Hearings on the Fair Labor Standards Act of 1937

STATEMENT OF ROBERT H. JACKSON, DEPARTMENT OF JUSTICE

Mr. JACKSON. Mr. Chairman, the formal statement which I have prepared deals with the constitutional questions, and later we can point out how those particular constitutional theories are carried into the bill.

For years we have heard easy lip service "in principle to the commonplace that it is bad for America - economically as well as socially - to have child labor, sweated labor, low standards of living, inhumane and unhealthy working conditions."

Today we are considering something more than "approval in principle" of these ideas. We have an effort, in the specific and exact terms of a bill, to make this devotion to ideals statutory instead of merely rhetorical.

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Bringing principles down to statutory reality is a tough-minded process. It means making decisions - practical decisions on the balance of advantage and disadvantage - in the face of legal ambiguity, economic variation, and the human limitations of administration. It often means choosing the lesser evil - and making the choice work.

I have been asked by the chairman of both of these committees to discuss the constitutional problems suggested by the pending bill. I undertake this discussion in what I hope will be a realistic way, on the assumption that these committees are interested in finding a way to insure decent labor conditions for the submerged third of our population rather than in regretful excuses why nothing can be done.

At the outset there is a popular and widespread impression that Congress rightfully has nothing to do with labor standards or working conditions in industry and that any effort to improve them must be a subtle encroachment on local government and a subversion of constitutional limitations. This misunderstanding is laid at rest by the recent statement of Chief Justice Hughes writing for a unanimous Court that - "The Congress in exercising the powers confided to it by the Constitution is as free as the States to recognize the fundainental interests of free labor."

CONGRESSIONAL POWER TO REGULATE COMMERCE AMONG STATES

The power confided to Congress which this bill proposes to exercise, and in exercising, to recognize the fundamental interests of free labor, is the expressly given power to regulate commerce among the several States. The constitutional basis for the proposed legislation will appear from an examination of the scope of this power.

The Supreme Court has upheld various types of regulation of interstate commerce upon several distinct constitutional theories. The attempt is to consolidate in a single bill all hopeful approaches to constitutionality, each complete in itself, so that if one or more falls at the hands of the Court, we will not be left for an interval while a new bill is being adopted. The result is that there is some overlapping in its provisions but no inconsistency in its operation or its objectives.

Different judicial theories of the commerce power, which this bill invokes may be classified as follows:

1. There is the power directly to regulate or prohibit movement across State lines of goods deemed for any reason to offend against sound national policy. This power has been applied in many cases and denied in but one, the famous Child Labor case to be discussed later. This bill invokes that power to regulate and prohibit by directly forbidding transportation of the products of the labor of children under 16 years of age, which ought not to be accepted in any fair market, and products made under conditions where workers are denied the right of self-organization by fear of labor spies and where their right to strike and to enforce collective bargaining is rendered ineffective by the use of professional strikebreakers. Such use of espionage and of professional strikebreakers is both a provocation of violence and an excuse for it, and offends against our national policy.

2. Congress has the power to regulate competition in interstate commerce. It has exercised this power without question since the adoption of the Sherman Antitrust Act in 1890, and again through

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the Clayton Act and the Federal Trade Commission Act. In the exercise of this power Congress has prohibited certain practices deemed injurious to competition in interstate commerce. It has prohibited many acts, in themselves local, by employers engaged in productive industry, but which tended to monopoly or to destroy competition. Under this power Congress has prohibited, under certain circumstances, the acquisition of the stock of one corporation by another. It has defined and prohibited unfair methods of competition. What, then, may be said of the employer who cuts wages, employs children, and sweats labor, for the purpose of gaining a competitive advantage in marketing his product in an interstate market? As pointed out by Prof. Thomas Reed Powell of the Harvard Law School, and by other students of constitutional law, since Congress has the power to regulate conditions of competition as it has done through the antitrust acts, it may likewise prohibit the securing of a competitive advantage in interstate commerce through the adoption of oppressive and sweatshop labor conditions.

It will be noted that part IV of this bill proceeds upon this theory and its provisions may be sustained, without overruling the Child Labor case. The factual basis for thiis view is that by prohibiting the use of substandard labor conditions by those who compete with employers who use fair labor standards, the great majority of employers who really desire to treat labor fairly are thereby protected against the unfair methods of competition of those who utilize sweatshop methods to gain a competitive advantage.

And, since Congress may regulate the conditions of competition in interstate commerce, it may protect the fair employer shipping in interstate commerce against the unfair competition of even his inter-state competitor under the doctrine of the Shreveport Rate cases (234 U. S. 342), a case to which the Supreme Court had occasion to allude with approval in the recent Wagner Act decision.

3. The power to regulate commerce includes the power to eliminate labor conditions which lead to labor disputes which will directly burden or obstruct commeree (Nationat Labor Relations Board v. Jones Laughlin). This power is invoked in eliminating excessive hours, inadequate pay and child labor insofar as they tend to provoke such labor disputes.

4. The power to regulate commerce is held to include the power to prohibit transportation of goods into States in violation of the laws of such States and making such interstate goods subject to such State laws. This doctrine is supported by the decisions involving prison - made goods Kentucky Whip and Collar case, Jan. 4, 1937, and Whitfield v. Ohio, 299 U. S. 431. This bill invokes this constitutional power by prohibiting consignment of goods into a State if produced under conditions that would have been unlawful within that State.

5. The power to regulate commerce has been held to include power to eliminate a condition which affects the movement of goods, the price of goods, or which causes undue price fluctuations in interstate commerce. This doctrine is set forth in the cases relating to the regulations of stockyards and grain exchanges (Olsen case, 262 U. S. 1, Stafford case, 258 U. S. 495). This bill invokes this power by eliminating from interstate commerce goods produced by substandard labor conditions which affect interstate commerce in the manner stated.

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6. The power to regulate interstate commerce has been held to include the power to regulate conduct intended to divert or substantially affect the movement of goods in interstate commerce. This is the doctrine of the Coronado Coal case (268 U. S. 295). This bill invokes such power to regulate such substandard labor practices as are found to be the result of an intention to divert the movement of goods in interstate commerce.

It will be observed that these theories of the interstate commerce power, as laid down by the Court, are complicated and overlapping and that some could be directly and automatically applied while others could be applied only where circumstances were found to warrant. It was therefore inevitable that any bill which tried to use these available weapons to fortify itself against the constitutional attack which labor and commerce legislation always faces, should to a considerable extent sacrifice simplicity. For neither the subject-matter of the bill nor the legal theories underlying it can with practical safety be reduced to any one simple formula. But the bill is believed not to be conflicting within itself or self-defeating.

In addition to rigid and direct exclusion from the channels of interstate commerce of those products made under conditions deemed oppressive at any time and under any circumstances, such as labor of children under 16, spied-upon labor, or strikebreaker-brow-beaten labor, there is also included administrative proceedings before an independent board, similar to the National Labor Relations Board or the Federal Trade Commission.

As President Roosevelt has stated: Even in the treatment of national problems there are geographical and industrial diversities which practical statesmanship cannot wholly ignore. Portions of the bill relating to wages and hours would become operative as and when the Board created by the act orders their application. This bill does not plunge the Nation headlong into a rigid and widespread policy of regulating wages and hours. It permits the building up a body of experience and prevents the extension of regulation faster that ceapaetity pyopeyly tD admini~stey is revxxired. Tht iwvestigti~mis of the Board will also provide the evidence and the findings upon which the Government can rest its argument if the constitutionality of the act is assailed.

The proposed bill, therefore, is - except as to the Child Labor case to be dealt with later-backed by long established precedents defining Federal power to regulate interstate commerce. Congress may so use the power as to stop interference from State laws, and it can equally protect it against employer lawlessness. It can foster the legitimate and helpful trade as well as stop the unwholesome. To quote again from the Chief Justice in the Kentucky Whip case: The power to prohibit interstate transportation has been upheld by this Court in relation to diseased livestock, lottery tickets, commodities owned by the interstate carrier transporting them, except such as may be required in the condut of ABs business -m a vommon zayyic, awatc~atcd and ZAanla',teZe, under the Pure Foods and Drugs Act, women for immoral purposes, intoxicating liquors, diseased plants, stolen motor vehicles, and kidnaped persons.

A commerce clause broad enough to protect the children of the rich from kidnaping would seem not to be abused if it should also protect the children of the poor from exploitation. As Justice Holmes said, with the approval of Justices Brandeis, Clark, and McKenna, it was not intended to leave Congress free to prohibit traffic between States

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in lottery tickets and strong drink, but not to prohibit the interstate shipment of "the product of ruined lives."

THE CHILD LABOR DECISION AND STATES' RIGHTS

The power of Congress to enact the bill is clear, under the decisions, both old and recent, except for the denial by the Supreme Court in the Child Labor case of the most simple and clear of all these theories. In 1918 by a 5-to-4 vote, the Supreme Court in Hammer v. Dagenhart (247 U. S. 251) held invalid an act of Congress prohibiting interstate transportation of goods manufactured in violation of certain child labor standards.

In view of the President's recommendation of legislation of the type proposed in the pending bill, and ofthe unique constitutional situation presented by that Supreme Court decision it has seemed appropriate for the Department of Justice to furnish these committees with the result of our studies of this bill, notwithstanding precedents against so doing.

The Court's decision sheltering child labor from Federal action could affect only a part of the bill at most. But if it were overruled it would permit a simple and more understandable dealing with the question.

The child labor decision was promulgated by a bare majority of numbers. They were Mr. Chief Justice White and Justices Van Devanter, Pitney, McReynolds, and Day who wrote the prevailing opinion. A ringing dissent was written by Mr. Justice Holmes and supported by Justices McKenna, Brandeis, and Clark, who could not be regarded as a minority in prestige.

Legal scholarship received the dlecision with indignation and derision which time has not softened. A leading authority on the Constitution has said: There is certainly nothing in the Constitution which requires the decision of the majority. It is wretchedly supported by the argument of the opinion. The assertion (which the majority made) that "the act in its effect does not regulate transportation among the States" is obviously unfounded (Thos. Reed Powell, 3 Southern Law Quarterly 175).

Others pointed out that if a State attempted to stop the shipping in or shipping out of child-labor-made goods it would be held to be interstate commerce and void while if the Nation prevented the shipment it was held not interstate commerce and void. (Gordon, 32 Harvard Law Review 45-51-52). The game so far as the children were concerned, seemed to be, heads they lost and tails they didn't win.

We owe it to our times to challenge the perversion of our Constitution injected into our law by the child-labor decision. This bill would challenge it. We should give the courts a chance to remove this blemish from our judicial history.

The doctrine of the majority in the Child Labor case belongs to the same dark era of legal thought as the decision holding that the minimum-wage law was unconstitutional (Adkins v. Children's Hospital, 267 U. S. 525, decided in 1923). The Court recently said that the importance of the minimum-wage question, the close division of the Court by which the former decision was reached, and "the economic conditions which have supervened" in the years since it was decided, made it "not only appropriate, but we think imperative" that the

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subject should receive "fresh consideration." Every condition that led to fresh consideration of the Minimum Wage case with equal force renders not only appropriate but imperative fresh consideration of the child-labor decision. Reconsidering the ninimum-wage case, which it had only a few months before followed as good law in striking down the New York statute, the Court held in the language of the Chief Justice that the 1923 case-and of course the 1936 case to the same effect-"was a departure from the true application of the principles" of law and frankly and courageously said "Our conclusion is that the case of Adkins v. Childrens' Hospital should be, and it is overruled."

And in the National Labor Relations Board v. Jones and Laughlin, the Court, without expressly overruling earlier cases, plainly receded from decisions such as Carter v. Carter Coal Company (298 U. S. 238), which had seemed to cramp the interstate commerce power into its lowest visible dimension.

The Court seems again to have been persuaded as Chief Justice Taney said that it is "the law of this Court that its opinion upon the construction of the Constitution is always open to discussion when it is supposed to have been f-auudeA in eriror, &nd tho t its jiadiciat authority should hereafter depend altogether upon the force of the reasoning by which it is supported" (Passenger cases, 7 Howard 283, 473).

