked by the proponents of this bill to subscribe to the view that, as a finding of fact, child labor prevails in the cotton textile industry-not that it exists, mind you, but that it prevails. At the time of the great "gold fish bowl" hearing on N. R. A. Code No. 1, the Cotton Textile Code, the latest figures available regarding the employment in this industry of minors under 16 years of age were those of the United States census of 1930, which indicated that only 2%1⁄2 percent of cotton textile workers were under 16 years of age in 1930. It was believed that by 1933 the pressure of unemployment had practically eliminated these young workers.

While the number was realized to be unimportant, nevertheless, the mill executives then negotiating the code saw an opportunity to end, once and for all, by voluntary means the last vestige of a practice which years ago had been a reflection upon the industry. So, by a spontaneous proposal from management--not at the behest of labor or the Government-the prohibition of child labor under 16 years of age in American cotton mills was, in the very eyes of the public, written into the Cotton Textile Code. Is it reasonable to believe, in the face of the enthusiasm and commendation which greeted that announcement, that the industry has about-faced on that subject?

Why, in a communication from Maj. A. L. Fletcher, Commissioner of Labor of the great textile State of North Carolina, where 100,000 cotton mill workers are employed, Major Fletcher stated as recently as December 5, 1935, that only 48 children under 16 years of age were then known to be employed in cotton mills in North Carolina and that those were employed for necessary social reasons. Under the N. R. A. Code regime not one single case of deliberate employment of a minor under 16 years of age came to our attention. That was 48 out of 100,000.

With your permission, Mr. Chairman, I will read into the record Major Fletcher's letter. It is dated December 5, 1935, and is addressed to Mr. William V. Lawson, executive assistant, the Cotton Textile Institute, Inc., no. 320 Broadway, New York, N. Y., and it reads as follows:

I have your letter of December 2, in regard to statement made by Mr. Courtney Dinwiddie as to child-labor conditions in the State of North Carolina. Mr. Dinwiddie probably based his assertion on the September Bulletin of the Department of Labor, which contained a brief study as to the number of employment certificates issued in the 3 months following the Supreme Court's decision in regard to the codes, as compared with the same period in 1934. I am enclosing a page from this issue of the Bulletin, which is self-explanatory.

You will note that a total of 62 employment certificates were issued for all of the manufacturing establishments in the State, and that 77 percent of this number were actually for the cotton textile industry. In my opinion, the childlabor situation in North Carolina offers nothing to be alarmed about. I regret that the records show there were 48 outstanding certificates on September 1, for

the textile industry, but this number is negligible compared to what we have had in the past.

I am sure if I were able to examine the case history of each child involved in the 48 referred to, I would find very real and pressing necessity for the employment of each child. As you know, every case is investigated by the county welfare officer, who actually issues the employment certificate.

With best wishes, I am,
Yours very truly,

A. L. FLETCHER, Commissioner.

Now, I believe I stated in qualifying that I was compliance director for the Cotton Textile Code Authority under the N. R. A. regime. During the N. R. A. Code regime not one single case of deliberate employment of a minor under 16 years of age came to our attention. And 4,000 complaints of one sort or another crossed my desk.

Now, after a recital of all the evils imputed to this industry, the bill proposes that you shall find that they "cause widespread unemployment and heavy financial expense to the Government." This at a time when some 10 million people walk the streets in search of work, not to mention the additional millions doing unnecessary work at the taxpayers' expense and the thousands of agricultural workers who own no land and are as idle as the land on which they used to work, and at a time when the Nation's cotton mills are employing 407,000 workers or only 18,000, or 4 percent, less than were employed in 1929 in spite of the decline of our domestic business and the near destruction of our export markets! If employment in all of the Nation's activities now stood within 4 percent of 1929 employment, as is the case in the cotton textile industry, the Nation would be in far better shape than is the case and there would be far less excuse for lavish expenditure by the Government of the funds which the people provide. Between March 1933 and August 1933, the cotton textile industry, largely through the adoption of its code, increased its employment 44 percent, restoring work for 137,000 workers and support for their dependents. It is hard indeed to understand why such an industry should be singled out for the reproach of "widespread unemployment" or of being a financial burden to that Government. It may be pertinent to conjecture how much of a financial burden it may become if this bill should pass and require the Government to employ a far-flung army of inspectors, investigators, and inquisitors to attempt enforcement of such a procedure of control without the consent of those controlledalso to conjecture how much in the form of taxes the industry may be able to contribute when in the face of continuing losses it may be threatened with this 50-percent rise in labor costs. Who will then support the hundreds of small communities, mostly in the South, which are wholly or primarily dependent for their very existence upon the local cotton mills when mill after mill closes its doors in the face of the ruinous losses such excessive costs would entail?

