The second point which we wish to make, and which is discussed in some detail, is that even if the cotton-textile industry would possibly be so considered, namely, affected with a public interest, the Congress has no power of regulation with regard thereto, but the sole and exclusive right to regulate is reserved to the State.

I think, in view of recent decisions confirming a long line of previous decisions by the Court, there is no necessity of going into that second point.

Mr. WOOD. What do you say about the transportation of textile goods in interstate commerce? Do you mean to say that there is no legal method we can employ to prevent certain practices against the public interest?

Mr. SMETHURST. In transportation?
Mr. WOOD. Yes; in transportation.
Mr. SMETHURST. Or in production?
Mr. WOOD. In interstate commerce.

Mr. SMETHURST. If it is a regulation of interstate commerce, I say: Yes-a regulation of the transportation.

Mr. WOOD. What would you say about the feature of this bill that prohibits the shipment of these goods in interstate commerce under certain conditions? We do not attempt to regulate it intrastate. A manufacturer can do what he pleases in the State so far as the Federal regulation is concerned, but, when he ships those goods across a State line, immediately they are in interstate commerce.

Mr. SMETHURST. Frankly, sir, I do not see that that is the situation at all. Section 9 of this bill says:

(a) No textile product shall be eligible for purchase, sale, shipment, transportation, or delivery in interstate commerce which has been manufactured, processed, or produced by any person not licensed for such purposes by the Commission

not that the person who is shipping in interstate commerce has to have a Federal license, but that the goods must be produced by a person licensed by the Federal Government. And that license requires compliance with a detailed regulation of the entire production of the product.

Mr. WOOD. What do you think of the Constitutionality of the Hawes-Cooper bill?

Mr. SMETHURST. That has not been decided.

Mr. WOOD. I am asking for your opinion. You seem to be very learned about this other matter.

Mr. SMETHURST. I make no claim on that.

Mr. WOOD. The Hawes-Cooper bill divests them of their intrastate character when they cross the State line.

Mr. SMETHURST. That is right. But it is my understanding that a case is now before the Supreme Court in this connection. Mr. WOOD. You haven't any opinion on that, have you?

Mr. SMETHURST. Yes; I will express an opinion. It may not mean much, but my own opinion is that on past performance that law is invalid.

You have brought up the substance of the bill, which is the denial to ship in interstate commerce textile products not produced according to a license, which license regulates all the details of production.

As to the third point, sir, carrying this one step further, even if Congress has this power, the things sought to be regulated must

bear some reasonable relation to what the public interest is alleged to require, and it is obvious that the multifarious restrictions and regulations contemplated in the proposed bill have no reasonable connection with the evils stated to require regulation.

The fourth point is as follows: The control of production is sought to be achieved by the imposition of restrictions on use of the mails and the right of persons to do business with the Government as a proprietor, despite the fact that such restrictions are bad in policy and legally invalid when used in these ways for these purposes.

5. The bill as drafted contains many flaws and defects, the more glaring of which are summarized herein. Although some defects may be cured, the more outstanding objections are inherent in the bill itself and are not susceptible of correction.

As I said, I will not take up the time of the committee to point out the particular defects.

Mr. WOOD. You talk about the constitutionality. What do you think about the constitutionality of the Reconstruction Finance Corporation, which has granted numerous loans, running into the hundreds of millions of dollars, to textile manufacturers and other manufacturers? Do you think that is constitutional?

You set up the Reconstruction Finance Corporation as doing a private business of lending money to private institutions, as they do every day; and numerous textile manufacturers have availed themselves of the law and have borrowed large sums of money from the Government. One southern manufacturer borrowed $800,000 from the R. F. C. Do you think that is constitutional? Do you think that that law is constitutional? The Government is dealing with private business there.

Mr. SMETHURST. On legal grounds?

Mr. WOOD. Yes; on legal grounds.

Mr. SMETHURST. The main difficulty there, it seems to me, Mr. Wood, is that there is no practical way to determine whether it is constitutional.

Mr. WOOD. No practical way?

Mr. SMETHURST. I do not see how the issue could arise. In the light of some of the language in the recent A. A. A. decision I think it is quite doubtful if the Government can appropriate money for the benefit of a private group.