In face of the willingness of the Supreme Court to decline to let obsolete precedent limit the exercise of its own reason, Congress may with propriety decline to let such decisions stall legislative reason. Had not the legislators persisted in challenging the minimum-wage cases, their inaction and acquiescence would have prevented the Court from amending its doctrine. Nothing but a challenge to the child-labor decision will enable the Court, even if it is so minded, to correct the old decision, now without support in scholarship, reason, or enlightened public sentiment. It is the distinguishing feature of judge-made law that it' is made only by the case method. The Court must await another case to correct an error. It has no technique for initiating reconsideration of closed cases. 11 old decisions are not challenged by law makers, judicial development is arrested and advancement of legal science stops.

Hence, I have no hesitation in urging that the time has come when the child labor decision should be challenged and reargued. We may reasonably entertain the hope that Hammer v. Dagenhart will be laid to a tardy and unmourned repose beside the lifeless remains of Adkins v. Children's Hospital.

STATES' RIGHTS

In view of the frequent confusion on the subject it is due to those considering this bill to analyze the effect which it has upon the reserved powers of the States.

Let us assume each State as completely sovereign as a nation could be. No State would then have any right to send its goods into another State. Each State would have the right to stop all incoming goods at its borders, to exclude any goods unfairly competing in its own market, or to lay a tariff on those admitted to equalize any advantage that the incoming goods had over its own producers. The exercise of this right by the colonies threatened to disrupt commerce and to divide our people. The exercise by the several States of their own

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parochial and conflicting rules to protect their own markets was a powerful incentive to formation of our Government.

Each State, therefore, largely surrendered its sovereignty over incoming goods to the National Government. This was not intended to surrender the home market place to the under-cutting competitor States. The power was granted to the National Government that the rule of the mnarket place should be fixed by a national policy for the common good.

A State may wish to meet advancing wealth of production with advancing standards of life for those who work in production. But if its own market place, as well as outside markets, are overrun with goods cheapened by child labor or sweated labor it has lost its power over its own working conditions. Is it confined then to appeals to its competitors for protection from such unfair competition? Its appeal is in law, as it is in common sense, to the Nation to which was given power to establish the rule by which goods should move among the States.

Mr. Justice Holmes in his dissent in the Child Labor case demolished the whole argument that States' rights are impaired by such legislation as this, in the following language:

The act does not meddle with anything belonging to the States. They may regulate their internal affairs and their domestic commerce as they like. But when they seek to send their products across the State line they are no longer within their rights. If there were no Constitution and no Congress their power to cross the line would depend upon their neighbors. Under the Constitution such commerce belongs not to the States but to Congress to regulate. It may carry out its views of public policy whatever indirect effect they may have upon, the activities of the States. Instead of being encountered by a prohibitive tariff at her boundaries the State encounters the public policy of the United States which it is for Congress to express. The public policy of the United States is shaped with a view to the benefit of the Nation as a whole.

Care has been taken to hold the pending bill to a good faith regulation of interstate commerce, and nothing more. Any State may use child labor or sweated labor for products of home consumption as much as it pleases so long as it does not divert or affect interstate commerce in so doing. The State may exploit youth in its internal affairs as far as its own conscience will permit, but it cannot dump its children into the Nation's markets to demoralize our national standards.

It has been suggested that the child labor provisions should be embodied in separate legislation. It is not my function to advise as to policy but we believe it would be more difficult to sustain separately than in company with the other substandard labor provisions.

All of the labor practices attacked by this bill are related. All are types of oppression utilized for the purpose of gaining unfair advantage in interstate commerce. One employer cuts wages, while another employs child labor, and still another employs sweatshop conditions, and all of these practices are a part of the vicious competition used in forcing down labor standards which it is appropriate to treat together in the regulation of interstate commerce. One of the constitutional bases of the pending bill is the principle announced in reference to the National Labor Relations Act that prolific causes of strife which may have a serious effect upon interstate commerce may be prevented. It is obvious that this principle is applicable to wages, hours of employment, and the use of strikebreakers and spies, for those practices have been prolific causes of labor strife. It is not clear that child labor

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standing alone has been the cause of industrial strife, although it is clearly one of the elements of unfair labor competition.

One reason for the unfortunate decision of the Child Labor case was that the Court failed to perceive that the legislation was related to the regulation of interstate commerce but regarded it as merely a police regulation to accomplish a local social objective. The inclusion of child labor with the other prohibited practices in an undertaking to prohibit unfair interstate commerce and to foster American standards makes plain that the law in which it is included is a genuine exercise on a broad front of the power to regulate interstate commerce and gives the prohibition of child labor a strength that it would not have if standing alone.

PERMISSION TO STATES TO EXCLUDE UNFAIR PRODUCTS

Two recent decisions have aroused hope of a new method of Federal and State cooperation to enforce proper labor standards. In Kentucky Whip & Collar Co. v. Illinois Central Railroad Co., January 4, 1937, the Supreme Court upheld the Ashurst-Sumners Act making it unlawful knowingly to transport in interstate commerce goods made by convict labor into any State where they would be received, possessed, or sold in violation of the State laws, and requiring labeling of convict-made goods.

In Whitfield v. Ohio (297 U. S. 431) the Supreme Court sustained convictions, under a State law, forbidding sale within the State of convict-made goods, even in the original package. It accepted the Hawes-Cooper Act.

Even if the method is approved as to other labor standards, it is open to grave administrative difficulty. It would seem that if the Court is to sustain any Federal regulation of commerce in goods made under substandard labor conditions it would overrule the child-labor decision and permit direct, simple, and effective regulation instead of reaching the same result by going round Robin Hood's barn. If Congress can give national scope to the standards set up by a receiving State it would seem able to give force to standards of its own making. If the Court will give effect to 49 nonuniform State standards, operating like tariff laws and difficult to administer, it would seem able to sustain a single Federal standard for goods in movement between the States. But there is a lawyerly preference for a difficult way of doing a simple thing, and the Kentucky Whip method may commend itself to the Court when direct regulation does not. If so, this bill is designed to get the benefit of such approval. While the Court is not certain to apply the prison-made-goods precedents lately established to goods made by underaged or underpaid free labor, the constitutional experiment is worth trying. If easier administered provisions are sustained, resort to this less practicable plan will not be necessary.

DUE PROCESS OF LAW

Even if the subject matter is within Federal power constitutional controversialists claim that it violates the due-process-of-law clause or illegally delegates congressional power.

Regulations of both wages and hours does not of itself violate due process, and is not necessarily "unreasonable, arbitrary, or capricious", where "there is reasonable relation to an object within the

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governmental authority" (Wilson v. New, 243 U. S. 332; Bunting v.Oregon, 243 U. S. 426).

Standards for determination of fair wages and reasonable working hours contained in the present bill are drawn with fairness to the employer. The standards are based on the value of the service rendered and the reasonableness of the period of working time considering the nature of the employment. Furthermore, fairness to all parties concerned and reasonable treatment of special cases is assured by the provisions of the bill which require the Board to grant exemptions from the wage-and-hour regulations as the need appears.

It is hard to see how employers who wish to maintain decent labor standards, or those who wish to see a better level of purchasing power in the masses of the people, can feel aggrieved at the general purposes and effects of this bill. Advancement of those objections State by State, each exposed to the competition of States which tarry, has been the foundation of the employers' most legitimate objection to labor legislation. He is so far from being injured by this bill, that it may be his chief protection against undermining his market by methods which his own standards forbid.

Neither in its general scope nor in its special treatment of particular cases can the bill be pronounced arbitrary. For fair labor standards are required to be maintained only to the extent necessary in order to accomplish the interstate commerce purposes of the legislation - purposes which fall clearly under the regulatory power of the Congress under the commerce clause.

Due process is defined in respect of both Federal and State legislation in Nebbia v. New York (291 U. 5. 502, 525).

The fifth amendment, in the field of Federal activity, and the fourteenth, as respects State action, do not prohibit governmental regulation for the public welfare. They rarely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort of business may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts.

If regulation may be dependent on "relevant facts" there can be no objection to delegating power to an administrative or quasi-judicial board to investigate, hear evidence and decide those facts.

DELEGATION OF POWER

It must be borne in mind that there is nothing whatever in the Constitution that forbids Congress to make a delegation of its power. The prohibition is purely judge-made, not Constitution-made.

The Supreme Court rarely finds fault with a congressional deligation of power. There is nothing in the recent decisions of the Court which would justify the Congress in abandoning administrative handling of modern complexities too numerous and diverse to be subjected to a single and inflexible rule directly imposed by the Congress. There are, it should be remembered, only two cases where congressional

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delegation of power had bgeen adjudged invalid in 150 years of constitutional practice.

The proposed bill deals with difficult and complex industrial situations. The draftsmen have been painstaking to make the standards as definite as the conditions with which they have had to deal permit without imposing upon the diversities of American industry inflexible and unworkable rules.

Nearly every legislative proposal dealing with complex economic conditions is attacked as arbitrary by those who do not like it. If the bill includes detailed standards it is said to be arbitrary for want of discretion in enforcement. On the other hand if it gives discretion to an enforcement agency it is denounced for setting insufficient limits to "arbitary discretion." This bill has been attacked on both grounds. The very inconsistency of this attack suggests that the draftsmen of the bill have attempted a fair, equitable and constitutional balance between the legal requirements of a standard and the practical requirement of workable flexibility.

A separate memorandum of the law on the subject of delegation of power has been prepared and will be filed with the committees.

During this flash of liberalism that illuminates a judicial record, otherwise pretty black for labor, we may reasonably hope that after being balked a score of years, Congress will now be sustained inadding to the list of interstate contraband what Mr. Justice Holmes so aptly called "the product of ruined lives", and in estaqblishing commerce among the States on the basis of industrial justice to disadvantaged men.

I will file copies of the statement on the delegation of power.

(The statement referred to is as follows:)

DELEGATION OF POWER UNDER THE PROPOSED FAIR LABOR STANDARDS ACT

Nearly every legislative proposal dealing with complex economic conditions involves problems of delegation. For such a legislative proposal must meet the charge that it entrusts arbitrary discretion to an administrative agency, or else it yuft resist the attack that it puts industrial enterprise into a straightiacket and imposes a rigid and inflexible rule without regard to industrial and geographical diversities. The proposed fair-labor-standards bill has at one and the same time been criticized on both of these grounds. The inconsistency of the attack suggests that the draftsmen of the bill have at least sought to achieve a fair and constitutional balance between the practical requirement of workable flexibility and the legal requirement of adequate standards.

The bill contemplates that the Congress should write into the statute some definite figures to be used as a guide by the administrative agency in establishing a floor below which wages shall not be cut and a ceiling beyond which hours should not be stretched. Let us assume, for the sake of an example, that the Congress fixes 40 cents an hour as the basic minimum nonoppressive wage and 40 hours a week as the basic maximum workweek. That would be $16 for a 40-hour week or $800 for a year of 50 weeks. It will scarcely be questioned that in most sections of the country a worker with $800 a year will have no more than is necessary to provide a minimum standard of living to maintain himself and his family.