Those who have followed the cotton textile industry's history in recent years know that it has established an honorable record for progressive social effort and achievement in the face of adversity. Early in 1930 it undertook a voluntary effort to establish a maximum limit upon hours of employment, which came to be observed voluntarily and individually by about 83 percent of the industry until about the time when N. R. A. was proposed.

Later in the same year a proposal that mills avoid the employment of women and of minors under 18 in the night hours between 7 p. m. and 6 a. m. was greeted with enthusiastic cooperative response and

by March 1931, 80 percent of the industry had voluntarily and individually put this policy into practice. Its observance reached 88 percent of the mills in 1932.

In 1933 the proposal subscribed to by the industry that a maximum work week of 40 hours for cotton-mill workers be established was made known to President Roosevelt shortly after his memorable address of May 7 before the National Recovery Act had been introduced. The first draft of the Cotton Textile Code was submitted to the President a few hours after the National Recovery Act was passed and on July 17, 1933, it became effective as Code No. 1 under the act. On that day the industry voluntarily effected a greater improvement in its social and working conditions than had ever been undertaken in a corresponding space of time by any industry in all industrial history. On June 1, 1934, General Johnson, Administrator for National Recovery, said:

I know of no Code *

* that is administered more conscientiously and more effectively than this Code has been and is being administered by its Code Authority. * * * The improvement of labor conditions under this Code surpasses that in any other industry Strictures on the good faith of that industry are unwarranted and unjust.

* * *

Mr. SCHNEIDER. That statement you make there now is due to the fact that the National Industrial Recovery Act was enacted and codes. carrying certain conditions were required to be adopted; it is not a generous application on the part of the cotton textile manufacturers to give these conditions. They knew it was coming under the code and they put it into effect. Your testimony indicates that they are doing this in advance of any codes being adopted, although they had submitted the code.

Mr. MUNROE. Let me say, sir, the 40-hour work week was submitted to our industry by recommendation of the board of directors of the Cotton Textile Institute, voted on by the industry and approved by an overwhelming percentage. I think it was around 77 percent. That was before the President made his May 7 address announcing the N. R. A. and before we knew there was going to be an N. R. A. I want to say that this applies to some extent, sir, to the question you asked, Mr. Schneider. On July 16, 1933, President Roosevelt, when he approved the Cotton Textile Code he said in part:

In the eyes of the whole country there was a great conference among the leaders of our industry, labor, and social service, presided over by Government, which considered the most controverted questions in the whole economic problem, wages and hours of labor, and it brought that question to a definite conclusion. It dealt with facts, and facts only. There was not one word of accusation. And the most remarkable of all, it arrived at a solution which has the unanimous approval of these conferring leaders on all three sides of the question at issue. I know of nothing further that could have been done. I can think of no greater achievement of cooperation, mutual understanding and good will. It would be unfair to omit a word of commendation of this great industry. It has proved itself the leader of a new thing in economics and government. That took faith and courage and patriotism of the highest order. They have their reward in the results they have achieved and the example they have given.

Mr. WOOD. We thank you for your testimony, Mr. Munroe. We are sorry we have to close now, but I think you will agree we have given you as much time as we have given to anyone else.

The hearing will now adjourn until 10 o'clock tomorrow morning. (Thereupon, at 4:10 p. m., an adjournment was taken until Tuesday Feb. 4, 1936, at 10 a. m.).