Mr. Wood. Of course, the Supreme Court declared the A. A. A. unconstitutional. But I have yet to find my first employer who attacked that R. F. C. law. I would like to have them test that law, because I would like to know whether they are getting that money legally or illegally.

Mr. SMETHURST. That might be arranged, but I do not know how it could be done.

There is just one other point I wish to raise. I was very much interested hearing the Senator from Pennsylvania this morning and also, after an earlier time in the hearing, the Representatives from Massachusetts. And I can say right now that personally I am as sympathetic with the situation confronting industry in Massachusetts as anyone is. But there is just one thing that I want to bring out. That situation in Massachusetts was the subject of a rather intensive investigation which resulted in a report to the Massachusetts Industrial Commission in 1931. That report and the investigation was

made by a firm of industrial engineers, and I think the full report would certainly be a very desirable document to incorporate in the record. I would like to point out just one quotation from that report because I think it has a bearing not only upon this legislation but upon legislation of a similar character which we know will follow.

In this report by the firm of Freeland, Bates & Lawrence, filed with the Massachusetts Industrial Commission in 1931 following an investigation of the situation under which industry was moving either from Massachusetts to other States or from urban centers to rural areas in Massachusetts and surrounding States, it is stated:

We clearly found that in order to have healthy, growing communities, we must have healthy, growing industries, and that whenever industries for any reason become embarrassed, the community suffers * * Taxes are a serious problem in all States. They are particularly serious in Massachusetts * Massachusetts has some of the most restrictive laws governing industry of any State in the Union. * * * Labor in Massachusetts, with the assistance of social workers, has imposed restrictions upon management which seriously hamper the securing of profitable orders. We believe that labor, in its own interest, could well afford to make a study of this condition and determine if it is not to its best interest to revise these restrictions and certain of its policies. * * * It is a shame to permit some of our best communities to be really distressed by our failure to study the condition and to prescribe the proper remedies, and we believe this to be the active duty of the State, which can be prosperious only to the degree to which it is made up of prosperous communities.

Mr. Wood. What do you mean by revising these restrictions? Do you mean by that the Labor Law that was passed in Massachusetts?

Mr. SMETHURST. To a considerable extent.

Mr. WOOD. The hours of labor law for women and child labor and safety measures?

Mr. SMETHURST. No; I do not think there is any objection to the minimum wage legislation in Massachusetts.

Mr. WOOD. Is that what you are referring to?

Mr. SMETHURST. No; it is not.

Mr. WOOD. What is this legislation you speak of that labor has imposed?

Mr. SMETHURST. It is the general factory laws, for one thing, I suppose.

Mr. WOOD. The factory inspection law?

Mr. SMETHURST. Not factory inspection; no, sir; but relating to compensation legislation.

Mr. WOOD. Workmens' compensation?

Mr. SMETHURST. Yes, sir.

Mr. WOOD. We have that in about 46 States.

Mr. SMETHURST. Yes; we have that in 43 States. Mr. Wood. In 46 States, I think it is. that law?

What is your objection to

Mr. SMETHURST. I would say I haven't any objection to it at all. I am merely pointing out a situation which we have in Massachusetts which we know to exist. And here was a report filed with the Industrial Commission which went into all of the details of Massachusetts laws and found what was the trouble. And this is the report as a result of that investigation. I am not stating it myself.

Mr. WOOD. What revision would you suggest?

Mr. SMETHURST. I am not suggesting any. I am suggesting this committee might consider this report with profit.

Mr. Wood. You just stated the workers should study the situation of Massacusetts with the purpose of revising the laws.

Mr. SMETHURST. I am quoting from this report. I do not claim to know what is wrong with Massachusetts.

Mr. ELLENBOGEN. You did more than quote. You added to the report that labor should study it.

Mr. SMETHURST. I am quoting from the report.
Mr. ELLENBOGEN. You added to it.

Which are the Massachu

setts labor laws you think should be repealed?

Mr. SMETHURST. If I said that I will correct it now, because I had no intention of saying it. I will read the sentence again, I am quoting.

We believe that labor, in its own interest, could well afford to make a study of this condition and determine if it is not to its best interest to revise these restrictions and certain of its policies.