In the Washington Minimum Wage case (West Coast Hotel Co. v. Parrish, October Term, 1936, decided Mar. 29, 1937) the Supreme Court held that the cost of living was a sufficient standard for purposes of the fourteenth amendment, even though no approximate figure was inserted in the statute for the guidance of the administrative tigency. Under the proposed bill not only is an approximate figure given to the administrative agency as a guide in fixing a minimum nonoppressive wage, but that figure is not to be applied and may be revised downward, if the

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board finds it necessary to avoid unreasonably qurtailing teh workers' opportunity for employment. The figure may be revised upward if the board findds it possible without unreasonably curtailing the opportunities for employment, but not above what may fairly be regarded as a minimum standard of living necessary for health and efficiency, i. e., substantially the same standard as was approved in the Washington Minimum Wage case.xxxx

I It is also to be noted that the board cannot fix even a minimum fair wage which yields an annual income in excess of $1,200. That means that the board cannot fix a wage in excess of 60 cents an hour for a worker employed 50 weeks a year. A higher hourly week may be fixed in occupations which do not give the worker full employment, but such hourly rate can in no case be in excess of 80 cents. It is clear that the bill protects only poorly paid workers who are not in position to protect themselves.

board finds it necessary to avoid unreasonably curtailing the workers' opportunity for employment. The figure may be revised upward if the board finds it possible without unreasonably curtailing the opportunities for employment, but not above what may fairly be regarded as a minimum standard of living necessary for health and efficiency, i. e., substantially the same standard as was approved in the Washington Minimum Wage case.

The situation is similar with regard to the number of hours which the Congress may write into the bill as the basic nonoppressive work week. Under the proposed bill not only is an approximate figure given to the board as a guide in establishing a nonoppressive maximum work week, but the basic number of hours specified is not to be applied and may be increased by the Board if the Board finds it necessary to avoid unreasonably curtailing the workers' earning power. The basic workweek may also be shortened by the Board if the Board finds it possible to do so without unreasonably curtailing the workers' earning power, but the Board may not so shorten the workweek beyond what it finds is required in the interest of the health, efficiency, and well-being of the workers. And in no event may a workweek be shortened below a fixed number of hours, say 30 or 35, which it is contemplated shall be specified in the bill.

The minimum fair wage standards and maximum workweek standards which the board may apply to industries where the facilities for collective bargaining are not adequate or effective are defined in section 5. These standards are patterned upon the standards used in the New York minimum fair wage statute. While a bare majority of the Supreme Court refused to enforce that statute in Morehead v. New York ex rel. Tipaldo (298 U. S. 587) on the ground that the Court was bound by its decision in Adkins v. Children's Hospital (261 U. S. 525), and on the further ground that the Court had not been asked to overrule the Adkins' decision, the Chief Justice and three of his colleagues, dissenting, were of the opinion that the New York Statute's "provisions for careful and deliberate procedure" made the New York statute constitutional even though the cost of living statute involved in the Adkins' case might be regarded as unconstitutional. And there can be no doubt that a majority of the Court, having expressly overruled the Adkins case in the Washington Minimum Wage case, would today view the more carefully drawn New York statute as constitutional. There can be no doubt that the opinion of the Chief Justice in the Morehead case may today be accepted as the law of the land.

The signposts to guide the Board in determining a nonoppressive minimum wage and nonoppressive maximum workweek, as well as a reasonable minimum wage and a reasonable maximum workweek in any particular occupation are much clearer and more distinct than those approved by the Court in the recent Washington Minimumum Wage case. It is significant that the Court in that case attempted to draw no subtle distinction between the Adkins case, which dealt with a congressional enactment, and the Washington case, which dealt with a State statute, but expressly overruled the Adkins case.

A number of the provisions of the present bill give the Board power to make exemptions and qualifications necessary to make the act workable and effective. The purposes of these provisions are plainly stated, and the standards to govern their application are defined as definitely as the practical exigencies will allow. "The industries of this country", as Mr. Justice Cardozo has stated, "are too many and diverse to make it possible for Congress in respect to matters such as these, to legislate directly with adequate appreciation of varying conditions" (Schechter Poultry Corp. v. United States, 295 U. S. 495, 552).

Although the power to exempt, to except, or to qualify may not be left to the arbitrary discretion of the Board to exercise for purposes bearing no relation to legislatively defined policy the Supreme Court has never nullified such administrative powers to relax the rigors of a rule of law when required to avoid injustice or unnecessary hardship. In invalidating the N.R.A. statute in the Schechter case, the Chief Justice was careful to point out that that statute did not "seek merely to endow * * * groups with privileges or immunities", but it involved "the coerci e exercise of the law-making power." Schechter Poultry Corp. v.United States (295, U. S. 495, 529). Both kinds of standards are employed in the act and both kinds of standards find their counterparts and analogies in State, as well as Federal, labor legislation. But a distinction must be drawn between those standards in the proposed bill which empower the Board to implement the general rules fixed by the Congress and those standards which permit the Board to relax the generality of the rules fixed by the Congress. A broader and wider discretion may be delegated in applying exemptions and exceptions than in applying the primary rule in regulation to be enforced. United States v. Shreveport Grain Co. (287 U. S. 77, 82, 85), delegation of power to allow exemptions and

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tolerances under the Pure Food Act; Intermountain Rate Cases (234 U. S. 476, 484, 486), delegation of power to allow exceptions from long and short haul; Chemical Foundation v. United States (272 U. S. 1, 12), delegation of power to except from public-sale requirement; Heiner v. Diamond Alkali Co. (288 U. S. 502), power to relax application of excess-profits tax; Hampton v. United States (276 U. S. 394, 407), delegation of power to make tariff provisions effective.

It is important to remember that the Supreme Court very rarely finds fault 'with a PongTessional deltgatiorn o p . Th. r is rothhg iv the ree 1esis of the Court which would justify the Congress in casting aside a half century of legislative experience in providing for the administrative handling of modern complexities too numerous and diverse to be subjected to a single and inflexible rule directly imposed by the Congress. There is, it should be remembered, no case where congressional delegation of power had been adjudged invalid where the delegation has been made to a permanent governmental, administrative commission, independent of the executive branch of the Government. Panama Refining Co. v. Ryan (293 U. S. 388) involved delegation directly to the Executive; the Schechter case involved not only theoretical delegation to the Executive but practical delegation to substantially private code authorities. Insofar as the decision in Carter v. Carter Coal Co. (298 U. S. 238, 310-311) rested on the grounds of faulty delegation, the vice lay in the delegation having been made not to an official or official body but "to private persons whose interests may be and often are adverse to the interests of others in the same business."

Indeed congressional delegations of power to official administrative agencies have been held invalid in only two cases: The Panama Refining Co. case and the Schechter case. In the Panama Refining Co. case, the subjet of the statutory prohibition, the transportation in interstate commerce of petroleum produced in violation of State law, was defined, but the delegation was held to be improper because the range of administrative discretion was not only unlimited, but wholly undefined. Panama Refining Co. v. Ryan (293 U. S. 388, 415) Schechter Poultry Corp. v. United States (295 U. S. 495, 530). In the Schechter case, on the other hand, the Court was not disturbed so much by the range of discretion granted with respect to any particular subject matter, as it was by the fact that it could find no "adequate definition of the subject to which the codes were addressed." As the Chief Justice stated: "Congress cannot delegate legislative power to the President to exercise an unfettered discretion to make whatever laws he thinks may be needed or advisable for the rehabilitation and expansion of trade and industry" (295 U. S. at 537-538). The National Industrial Recovery Act had authorized the President to approve codes of fair competition for trade and industry without attempting to limit or define the subject matter of the codes. As Mr. Justice Cardozo pointed out, such codes were not restricted, to "the elimination of business practices that would be characterized by general acceptance as oppressive or unfair" (295 U. S. at 552]. There is as a matter of fact nothing in either the opinion of Chief Justice Hughes or of that of Mr. Justice Cardozo which suggests that, if the Congress had restricted the subject matter of the codes to the labor provisions of the National Recovery Act instead of merely requiring that codes drafted for other undefined purposes should comply with such labor provisions, the Court would have considered the labor standards, vague as they were, fatally defective.

It must of course be borne in mind that the courts have never required the same definiteness of a standard which is set forth for the guidance of an administrative agency and which cannot be enforced against the individual before it has been specifically implemented by the orders or regulations of the administrative agehey, as the courts have required of a standard which operates directly upon the rights of the individual and to which the individual must conform at his peril. A standard too vague to support a self-operating provision enforced by criminal liability (United States v. Cohen Grocery Co., 255 U. S. 81), may well state a policy and purpose sufficiently definite to serve as an appropriate standard for the guidance of administrative action. Highland v. Russell Car & Snow Plow Co. (279 U. S.; Continental Baking Co. v. Woodring (286 U. S. 352, 368).

The Panama Refining Co. case and the Schechter case never purported to question the authority of numerous earlier cases which sustained congressional delegations of power to administrative agencies under extremely vague and general standards for the sole reason that the Court was convinced that in light of the nature and

[PAGE 13]

complexity of the subject-matter of the legislation the prescription of a more detailed standard would be difficult or impractical. [Footnote 1: Cases in which the use of general expressions as astandard has been upheld as proper in view of the nature and character of thespecific statute or provision involved, are Federal Radio Commission v. NelsonBros. Bond and Mortgage Co. (289 U. S. 266, 385), public convenience, interestor necessity; Avent v. United States (266 U. S. 127) and United States v.Chemical Foundation (272 U. S. 1), in the public interest; Colorado v. UnitedStates (271 U. S. 153, 168) and Chesapeake & Ohio Ry. v. United States (283U. S. 35, 42), certificates of public convenience and necessity; Tagg Bros.& .Mfoorhead v. United States (280 U. S. 420), just and reasonablecommissions; Wvayman v. Southard (10 Wheat. 1), in their discretion deemexpedient; Buttfield v. Stranahan (192 U. S. 470), purity, quality, and fitnessfor consumption; Union Bridge Co. v. United States (204 U. S. 364); MonongahelaBridge Co. v. United States (211 U. S. 177); ilannibal Bridge Co. v. UnitedStates (221 U. S. 194); Louisville Bridge Co. v. United States (242 U. S. 409),unreasonable obstruction to navigation; Mahler v. Eby (264 U. S. 32),undesirable resident; McKinley v. United States (249 U. S. 397), warpowers;United States v. Grimaud (220 U. S. 506), regulation of forest reserves]

The leading decisions reflect the importance of practical considerations and the necessity for delegation as a means of administering the law, in determining how definite a standard set by Congress for the guidance of an administrative agency must be. Beginning with Wayman v. Southard (10 Wheat. 1), the Supreme Court, speaking through Chief Justice Marshall, adverted (pp. 34-35, 46-47) to the need for flexibility in conforming the Federal practice to the judicial systems of the States in a statute delegating to the Federal judiciary power to alter the rules relating to process, as the courts "itn their discretion deem expedient" (p. 39). The statute uhpeld in Field v. Clark (143 U. S. 649) permitted the President to impose reciprocal duties on goods imported from countries which discriminated against American products, a function which could best be exercised by a governmental agency capable of prompt action after forming a judgment based upon changing conditions. The law sustained in Buttfeld v. Stranahan (192 U. S. 470) authorized the Secretary of the Treasury to fix standards of purity, quality and fitness for consumption with which imported tea must comply. The dourt declared: "Congress legislated on the subject as far as was reasonably practicable, and from the necessities of the case was compelled to leave to executive officials the duty of bringing about the result pointed out by the statute. To deny the power of Congress to delegate such a duty would, in effect, amount but to declaring that the plenary power vested in Congress to regulate foreign commerce could not be efficaciously exerted" (192 U. S. at 496).

In upholding the statute authorizing the Secretary of War to determine whether a bridge was an "unreasonable obstruction" to navigation, the Court in Union Bridge Co. v. United States (204 U. S. 364, 386) emphasized the fact: " investigations by Congress as to each particular bridge alleged to constitute an unreasonable obstruction to free navigation and direct legislation covering such case, separately, would be impracticable in view of the vast and varied interests which require national legislation from time to time." And the Court stated (204 U. S. at 387) that a denial of the rights of delegation "would be 'to stop the wheels of Government' and bring about confusion, if not paralysis, in the conduct of the public business."

Similarly, in United States v. Grimaud (220 U. S. 506) the impracticability of having Congress provide general regulations for each of the many different forest reservations was held to justify an authorization to the Secretary of Agriculture to "make such rules and regulations as will insure the objects of such reservations." The Court said: "In the nature of things it was impracticable for Congress to provide general regulations for these various and varying details of management. Each reservation had its peculiar and special features (220 U. S. at 516).

Again, in upholding the provision of the Interstate Commerce Act which authorizes the Interstate Commerce Commission to make rules in case of car shortage, the Court declared in Avent v. United States (266 U. S. 127, 130): the requirement that the rules shall be reasonable and in the interest of the public and of commerce fixes the only standard that is practicable or needed." See also Mutual Film Corporation v. Ohio Industrial Commission (236 U. S. 230, 245); Mahler v. Eby (264 U. S. 32, 40); United States v. Chemical Foundation (272 U. S. 1, 12).

The emphasis upon the practical need for the delegation is clear in Hampton Jr., & Co., v. United States (276 U. S. 394). In upholding the Flexible Tariff Act, which authorized the President to adjust tariff rates so that they would correspond to the differences in costs of production here and abroad, the Court took into account the inability of Congress to make the necessary adjustments (276 U. S. at 405), the need for readjustment because of everchanging conditions (276 U. S. at 406), and the uncertainty as to the time when the adjustments should be made (276 U. S. at 407). By way of analogy, it referred to the fixing of just and reasonable rates by the Interstate Commerce Commission, stating

[PAGE 14]

that: "If Congress were to be required to fix every rate, it would be impossible to exercise the power at all" (276 U. S. at 407). In view of these considerations, it was held sufficient for Congress to establish a general rule declaring an "intelligible principle": "In determining what it may do in seeking assistance from another branch, the extent and character of that assistance must be fixed according to common sense and the inherent necessities of the governmental coordination" (276 U. S. at 406). Mr. Justice Sutherland, in United States v. Curtiss-Wright Corp. (2 N UJ. S. 3Q14, 315), suxggests that iii the tariff caeinvetVL1g foreign relation a broader discretion may be vested in the President than in matters relating solely to internal affairs, but the reasoning of the Court in the tariff cases there cited is based upon no such distinction.

There is nothing in the adjudicated cases which suggests that the constitutional rule against the delegation of essential legislative powers is violated by a bill, like the proposed bill which, dealing with many and diverse industries, not only defines the subject-matter to which an administrative agency may address its discretionary powers, but clearly states the purposes for which the administrative discretion may be exercised. Unlike the statute in the Schechter case, the proposed bill carefully defines the subject matter to which the administrative agency may address itself. Unlike the statute in the Panama Refining Co. case, the bill does not omit to state the range of the administrative discretion vested in the Board, but clearly states the purposes for which it may be exercised.

The extent to which the Supreme Court has gone in sustaining a delegation of power to an administrative agency where the subject matter of the delegation is defined, and the purpose for which such power is to be exercised is indicated in most general terms, is strikingly illustrated in the case of New York Central Securities Corporation v. United States (287 U. S. 12), sustaining the validity of the consolidation provisions of the Transportation Act of 1920. In that case Chief Justice Hughes stated (287 U. S. at 24-25):

"Appellant insists that the delegation of authority to the Commission is invalid because the stated criterion is uncertain. That criterion is the 'public interest.' It is a mistaken assumption that this is a mere general reference to public welfare without any standard to guide determinations. The purpose of the act, the requirements it imposes, and the context of the provision in question show the contrary. The provisions now before us were among the additional made by the Transportation Act, 1920, and the term 'public interest' as thus used is not a concept without ascertainable criteria, but has direct relation to adequacy of transportation service, to its essential conditions of economy and efficiency, and to appropriate provision and best use of transportation facilities, questions to which the Interstate Commerce Commission has constantly addressed itself in the exercise of the authority conferred. So far as constitutional delegation of authority is concerned, the question is not essentially different from that which is raised by p1rovisions with respect to reasonableness of rates, to discrimination, and to the issue of certificates of public convenience and necessity. (Intermountain Rate Case, 234 U. S. 476, 486; Railroad Commission v. Southern Pacific Co., 264 U. S. 331, 343, 344; Avent v. United States, 266 U. S. 127, 130; Colorado v.United States, 271 U, S. 153, 163; Chesapeake & Ohio Ry. Co. v. United States, 283 U. S. 35, 42" 287 U. S. at 24-25).

In Panama Refining Co. v. Ryan (293 U. S. 388), Chief Justice Hughes emphatically stated (293 U. S. at 421): "Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the National Legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicability, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility."

The Chief Justice subsequently employed virtually the same language in United States (295 U. S, 495).

The proposed bill deals with difficult and complex industrial situations. A careful and deliberate procedure has been provided; orders of the Board may be entered only after hearing. The draftsmen have been careful and painstaking to make the standards as definite and specific as the conditions with which they have had to deal permit, without imposing upon the diversities of American industry inflexible and unworkable rules provocative of serious industrial dislocations. These standards are well within constitutional limitations, assuming, of course,

[PAGE 15]

that constitutional limitations are to be construed to make a constitutional democracy workable and not to render it impotent.

Senator WALSH. I am very much impressed with your statement and with your opinion, for the reason that the court, in the past, finding so much of the labor legislation unconstitutional was due to the fact that it was inclined to look upon labor legislation as an interference with the police power of the several States, and that they gave little attention to the interpretation of labor legislation with relation to interstate commerce. I rather agree with you. That is a fair interpretation of the way the court has, in the past, looked upon that labor legislation.

Mr. JACKSON. I think that has been the great defect in the judicial treatment of labor legislation, the tendency to see in it only its local aspects and not to see its far-reaching aspects.

Senator WALSH. An attempt to prevent the Federal Government from interfering with what local social objectives a State may or may not desire for its own ends.

Mr. JACKSON. That is right.

The CHAIRMAN. Mr. Jackson, you made a statement about the added legal strength that would be given to a child-labor bill if it should be passed as a part of legislation defining unfair practices in other fields of labor. I want to see if I clearly get the idea that you advanced.

The original child-labor opinion in the Dagenhart case was decided by a majority of five to four. The majority took the position, did they not, that the regulation of the labor of children in States could not be in any manner connected with interstate commerce?

JACKSON. Yes; that is right.

The CHAIRMAN. The majority also took the position that it did not tend to burden interstate commerce?

Mr. JACKSON. Yes.

The CHAIRMAN. If I get the idea which you have advanced it is this, that while the labor of children might not be sufficient in the quantity of goods produced to create a burden on the free flow of interstate commerce by reason of maladjustments, that the cumulative effect of the product of child labor, or the evil result of long hours and sweatshop labor conditions might all, taken together, create a burden on interstate commerce, and that thereby even the majority opinion of the Supreme Court in the child-labor case cannot necessarily preclude the passage of this bill, which has gathered together other labor practices; in other words, that the amount of goods produced, the seriousness of the complete maladjustment on account of the cumulative effect of all other labor practices might affect interstate commerce even so as to reach the ideas of the majority in the Dagenhart case?

Mr. JACKSON. Yes. It affords a ground for distinction, a thing which lawyers are fond of, so that even if a court were not willing directly to overrule Hammer v. Dagenhart, as they overruled the minimum-wage case, the court might very well say, "We see a difference." In the child-labor case Congress was simply dealing with one small phase of a labor problem and plainly were interested in the local employment of a child rather than the interstate effect on commerce, while here we have before us a comprehensive effort to protect commerce against all unfair practices.

The CHAIRMAN. In other words, if the practice of child labor, if the practice of unnecessarily long hours, if the practice of sweatshop

[PAGE 16]

wages all contribute largely to reduce the purchasing power of the workers of the Nation that might, in itself, be considered to create a burden on interstate commerce?

Mr. JACKSON. Yes.

The CHAIRMAN. While one of those phases, taken alone, might, to some minds, not produce a sufficient effect in connection with bringing about a maladjustment of interstate commerce.

Mr. JACKSON. Yes.

The CHAIRMAN. What I wanted to get clearly in the record was that even if it was not wholly possible to conceive that those who stood for the majority opinion in the Dagenhart case would see a difference when we approach the subject by regulating a number of labor standards which, in the aggregate, would materially affect interstate commerce, so as to satisfy their demand as to the effect upon interstate commerce.

Mr. JACKSON. Yes. In the Dagenhart case the court said: "This act which we have before us does not affect interstate commerce materially, it affects local social conditions." And for that reason, focusing their view on the local conditions alone, they said it was void as a regulation of interstate commerce. Now, you cannot view this bill without seeing that its purpose is to regulate interstate commerce, where you have this variety of unfair practices included.

Senator WALSH. Is not the theory upon which this bill is based that a State may produce, under whatever labor conditions it chooses, any kind and all kinds of goods or profit without interference by the Federal Government so long as those goods never cross a State border, but the moment one box of hosiery, one hat, or one ton of coal passes a State border that moment the Federal Government has control over the working conditions in the establishment, or the place of production in the particular State?

Mr. JACKSON. Well, it does not go quite as far as that in one respect, and it goes a little further in another respect.

Senator WALSH. Let me have your views on that.

Mr. JACKSON. The movement of the box of hosiery atross the State line would not give the Federal Government control in the factory except to the extent of practices that affected interstate commerce, as hours of labor, amount of wages, and so forth.

Senator WALSH. Sweatshop conditions?

Mr. JACKSON. Yes. That is, there might be many things in the factory that would not be regulated.

Senator WALSH. it would regulate almost anything outside of sanitary conditions and working conditions, would it not?

Mr. JACKSON. Yes; those are purely local things. There would be one exception to the statement in this respect, that even though the goods did not cross the State line, if those goods came into competition to a substantial extent with interstate commerce the labor conditions attending their production would be subject to regulation under this bill.

Senator WALSH. Not only that the goods are moved from one State to another but that they come into competition with goods producedunder somewhat better or worse conditions in another State.

Mr. JACKSON. That is right.

The CHAIRMAN. You mean within the scope of the opinion in the Shreveport case.

[PAGE 17]

Mr. JACKSON. Yes.

The CHAIRMAN. It would not be all competition, but it must be of such a gubstantial nature as actually to affect the free flow of goods in interstate commerce.

Mr. JACKSON. Yes.

Senator WALSH. Of course, the wages are a very important factor affecting free competition.

Mr. JACKSON. Oh, yes; of course.

Senator PEPPER. Mr. Jackson, let us suppose that products in textile mills were being produced in an area where there was some contagious disease so that those goods might possibly transmit that contagious disease into the channels of interstate commerce, do you think there would be national power to prevent the contamination of the channels of interstate commerce by such products?

Mr. JACKSON. I do not think there is any question about it. In fact the court has held that to transmit diseased plants, diseased animals, or disease-bearing textiles could certainly be forbidden to enter the channels of interstate commerce.

Senator PEPPER. So that what really is sought as the purpose of this bill is to fortify ourselves against the objectionable contaqmination of the channels of interstate commerce?

Mr. Jackson. Yes.

Senator PEPPER. Now, I would like to have from you a sort of succinct statement about three things: First, teh general nature of this bill as if youe were explaining this legislation to a layman somewhere. State, in a short paragraph or sentence or two the general nature of the bill that we are now considering.

Mr. Jackson. Well, you have given me quite a large order Senator Pepper. To explain this bill to a layman I would say was quite a task.

Senator WALSH. We willknow it better after you explain it section by section.

Mr. JACKSON. Yes. You might say, in general, that this bill takes certain conduct which is considered bo be oppressive in teh production of goods for sale in interstate commerce, and which is oppressive under any circumstances, and outlaws that conduct; that is to say, child labor, spied-upon labor, strike-breaking labor.

Then it establishes certain minimums for waqges and maximums for hours. But the bill recognizes that you cannot take the entire industry of the United States, with all of its geographical diversities and diversities within industries and suddenly clamp on to it a standard that is uniform every place. Therefore, while it enacts a floor, you might say, below which wages should not go it requires the administrative Board to study these industries and apply the act to particular industries, localities, and employments as rapidly as it can without throwing people out of work or disrupting industry.

Senator WALSH. And without any further approval by Congress.

MR. Jackson. Yes.

Senator WALSH. We have delegated the power for them to fix these standards?

Mr. JACKSON. You have delegated the power to apply a minimum which is fixed by Congress.