That is the end of the quotation.

Mr. SCHNEIDER. Who made that investigation and report?

Mr. SMETHURST. It was a report and investigation made at the request of the Massachusetts Industrial Commission by a firm of industrial engineers.

Mr. SCHNEIDER. Was it a private concern that made the investigation and the recommendations which you quoted here with reference to the repeal of certain laws?

Mr. SMETHURST. Of the request of the Massachusetts Industrial Commission.

Mr. SCHNEIDER. Was this recommendation made by the Industrial Commission of Massachusetts or by this private firm that was employed to make this investigation? And were they employed to make an investigation and also a recommendation?

Mr. SMETHURST. Yes, sir; they were.

Mr. SCHNEIDER. Or just to make an investigation?

Mr. SMETHURST. They were employed to make an investigation and report with their recommendations to the Industrial Commission. Mr. SCHNEIDER. As I take it, you do not approve that recommendation?

Mr. SMETHURST. No; I do not claim to know anything about the local conditions. I am saying that this particular investigation was a very thorough investigation by people who apparently know what they are talking about and who had an opportunity to observe the conditions in Massachusetts at first hand.

Mr. SCHNEIDER. Do you live in Massachusetts?

Mr. SMETHURST. Not now. I was born and raised in Massachusetts.

Mr. Wood. You don't know of any laws that are undesirable that you want repealed, do you?

Mr. SMETHURST. No; I do not, I will be frank to say. I don't know what the local laws are there. But I saying that following an investigation that recommendation was made. I think it has an important bearing on the type of legislation now before the committee. Mr. WELCH. What does the report recommend? Does it recommend a repeal?

Mr. SMETHURST. It recommends a study of the laws of Massachusetts, including tax laws. I am not saying that this committee says that the whole problem is one caused by restrictive labor laws;

but that is part of the picture. And I am merely giving a quotation from that report.

Mr. Wood. Didn't that report have something to do with the contracts that has been entered into between the five or six New England States?

Mr. SMETHURST. That minimum wage compact?

Mr. WOOD. Looking towards the unification of the laws of those States?

Mr. SMETHURST. I don't know. It may have lead up to that compact.

Mr. WELCH. You were speaking about the constitutionality; that is, you are approaching this matter from an entirely legal viewpoint. What do you think about the assistance of the States by the Federal Government with reference to road building and also the Federal Government's contributing to the States for the school system a certain amount. They contribute to the States also certain amounts for agriculture. The Federal Government is now contributing to the States dollar for dollar for old-age pension systems. What about the constitutionality of all of those acts?

Mr. SMETHURST. Well, Mr. Wood, I disclaimed at the beginning that I even assert to be a constitutional lawyer. And I have not had any occasion to study those things. I don't know whether they would fall within the restrictions, or the suggestions at least, of the A. A. A. decision.

Mr. WOOD. What about the contribution of the Federal Government in the P. W. A., F. E. R. A., and now the W. P. A., where the Government has contributed several billion dollars to States and communities for relief? And then the Public Works Administration has loaned money to various enterprises, both public and private, for the construction of buildings and the public-building program. What would you say about the constitutionality of that legislation, or the Federal Housing Administration, which has been of great benefit to all of us. It caused a great impetus to industry. The Federal Housing Administration lends money to private enterprise altogether for the construction of buildings and homes and the repair of homes. Don't you think that is sort of going into private business? What do you think about the constitutionality of that? None of these laws have been tested, because everybody gets some benefit out of them, as they can see.

Mr. SMETHURST. I think that is the answer right there. For practical purposes it is just an academic question.

Mr. WOOD. According to that, all of these acts I have mentioned have been really the main contribution to recovery. And if we will agree that the increase in wages in the textile industry and the shortening of the hours will spread employment and increase the purchasing power, wouldn't that also spread the benefits to all? And why test the constitutionality of this law when, as to all of these laws, there seems to be some question about them but nobody is interested because employers and others know that they are getting some benefit from them.

Mr. SMETHURST. I would not want to speak here for the textile industry in view of the number of representatives who have appeared and stated the conditions in the industry. It was my understanding from the testimony here that the textile industry at the present