Then the bill further attempts to protect interstate commerce from these labor practices which provoke violence and strikes and thereby stop or burden interstate commerce, so as to utilize the benefit of the Supreme Court decisions sustaining the Wagner Act.

[PAGE 18]

It also attempts, under the philosophy of the antitrust laws, to protect the man who is engaged in interstate commerce on a fair and lawful basis from the competition of those who would go into it on an unfair basis. I think, as we go through it, taking the principal key sections of the bill it will be more apparent just what has been attempted.

Senator PEPPER. You have answered practically the second and third inquiries I attempted to make. The second was the general situation to which it is applicable. The third was the means which are employed in this bill to achieve those purposes. Now, the last one involves the question of the delegatability of power, and in that regard, as I understand it, the bill itself lays down the principles. The applicability of those principles to varying situations rests upon questions of fact which are ascertained and determined by a quasi-judicial body, which is the Board.

Mr. JACKSON. Yes. If you read this bill, you may very reasonably say, "Well, that delegates a great deal of power", but if you go back and read the Interstate Commerce Act and could eliminate from your minds the way it has been applied you would see that there is delegated to that commission pretty nearly all the power in the world.

Senator PEPPER. Yes.

Mr. JACKSON. The attempt has been made in this bill to lay down as definite standards as it is possible to lay down, considering the subject matter. Now, when we are dealing with railroads iunder the Interstate Commerce Act you do not say, "The rates shall be so much", you say, "The rate shall be a just rate, a reasonable rate and a nondiscriminatory rate", and you delegate to somebody the power to fix that.

Senator PEPPER. And the Interstate Commerce Commission under that authority fixes the rates of all kinds of commodities, does it not?

Mr. JACKSON. That is right.

Senator PEPPER. In all sections of the country, under all kinds of conditions, by constantly applying these principles to various facts?

Mr. JACKSON. Yes.

Senator PEPPER. The Motor Carrier Act of 1935 provides that persons may engage in interstate commerce as the carriers of persons and property for hire by motor vehicles. The Congress does not name those people who may exercise that privilege.

Mr. JACKSON. No.

Senator PEPPER. It leaves that entirely to the Interstate Commerce Commission.

Mr. JACKSON. All of the utilities of both the State and Federal Governments are required to get certificates of public convenience and necessity. You leave it to an administrative Board to investigate the particular locality in which it is proposed to operate and determine whether it is for the public convenience and necessity that they shall have the right to operate there. There is no other way, as government becomes complex, in which the Congress can effectually function, and it seems to me that the Congress can use its powers most wisely in establishing general principles and delegating power to somebody in the application of the details.

Senator PEPPER. In other words, the only protection that any industry has against severe discrimination is this quality of flexibility that the law has?

[PAGE 19]

Mr. JACKSON. Yes. You have in all cases of legislation constitutional objections that come at you from two directions. If you enact a Nation-wide inflexible rule so definite that it binds everybody, the thing that will happen to you constitutionally is that the worst case of hardship that can be found in the United Statesill be seized upon by the lawyers and taken before the Supreme Court to show that your law violates due process by being unreasonable, arbitrary, and capricious. They will then say, "This is an arbitrary law." On the other hand, if you delegate some discretion to a board so that you will avoid those cases of hardship, as this bill attempts to do, the same lawyers then come back and say, "Oh, well, that is an unconstitutional delegation of power." You are going to face that argument one way or the other, no matter how you fix it, but if you fix a reasonble delegation accompanied by reasonable standards you have the best chance of having that law sustained, and not only that, but you have the best chance of having a fair, workable law. That has been the attempt here, to set down as reasonable and exact standards as the subject matter admits of. Of course, perhaps, after you have studied the matter you may find that more definite standards can be applied, or you may find that the delegation should be restricted in some respects, but the attempt here has been to follow a fair, middle-of-the-road course.

Senator PEPPER. Now, if the child-labor provisions of this act should come again before the courts for review it is entirely possible that the Government's position might be strengthened in these respects over what it was in Hammer v. Dagenhart, might it not? First, the general provisions of the bill applicable to a situation similar to that all over the country; second, the hearing that is being conducted now by the joint committee will build up the record, and, third, the evidence which will be taken in a sort of judicial manner by this Board which would eventually promulgate the regulations which would be subject to review by the court, in all probability.

Mr. JACKSON. Yes; the board would build up a substantial amount of evidence, I expect, that would be available.

Senator Pepper. And then since the Dagenhart case a vast amount of data has been accumulated which will be applicable to the situation

Mr. JACKSON. And then in addition to the Dagenhart case you have the approach to this problem through the question of restraining unfair competition, and you have also the benefit of the approach through the theory of the Kentucky Whip and Collar case, which was the case in which they excluded prison-made goods because of the laws of the State into which they went. This bill attempts to gather up every constitutional theory which can sustain this act and put every constitutional support that we can find back of it.

Senator PEPPER. Now, one last question. Proceeding on the matter from a legal point of view, the vast majority of the situations affected by this bill are admittedly within the exercise of national power, are they not, by virtue of all the decisions of the Supreme Court?

Mr. JACKSON. That is right

Senator PEPPER. It is only in the fringes of the circle, as it were, that there may be here and there questions of doubt?

Mr. JACKSON. Yes.

[PAGE 20]

Senator PEPPER. Those situations are at least doubtful, because, for instance, with respect to the child-labor provision there is at present one member of the Court, Mr. Justice Brandeis, who upheld the position that the Government would take now, and Mr. Justice McReynolds who was on the other side in the Dagenhart case. So the Justices now are equally divided, as far as that is concerned.

Mr. JACKSON. That is right.

Senator PEPPER. There is a probability that even those situations would be determined differently by the Court now, but if they would not be so determined the other provisions of the bill would authorize action by the Board and would not affect the general effectiveness of the act.

Mr. JACKSON. Yes; that is right.

Representative KELLER. Mr. Chairman, I would like to ask a question.

The CHAIRMAN. Mr. Keller, may I clarify one thing? I just want to inject this: You have talked a great deal about the provisions for delegation. You have, of course, read carefully the opinion in the Minimum Wage case.

Mr. JACKSON. Yes.

The CHAIRMAN. That the two States recently decided.

Mr. JACKSON. Yes.

The CHAIRMAN. Is it not true that the provision for powers to be given this Board with reference to determining the circumstances under which minimum wages should be put into effect is the same as that upheld by the Supreme Court in the Minimum Wage ease from the State of Washington?

Mr. JACKSON. Very much so.

Representative KELLER. I understood you to say that there might be such a thing as a basic minimum wage below which no one should be permitted to go.

Mr. JACKSON. Yes.

Representative KELLER. It would require very considerable time would it not, for this Board to set the different minimums fof the various divisions of our industries?

Mr. JACKSON. I suppose it would take some time. I wouid not know just what time it would take, but it would take time, of course.

Representative KELLER. Why not set some such minimum wage in this bill which would act as a minimum until a fair minimum wage could be established by the Board?

Mr. JACKSON. Well, if you did that you would run the risk of setting a minimum which would be in some particular case a great hardship, and of having your right to fix a minimum tested in the courts under its most unfavorable aspect as a violation of due process.

Representative KELLER. Nevertheless, if you empower your Board to determine that, before the courts have a right to take it under consideration, and permit the man who feels he wants to come and have a hearing before the Board, it precludes the power of the court to grant an injunction to prevent such action.

Mr. JACKSON. Perhaps I do not know what you mean. I thought you meant to enact a rigid minimum wage for the entire United States. If you meant to have it apply only as the Board saw the circumstances to warrant it, then you would have practically what this bill does.

[PAGE 21]

Representative KELLER. I got the impression, from the answers that you made, that there might be such a thing as an agreed basic wage below which no one would be permitted to go in any industry anywhere. If that can be done, it seems to me it would be very advantageous to include that in the bill, and then if anybody who felt himself aggrieved should have the power to come before-not before the court - but let the bill provide he may come before the Board show that he is injured and receive his proper reduction of the minimum.

Mr. JACKSON. Well, he can now come before the Board. In fact, the wage will not be made effective as to him until there is a hearing in which his particular circumstances of hardship, if he have any, can be heard.

Representative KELLER. I do not want to be insistent upon it, but will that not really tend, Mr. Jackson, to draw out to a very great extent the entire subject of the minimum wage?

Mr. JACKSON. There will probably be some delay in accomplishing it. Of course, in many industries you have pretty well agreed bases established where they have real collective bargaining. For example, in the bituminous coal industry you have agreements arrived at between the employer and the unions which establish differentials the different working conditions, so that when the Board begins to make these miuimum wages applicable they will be able, in many instances, to deal with entire sections, such as the bituminous section of western Pennsylvania, and with an industry which already has a standard set as against certain of what we may term chiselers, so that they will not have in all industries so big a problem as it may look upon its face. However, I grant you that it is a good deal of a problem to get this standard into effect in the entire United States.

Representative KELLER. Of course, I agree heartily with you on the point that where we have union labor they do, as a matter of fact, fix their own minimum, but where the labor is not unionized they do not fix their minimum. My understanding is that less than 10 percent of the labor in the country is unionized, And they tiore mirimums exist for less than 10 percent of the entire labor engageed in industry.

Mr. JACKSON. I suppose that is true.

Representative KELLER. In other words, it does seem to me that if we could start out with a basic minimum below which no one would be permitted to go it would be starting out in the right direction.

Senator ELLFNDER. Mr. Jackson, in the course of your talk just now you mentioned the Wagner Labor Act. Will not this act, measure, conflict with or supersede the Wagner Labor Act?

Mr. JACKSON. I do not think of any respect in which it would. I do not know just what you may have in mind.

Senator ELLINDER. Suppose the employer and employee should agree on a certain minimum wage, and various other things that related to this act, and that the Labor Board should not find that to be accord with proper practices, what would then happen?

Mr. JACKSON. I cannot conceive of it happening. You are considering a case where there was true bargaining between the employer and employees?

Senator ELLINDER. Suppose the employer and employees in a certain given industry should agree on minimum wages, on minimum hours, and be satisfied with them, and that they would be more than

[PAGE 22]

we will say, the wages and hours that were fixed by the Board, what would then happen?

Mr. JACKSON. Well, I think if they agreed on anything below the limitations which the Congress has fixed, they can be made applicable only where it is found that they have effective facilities for collective bargaining. You will note in section 5 that it starts off [reading]

Whenever the Board shall have reason to believe that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, wages lower than minimum fair wage are paid to employees in any occupation,

and so forth.

Senator ELLENDER. In that event this bill would supersede the Wagner Labor Act, would it not?

Mr. JACKSON. No, this gives effect to collective bargaining, as I understand it. I do not think you are in any danger of collective bargaining reaching a wage below the minimum.

Senator ELLENDER. No, but I would like to find out what act would govern should there be a conflict.

Mr. JACKSON. Well, I haven't studied that question. Perhaps Mr. Pope, who has worked on the actual draft of this bill, has studied the possible confliet between the two, otts. 1 so,, I wiowh bu ghi4 to have him give the information. I haven't studied the possible conflict, because I cannot see, in actual practice, the possibility of a conflict between the two.

Senator ELLENDER. You get the idea that I have in mind, do you not, Mr. Jackson?

Mr. JACKSON. The situation seems to be this, that the Board could if it found a collectively bargained agreement to be unfair, disregard it.

Senator ELLENDER. Well, how could they determine that it was unfair if both the employer and employees agree that it is fair? After all, this bill is to protect labor, is it not?

Mr. JACKSON. That is why I told you that I think it is a highly improbable thing that such a conflict will arise.

Senator ELLENDER. Suppose a given industry comes to the conclusion, as between employer and employees, that "We are satisfied with certain minimum wages, certain hours", in a given business? After all, if they are satisfied why should the Board have anything to say about it?

Mr. JACKSON. Well, it is conceivable, of course, that in collective bargaining the bargaining agents will, either through lack of zeal or less worthy motives, agree upon a wage that would be below a minimum, but as a matter of actual practice the minimum wages established by the Authority are usually almost invariably the very floor that any free labor will accept. Now, if wages agreed upon did not get up even to the established fair wages, then I can conceive of a conflict, but I think that is an improbable situation, but if it occurred, I think that the Labor Standards Board under this act, would have power to hold that the two sides had agreed upon what was not a fair wage.

Senator ELLENDER. No matter if it affected the whole industry and the employees would be satisfied and the employer would be satisfied?

Mr. JACKSON. I think that would make no difference.

Senator PEPPER. I think the paper said the other day that the woman who was pulling the plow in a certain State did not record any protests.

[PAGE 23]

Mr. JACKSON. No; and probably it was very unhealthy, as I read the statement.

Representative CONNEBY. Mr. Jackson, as I understand it, there are two points in regard to the child-labor provisions in this bill. I mean, there was the Hammer v. Dagenhart case, which was a direct proposition of saying that any goods, wares or merchandise manufactured within 90 days before its shipment would be barred from commerce if a child under 16 has been employed in the manufacture of it. Under the Wagner-Connery Act we held that a labor dispute was interference with the free flow of interstate commerce. Now, do you hold that oppressive wages and child labor are causes of a labor dispute which is interference with the free flow of interstate commerce?

Mr. JACKSON. They may be, yes; the Board may find that

Representative CONNERY. In other words, you have two bases.

Mr. JACKSON. More than two. If we go through the bill I think we will come to the different bases, as we take up those provisions, because the different provisions of this bill are framed under the constitutional theory of particular cases, as I pointed out earlier, and if we go throulgh the key provisions of this bill, I think we will quite quickly see the different approaches to the question that you have in mind.

Representative CONNERY. Now, along the line of what Mr. Keller said about minimum wages under the bill as it is drawn now, suppose you set in that bill a 40-hour maximum week and then said that the Board could not set lower than 30 hours a week, and then said that the wage should be 40 cents an hour or $16 a week, up or down, is there any danger there as to the delegation of power to the Board?

Mr. JACKSON. I filed a brief on that point.

Representative CONNERY. Referring again to what Mr. Keller said, suppose you set 40 cents an hour and a 30-hour week without it being revised up or down by the Board, what about that?

Mr. JACKSON. Then your due process problem would arise, if it were proved to be arbitrary and unfair in some particular case.

Representative CONNERY. Now, along the line of questions by Senator Walsh, if a garment factory in New York manufactures garments and they only sell those garments in New York City, they make them in New York City and sell them in New York City, if, because of competition, they pay lower wages, cheap wages, and work long hours, and that comes in competition with Indiana or New Jersey, or some place else, that will aflee't interstate commerce and the Board can regulate those works, can it not?

Mr. JACKSON. They can be reached, because the Congress has the power to foster interstate commerce as well as to regulate it, and if you find that commerce between Indiana and New York is based on labor standards that we like to consider American standards, and you find that that interstate commerce is being choked off and stopped by some local practice, you have the power to reach it under the doctrine of the Shreveport case, even though the competition is wholly within the State.

Now, let me tell you how far the courts have gone in that respect. The State of New York granted a charter to the New York Central Railroad that it could operate between two points and that it must not charge more than a certain rate of fare - I have forgotten what it

[PAGE 24]

was-2 cents, we will say, for example-and the Interstate Commerce Commission set a rate of more than that - 3 cents, we will say - though I am not sure what figure it was. The State of New York said, this is our State, this is our corporation, it is our baby. We told it that it could only charge 2 cents, and that is the condition of its charter. The Supreme Court said, No; the Federal Government may regulate your intrastate rate, because the charging of only 2 cents would be a discrimination and would affect the carrier's capacity to perform its interstate functions. So that if you have an industry in the city of New York that is, by its unfair labor practices, breaking up, choking or stifling fair interstate commerce, then you have a right to bring your powers to the protection of fair interstate commerce.

Representative CONNERY. Now, we also have a bill, haven't we, similar to the Hawes-Cooper Act on prison-made goods, that where goods are shipped into a State, where the goods are made under oppressive labor conditions, cheap wages, long hours, and that State has a law against it the case will be settled in the State?

Mr. JACKSON. You have such a bill pending, and there are other bills pending on the same theory.

Representative CONNERY. Then there are three approaches to the child-labor proposition: Under the Hammer v. Dagenhart case, if the court threw that out as they did under the 5-to-4 decision you would still be able to reach child labor through the interference with the free flow of interstate commerce and oppressive labor practices, or in this other way where we divest ourselves of that character of commerce going into the State.

Mr. JACKSON. That is right.

Senator ELLENDFR. Mr. Jackson, suppose in the case cited to you by Congressman Connery that the prices for the goods manufactured in Indiana should be the same as the prices of the goods offered in New York, what would then happen?

Mr. JACKSON. If they were the same price?

Senator ELLENDFR. If they were the same price.

Mr. JACKSON. The same quality?

Senator ELLENDFR. The same quality.

Mr. JACKSON. Well, it would depend upon whether there was unfair competition by reason of wage cutting.

Senator ELLENDIFR. Would prices be the governing factor in determining competition?

Mr. JACKSON. They might, although of course quality might enter into it or some factor of that kind, but you would have to establish substantially unfair competition before you could reach the New York business.

Representative HARTLEY. Mr. Jackson, in your opinion would the provisions of this bill apply to retail stores of the chain-store variety, that is, those stores that sell in the retail market but who move goods across State lines?

Mr. JACKSON. Well, you would have to establish first that they were engaged in interstate commerce to a substantial extent in themselves, or you would have to establish the competitive feature I have mentioned. It is hard to conceive of the latter situation arising whereby local businesses would be subject to this law.

Representative HARTLEY. Well, take for instance the A. P. grocery stores, or the National Grocery, or the Woolworth stores - during these recent labor disturbances we had one of the sitdown-strike

[PAGE 25]

demonstrations in the Woolworth stores-we will say that certainly they are in competition with stores that are engaged in interstate commerce; I would like to find out whether or not you consider the provisions of the bill to apply to such an organization?

Mr. JACKSON. Before you would be able to reach a situation of that kind you would have to find that the practices did, to a substantial degree, affect interstate commerce. If you do it does not make very much difference whether it is a chain store, a group of manufacturing plants, or an individual. You reach the practice rather than the type of business. I think it would be quite apparent as we go through this bill, if we take that up, the extent to which it goes.

Senator HOLT. Mr. Jackson, before you proceed with the bill I would like to ask you how this bill resembles the National Recovery Act in any of the provisions.

Mr. JACKSON. It is easy to see how it does not. It does not touch trade practices at all, which was the cause, of a large number of the ational Recovery Act administration's activities. This does not touch the trade practices at all. This does not have any element of delegation to private industry to establish its own code. I should say that the resemblance of this act to the National Recovery Act is very, very slight. About the only thing that they have in common is that they both try, to a certain extent, to reach labor practices, but this is distinctly not an N. R. A., nor anything like the N. R. A.

Representative KELLER. Before we leave this subject may I ask you a question? Mr. Connery was bringing out an idea that we have been discussing over in the textiles investigation for some time, and the bill at present existing, soon to be reported to the full committee, contains exactly what I am driving at, and that is that the board has the perfect right to pass upon these matters before the court can review the action, or before the court can interfere one way or the other, through injunction or otherwise. It does seem to me that we may be able to apply the same thing here.

Senator HOLT. I have one more question. Does this board do in a mandatory way what the N. R. A. tried to do in a voluntary way?

Mr. JACKSON. I could not answer that, Senator, for I do not know what the N. R. A. tried to do in a voluntary way.

Senator HOLT. I mean in the regulation of labor practices.

Mr. JACKSON. I suppose that they tried to reach some of these same objectives, but their procedure was entirely different. The procedure here is more to be compared to the procedure, I should say, under the Wagner Act, with hearings before the board to determine the particular industry and the particular circumstances. I do not see any parallel in workings between this and the N. R. A. at all. I know it is popularly called a new N. R. A.

The CHAIRMAN. You mean it is popularly called that by those who are against the regulation.

Mr. JACKSON. Those who are against both.

The CHAIRMAN. Those who are against the regulation to provide minimum wages and maximum hours, and the regulation of child labor.

Mr. JACKSON. Yes.

The CHAIRMAN. You know, do you not, that the Senator who offered the bill in the Senate voted against the N. R. A. each time it came up?

[PAGE 26]

Mr. JACKSON. Well, I would be glad to take his word as to that.

The CHAIRMAN. That is correct.

Mr. JACKSON. I have not examined the record.

The CHAIRMAN. The N. R. A. provided for voluntary action on the part of the employers without giving the Government the right to fix the minimum wage itself.

Mr. JACKSON. Yes.

The CHAIRMAN. And this is a bill which is intended to give the Government of the United States, represented by all of its people, the right to fix minimum wages and maximum hours, and not to delegate that to any group of employers, for any one group of American life.

Mr. JACKSON. There is certainly no comparison between this bill and N. R. A. in fact.

Representative CONNERY. Mr. Jackson, also there is no provision in this bill that provides that employers can reach wages and hours for their employees without the employees having anything to say about it, as they did in the N. R. A.

Mr. JACKSON. They certainly cannot. There is nothing of that kind in this bill. This is distinctly an effort to take into the control of the Nation the wage and hours standards in regard to goods which will move in interstate commerce, and is not an effort to give industry the control of its own standards in interstate commerce, or elsewhere.

Representative CONNERY. No opportunity for the cats to write the codes for the mice.

Representative WELCH. Mr. Jackson, could the board, under the provisions of this bill in its present form, establish a minimum wage and maximum hours in a given industry that would be different in the several States?

Mr. JACKSON. Yes; it may apply a particular minimum to a particular employment.

Representative WELCH. For instance, the shoe industry.

Mr. JACKSON. That is right.

Representative WELCH. Can they fix a mininmum wage in the State of Massachusetts in a given industry which is different from the minimum wage in the State of Indiana?

Mr. JACKSON. That is the whole purpose of the flexibility provision, so that you will not lay upon an industry an inflexible rule that disregards local conditions. You may have an employment in a city as against an employment in a section where living is cheaper.

Senator BORAH. Would that rule apply also to large cities, that they can fix different minimum wages in one large city than they would in another?

Mr. JACKSON. I see no reason why it could not be done under this

Representative WELCH. Why should it be done?

Mr. JACKSON. Living conditions are considerably different in different communities, and it is desired, as you will see when we get to the discussion of the standards set up in this act, that they are to consider the cost of living, the fair value of the services, and so forth. The prevailing rate of wage in the community may be different.

Representative RAMSPECK. Mr. Jackson, as I understood your previous statement, the whole theory of this bill is based, in effect, on commerce. It may not only be possible but necessary to fix different

[PAGE 27]

wages, might it not, because in some cases the higher wage under competitive conditions would be discriminatory?

Mr. JACKSON. Yes. The wages that are fixed by collective bargaining - take for example the bituminous coal industry - the schedule which they agree upon by collective bargaining takes into consideration different conditions within the industry. For example, pick mining and machine mining-there is a differential in wage. I do not recall what it is, but there is a differential whether they are working a thick vein or a thin vein, because if you did not make a differential, if the labor cost were bound to be fixed the same for both, you might completely close one type of mine and throw a lot of people out of work. That is why a good deal of flexibility has been given here in the application of these minimums, so that, as I said, a body of experience can be built up and you will not plunge headlong into a task that creates an injustice to the people.

Representative RAMSPECK. Without that flexibility there would be danger of the law being held unconstitutional also, would there not?

Mr. JACKSON. There would be danger of the law being held unconstitutional and danger of its doing a great injustic.

Representative CONNERY. Mr. Jackson, referring to Mr. Welch's question and Mr. Ramspeck's question, as a practical matter under this bill, with the advisory board set up, take the shoe industry that Mr. Welch is speaking of, a manufacturer from New England and a manufacturer from St. Louis, which are the two competing places, you might say, in the United States, they could get the union men from Massachusetts and the union men from St. Louis, and then somebody representing the public, and they would be permitted to go out and try to reach an agreement among themselves and then come before the board and practically work out an agreement on wage differentials and everything else in the industry, could they not?

Mr. JACKSON. They probably could, but the board is not bound by anything that this advisory committee brings up.

Representative CONNERY. They could fire them the second day. It is not like the code.

Mr. JACKSON. It is not like the code at all.

The CHAIRMAN. That is the provision that is in the New York minimum wage law which was sustained by the Supreme Court of the United States.

Mr. JACKSON. The advisory committee.

The CHAIRMAN. Yes.

Representative GRISWOLD. The sponsor of the bill in the House stated it was his opinion that the railroad employees and train service would not come under this bill. As I read the bill now it seems to me that the definition of the legislative intent would definitely bring them within the limits of the bill. What is your opinion as to that?

Mr. JACKSON. You are right.

Representative GRISWOLD. As to the legislative intent in the bill here you refer to occupations in interstate commerce.

Mr. JACKSON. You are right.

Representative GRISWOLD. And later on on page 43, and on different pages in your definition where you make it more specific than the employees in interstate commerce, you say anything that would affect the flow of commerce. Certainly these men in the railway train service would affect the flow of commerce between the States.

Mr. JACKSON. Yes.

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Representative GRISWOLD. That is my understanding of it, in contrast to the understanding to the sponsor of the bill in the House.

Mr. JACKSON. Well, you may be right.

Representative CONNERY. Mr. Jackson, if what Mr. Griswold said is so then is not the gasoline attendant in a filling station in interstate commerce, is not his occupation in interstate commerce, or is it in service?

Mr. JACKSON. I would not think that there was actually any interstate commerce in such a case.

Representative CONNERY. Because he is not traveling up and down the line like the railroad men.

Mr. JACKSON. If he were attending a gasoline filling station for bus line moving through he would get within the railroad cases, but I think that a local gasoline station man who serves those who come from out of the State as well as those within the State, and whose service was wholly local, would not be an interstate-commerce factor.

Representative CONNERY. Well, certainly under this, as Mr. Griswold suggested, we would affect the men who make engines and who make cars for the railroad, would we not, in production?

Mr. JACKSON. You would affect anything in production that moved in interstate commerce as a commodity.

Representative GRISWOLD. It would go further than the act of production limited it, as Mr. Connery suggested. If a man makes a repair and that engine is delayed in commerce under this bill, as I understand it, he would be affecting the flow of commerce.

Mr. JACKSON. That is true.

The CHAIRMAN. Under the bill as it is written, whether the enginemen, the trainmen, and the conductors, would ever be included in the operation of the law or not would depend upon whether or not the board later reached the conclusion that it was in the interest of the public service, to the men and to the business that they should be included.

Mr. JACKSON. That is right.

The CHAIRMAN. So under the bill as it is now written that committee may decide as to what shall be done, if there were groups of railroad employees who are compelled to work long hours and who desire a maximum beyond which they should not go, it would give the right to the board to include them, would it not?

Mr. JACKSON. There is no compulsion on the board to apply the wages and hours of any industry until they find that it is needful and find that it can be done without throwing people out of work. So it does not automatically apply to any particular kind of labor, but the definition of employer and employee is broad enough to include a railroad employer or a railway employee. Of course, it would not be affected by the law unless the Board saw fit to make it applicable after a hearing.

The CHAIRMAN. Of course, there is very little reason, so far as those features are concerned, why the employees who have the present arrangements, that is, the engineers, the conductors, and the others, there is very little reason why they would resent any benefit, if anybody would resent any benefit by bringing them within the scope of the law.

Mr. JACKSON. The minimum-wage provision is not applicable to them.

[PAGE 29]

The CHAIRMAN. But if there should happen to be employees, as I have reason to believe there are from letters I have in my files since the bill was offered, working for railroads who actually need the benefit of it, they could be brought under it?

Representative GRISWOLD. Will the Senator yield there? He speaks of the enginemen. We will assume, for instance, where they have some short line, under one section of this bill, I do not just recall just which one it is now, it provides that a man who is deprived of his tenure of employment can make his appeal. Under this bill, despite the collective bargaining of the organization, as I read it, one man can raise the question of his tenure of employment and wreck the whole collective bargaining proposition, because you give the definition of an individual in a way that the term shall be considered in the singular and plural.

Mr. JACKSON. Did you say "tender" or "tenure"?

Representative GRISWOLD. Tenure.

Mr. JACKSON. Deprived of his tenure?

Representative GRISWOLD. Yes. I do not know which section it is, but I just glanced at it since I came here.

MR. JACKSON. The employee, in this case an individual, whose work has ceased in consequence of labor disputes, or because of unlawful discharge, would have the right, while he was in that status, that any other employee would have.

Representative GRISWOLD. The section I refer to uses the word "tenure." You understand that all these enginemen, conductors, brakemen, and so forth, through their collective bargaining have certain bases of seniority and other things. Now, if we are going to make the singular and the plural tha same, according to the definition, this one man there could tie up the whole thing.

Mr. JACKSON. I do not see what he could tie up. I do not get what you mean.

Representative GRISWOLD. He may refer the matter to the Board.

Mr. JACKSON. He could ask the Board to give him a hearing. Of course, the provisions are very wide as to permitting hearings, but he could not tie anything up unless he got a favorable decision from the Board.

Representative GRISWOLD. But the Board, to that extent, would enter into it and hold the power over the collective bargaining of these men, would it not?

Mr. JACKSON. No; I do not see that that follows.

The CHAIRMAN. The bill does provide, does it not, that any person who thinks himself aggrieved, if his group comes within the scope of the act, shall have the right to make a complaint?

Mr. JACKSON. Of course, anybody can go to the labor board, or any of these boards with any complaint, but the rights of the employees are intended, by section 23, to be specifically protected for the purpose of collective bargaining. Section 23 of the act reads:

Nothing in this act, or in any regulation or order thereunder, shall be construed to interfere with or impede or diminish in any way the right of employees to self-organization; to form, join, or assist labor orgarnization; to bargain collectively through representatives of their own choosing; and to engage in all concerted activities allowed by the law of the land, and the act shall be construed and applied to encourage and protect the self-organization of employees for the purpose of collective bargaining and mutual aid.

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Now, it is inconceivable that under this act the Board would disregard collective bargaining, if it were fairly and representatively arrived at. There is a power, of course, to deal with some of these subjects that it is not likely the board will exercise. I think we are bound to assume that the appointment and confirmation powers will be exercised reasonably and that a reasonable board will administer this bill.

Representative DUNN. Mr. Jackson, is it not a fact that the intent of this bill is to wipe out the sweatshop, abolishing child labor, and increasing the standard of living for the working men?

Mr. JACKSON. That is true.

Representative DUNN. We do not have any bona fide guarantee that the Supreme Court is not going to declare all the measures in this wonderful bill unconstitutional.

Mr. JACKSON. No, sir.

Representative DUNN. Let us hope they do not. This kind of legislation should have been enacted into law since Adam and Eve came into the world.

Representative WOOD. Mr. Jackson, you mentioned a while ago minimum wages in a given industry in different localities. Take, for example, the garment workers. Suppose the garment workers in St. Louis, Mo., had established a wage of $6 a day through collective bargaining and the garment workers in Pittsburgh, a town of similar size had established a wage of $4 a day, or $3 a day, what mechanics would the Board use in establishing a minimum in those two towns? Do you think the board would establish a higher minimum in St. Louis than it would establish in Pittsburgh, or do you think they would use a yardstick of the cost of living in the different towns, taking into consideration all the wage scales in the two towns?

Mr. JACKSON. Your illustration is so far above the minimums which the Board is permitted to deal with that the situation would not be affected, because the purpose of the minimum-wage bill is not to help the man who already has been able, by collective bargaining, to establish a fair wage.

Representative DUNN. I understood you to say a while ago that the Board would establish different minimums in a given in different localities. Did you not say that?

Mr. JACKSON. That is right; but what I am pointing out to you is that your illustration would not be affected at all, because you will find on page 15 of the Senate bill the limitation "the Board shall not establish a minimum fair wage which in the judgment of the Board will give employees receiving not more than such minimum fair wage an annual wage income in excess of $1,200, or an hourly wage in excess of 80 cents except for overtime, night, or extra-shift work." In other words, the dealing with the minimum wages does not deal with the people getting wages in the higher brackets.

Representative WOOD. The wages received in St. Louis would, in effect, depend on the things that influenced the board in establishing a different minimum there than in the other town that had a $4 scale, is that the position?

Mr. JACKSON. In the first place, the minimum wage is established in the bill by Congress. That is the basis below which any payment will be deemed oppressive.

Representative WOOD. It does not prevent the board from establishing a higher wage than 40 up to 80 cents an hour?

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Mr. JACKSON. The Board may establish a fair wage. The bill provides just what it shall take into consideration. On page 14 of the Senate bill, commencing at line 11, it reads:

In determining and establishing a minimum fair wage for any service or class of service, the Board (I) shall take into account the cost of living and all other relevant circumstances affecting the value of the service or class of service rendered, (2) shall be guided by like considerations as would guide a court in a suit for the reasonable value of services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid.

Representative WOOD. I read the section. Now is that applicable?

Mr. JACKSON. It is the same as if you sue a man for your services and you haven't any contract, the old rule of quantum meruit would apply, where the service is at the request of the employer with no contract as to the pay, where you call your witnesses to show what similar services receive in other employment. You try to find what a willing seller and a willing buyer will pay for the service. This section lays down the evidence that will be admissible.

Representative WOOD. I want to ask it in another way. Supposing the Board be called upon to establish a minimum for garment workers in St. Louis and Pittsburgh, the wages in St. Louis were $6 a day, or whatever it might be, the wages in Pittsburgh $4 a day, both being arrived at as the result of collective bargaining, what do you think the Board would do? Do you think the Board would establish a similar minimum wage for St. Louis as it did for Pittsburgh?

Mr. JACKSON. I think it would be very likely that there would be a differential between the two places, because the free bargaining agents on both sides had found $6 to be fair and $4 to be fair, presumably, as you went down the scale toward the minimum. Some differential up to the minimum would be fair.

Representative WOOD. You set the differential wage, establishing a minimum between $6 a day in St. Louis and $4 a day in Pittsburgh?

Mr. JACKSON. They have the power to fix the minimum.

Representative WOOD. You think the Board would not be influenced in establishing the minimum?

Mr. JACKSON. Both of those are above the minimum which the Board has the power to fix, so you understand the Board could not affect either of those wage scales.

Representative WOOD. St. Louis might have an organization of 1,000 or 1,500 members that may have a $6 wage and there might be 5,000 other garment workers in St. Louis that have a $2 wage, and similar conditions might exist in Pittsburgh. Now, in order to establish a minimum, if the same conditions, the same number of people were affected by the $4 wage as were affected in St. Louis by the $6 wage, how would they establish a minimum in St. Louis, establish a minimum wage for the 5,000 unorganized garment workers?

Mr. JACKSON. Well, the reasonable value of the services in that community would surely have some force, and the bill directly requires that in fixing the minimum fair wages the board "shall consider the wages established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing." So that the Board is expressly commanded, under this bill, that it should consider your $6 collective bargaining wage in one place and your $4 collective bargaining wage in the other place.

[PAGE 32]

Representative WOOD. If living conditions and everything were similar in Pittsburgh and St. Louis do you think they would establish the same minimum in St. Louis as in Pittsburgh?

Mr. JACKSON. What was the last part of your question?

Representative WOOD. If the people I am speaking of, affected by the decision of the Board, would ask for a minimmum wage to be established, under the same circumstances and conditions, the cost of living and everything included being the same in Pittsburgh as it is in St. Louis, do you think the Board would establish a minimum wage in each town that is similar?

Mr. JACKSON. If they had the same evidence before them in both places and the same conditions I should think that the same judgment would follow.

Representative WOOD. In other words, if the Pittsburgh people were not able to receive wages up to $6, due to the collective bargaining power, you give the board the power to set either that minimum or to lowering the minimum?

Mr. JACKSON. I understood you to say that the conditions were the same. Now, if you have the same conditions except that the collective-bargaining rate is different in one community than it is in the other, then the Board would have to take that into consideration under the law.

Representative WOOD. And establish the same minimum?

Mr. JACKSON. No; they would have the right to take into consideration and give such rate as they thought was fair. Due to the fact that those two rates were established by collective bargaining, they would have to take that into consideration.

Representative WOOD. If they did not take that into consideration - if the Board did not take that into consideration and established a similar wage in Pittsburgh as in St. Louis, it would work a hardship on the workers in St. Louis.

Mr. JACKSON. If they did not take it into consideration, as the statute has commanded them to do, an appeal can be taken to the court to set aside the order fixing the wage because they had failed to take it into consideration, because the statute directly commands them to take that into consideration.

Representative WOOD. Is there any mandatory provison about that?

Mr. JACKSON. Yes. It says: "In determining and establishing a minimum fair wage for any service or class of service, the Board shall take into account the cost of living", and these several things, among others the wages established by collective labor agreements negotiated between employer and employee. It is just as mandatory as you can make it.

Representative WOOD. We had a good deal of discussion about that, establishing a minimum wage in Pittsburgh of, say, $3.50 or $4 a day, and establishing the same wage in St. Louis where the workers got $6 a day. It would work a hardship on the workers in St. Louis.

Representative CURLEY. Mr. Chairman, there are some members on this committee that have not had an opportunity to read the provisions of this bill, inasmuch as there are 48 pages to it, although I have listened very carefully and attentively to Mr. Jackson in his original statement made to this committee. The thought has come to my mind, induced by the questions put by Mr. Wood from Missouri, as to whether or not the operation of this bill would affect or influence

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the prevailing rate of wages established throughout the various communities in the United States. Would this bill affect the rates as prescribed in the labor organizations by collective bargaining agreements?

Mr. JACKSON. Well, you will have to bear in mind my limitations. I am only a lawyer and not an economist, and the effect that it would have I do not feel competent to say.

Representative CURLEY. I am only a layman; I am not even a lawyer.

Mr. JACKSON. Then on many practical questions you probably have the advantage over a lawyer, because you mind is not littered up with a lot of precedents.

Senator WALSH. Mr. Jackson, does it not appear clearly in the bill that where the annual wage is over $1,200 there is no jurisdiction in this Board at all?

Mr. JACKSON. There is no jurisdiction to affect it at all.

Senator WALSH. So that when a group of employees are receiving a wage of less than $1,200 annually they can go to this Board and ask to have a minimum wage in that industry established?

Mr. JACKSON. Whether that would influence the wage levels I would not be able to say.

Representative CURLEY. I refer to some craft industries in New York, where the prevailing rate is different from that set down in Pennsylvania.

Senator WALSH. The trades that he speaks of, the well-paid craftsmen, would have no application. There is no question of wages at all unless the annual income to the worker is less than $1,200.

Mr. JACKSON. That is right.

Representative CURLEY. That satisfies my question.

Representative GRISWOLD. Mr. Jackson, going back to the garment industry, under the N. R. A., as I recall it, they established a line across the country, on a line with Wheeling, W. Va., and south of that line they had a differential in wages of a dollar less than north of the line, a dollar per week. In Indiana, for instance, a garment factory could move across the river and avail themselves of that differential of one dollar a week less, and some of them did that. Now, under this bill would the Board have authority to establish an arbitary line like that and establish a differential under that arbitrary line? Would they have that authority, whether they might exercise it or not?

Mr. JACKSON. There is a provision in the bill on classification.

Representative CONNERY. Mr. Chairman, I suggest when Mr. Griswold finishes questioning Mr. Jackson that we recess until 1:30 and we can fix the tables in the meantime so that the members can be heard and it will be easy for Mr. Jackson to answer the questions and then he can' go through the bill section by section.

The CHAIRMAN. Will that be satisfactory to the members of the committee, that when Mr. Griswold finishes his questioning we recess until 1: 30? During that time we will try to make a better arrangement of these tables so everybody can get closer to the witness. As soon as Mr. Griswold finishes his questions we will recess until 1: 30.

Mr. JACKSON. On page 26 of the Senate bill is the provision with reference to classifications, which authorizes the Board to classify employers, employees, and employment within an occupation to which

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such order relates, according to localities, the population of the communities in which such employment occurs, the number of employees employed, the nature and volume of the goods produced, and such other differentiating circumstances as the Board finds necessary or appropriate. Now, that gives the Board a considerable power in classification. There is no express power given there to draw a line across the country and call that a classification.

Representative GRISWOLD. Do the implied powers of this Board permit them to do that?

Mr. JACKSON. Let me read the next limitation there -

but it shall be the policy of the Board to avoid unnecessary or excessive classifications and to exercise its powers of classification only to the extent necessary or appropriate to accomplish the essential purposes of the act.

Representative GRISWOLD. Where is that?

Mr. JACKSON. That is at the bottom of page 26. The limitation I just read begins at line 25.

I do not see how a classification as broad as you have suggested could accomplish the purposes of this act where the classification is by employers, employees, and employment, and conditions within the industry.

Representative GRISWOLD. I hope your opinion is correct, but the very fact it says, "but it shall be the policy of the Board to avoid unnecessary or excessive classifications" would be a drawing of a line, an arbitrary line in itself tending to reduce excessive classifications.

Mr. JACKSON. No; I think it would be a classification in itself.

Representative GRISWOLD. Yes; but it would be one classification that would tend to eliminate more classifications which would be excessive classifications, if 1 understand the word "excessive" properly.

Mr. JACKSON. But you see this Board can only function by hearings, and I can hardly conceive of a question being before the Board upon which it could grant hearings that would involve as wide a classification as that. The purpose of the flexibility provisions here is so that classifications can be made in reference to the piirtitulma employment, not a general subdivision of the country.

Now, it should be borne in mind that so far as the oppressive wage is concerned, that is, the wage which is fixed by Congress, there is only one standard fixed for relaxing that wage, and that is where the application of it would tend to throw people out of employment. When you come to the fixing of a fair wage you have a different standard which is its value, and the value of services is something that the courts have been inquiring into for years, and the method of proving the value of services is well established. You prove the different elements which we have been discussing, including the collective bargaining agreements. So that the question of fixing the minimum fair wage is one that proceeds in accordance with very old and very well-established legal procedure.

Representative GRISWOLD. On your theory of quantum merit you would establish a wage the value of which, south of that line which was begun under the N. R. A., would be a dollar less than north of the line, and you would arrive at the same result, for instance, in enforcing the wage scale.

Mr. JACKSON. I do not think you could establish a wage scale for all industries, a differential for all industries by a line drawn across the country in that manner.

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Representative GRISWOLD. Did we not do that under the N. R. A.?

Senator WALSH. Have we concluded?

The CHAIRMAN. We will recess until 1:30.

(Whereupon, at the hour of 12 noon, a recess was taken until 1:30 p. m. of the same day.)

AFTERNOON SESSION

(The hearing was resumed at 1:30 p. m. pursuant to taking of recess.)

The CHAIRMAN. Mr. Jackson, you stated this morning that you would give to the committee an analysis of the bill by paragraphs, and I suggest that we do that. But before we do that, there was some question came up this morning about the regulation, for instance, of retail businesses under this bill, and I doubt if your statement was quite full on that subject. Would you explain under just what circumstances and under what circumstances only, it would be possible for the regulation of retail establishments and small business enterprises to come under this bill?

Mr. JACKSON. I will try to. It was not intended by this bill to apply generally to retailers or to apply to the service trades, such as the filling-station attendant, and the pants presser and small business generally. In fact, there is in it a provision which provides for the exemption of businesses which have a number of employees below some certain figure which the Congress of course may fix.

If it were 15, for example, it would not affect any retail or service trades business with a smaller number of employees under any circumstances.

But then, there are only two ways in which a retailer, for example, would be affected by this bill as it now stands, and disregarding that exemption. One would be the retailer who is located close to a State line and sold his goods by delivery across a State line, and the other would be the case of a local retailer, who by his labor practices and standards was able to affect the interstate movement of goods. In other words, if a merchant in interstate commerce such as Sears, Roebuck should be able to convince the Board that a local merchant's labor standards were enabling him to compete unfairly with Sears, Roebuck, then that local merchant might be required to adopt fair standards. Of course, while that is possible legally, it is very far-fetched as a practical proposition.

Practically, the situation in which a local merchant might be affected would be if he were moving his goods in the course of delivery across the State line to a substantial extent so that he were engaging in interstate commerce; but generally speaking, the policy of the bill is not to include the service trades and small businesses and the retailing enterprises.

The CHAIRMAN. You said something about State lines. Before the law would apply to retailers along State lines they would have to be drawn into it by an order of the Board?

Mr. JACKSON. Oh, yes.

The CHAIRMAN. It is not reasonable to assume that the Board would draw small retailers in because they happened to be in a locality within a few feet of the State line without including others too.

Mr. JACKSON. As a practical proposition, the bill does not affect the retail trades.

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The CHAIRMAN. And the bill shows on its face, does it not, from the beginning to the end, that it is intended to provide standards for those business units that are actually engaged in and substantially and materially affecting interstate commerce.

Mr. JACKSON. That is right.

The CHAIRMAN. Leaving to the States and the local communities themselves, the power of regulating the small business units that affect the local community only.

Mr. JACKSON. That is a correct statement of the purpose of the bill.

Representative GRISWOLD. You used the example there of the local merchant interfering With Sears, Roebuck or some mail-order house; that it might bring them - the possibility of it. What about Sears, Roebuck interfering with the local merchant?

Mr. JACKSON. I do not see how they could. As I said to you, Sears, Roebuck could come to the Board and complain that the local merchant was competing and was putting them out of business with its labor standards, if Sears, Roebuck could show an unfair competition, and in that way this bill would make a case, that is possibly but not practically.

Representative GRISWOLD (interposing). I understand that. But you only gave that as a possibility and not as a probability. But I want the reverse of it. What about the local merchant? Can he go and complain about Sears, Roebuck under the same practice and procedure?

The CHAIRMAN. If they are engaged in interstate commerce.

Mr. JACKSON. Sears, Roebuck being engaged in interstate commerce, and the regulations of commerce are applicable to interstate commerce.

Representative GRISWOLD. I do not know how it is with the rest of the United States, but practically every town and community of any size in my part of the country has a Sears, Roebuck and a Montgomery Ward store in that community. It is a chain proposition.

Mr. JACKCSON. But insofar as their mail-order business is concerned, it is interstate commerce, and is subject to the regulation by Congress. Sears, Roebuck, if it has a local store, that store does not necessarily follow to be in interstate commerce. It would depend on the set-up.

Representative GRISWOLD. The set-up is this. In some instances that I am familiar with, for instance, I want to go and buy an outboard motor at Sears, Roebuck. I go there and they telephone up to Chicago, and on the next bus it comes out.

Mr. JACKSON. Generally speaking, a store of that kind, which is an agency for taking orders to be transmitted, would be engaged in interstate commerce.

Representative GRISWOLD. And the local merchant can have the right to go in and complain?

Mr. JACKSON. Well, he would have to show the Board that there was -

Representative GRISWOLD (interposing). He would have the same right to go to the Board and complain against Sears, Roebuck, this local merchant who is doing strictly intrastate business, as Sears, Roebuck would have to come in and complain against him.

Mr. JACKSON. While your local merchant is not engaged in interstate commerce, and therefore he could not charge that his interstate business was being affected, he could complain about unfair interstate

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competition. Of course, Congress cannot ordinarily interfere to protect the purely local business any more than it can interfere to regulate him.

Representative GRISWOLD. It would seem to me that you leave the local merchant out on a limb on that kind of proposition.

Mr. JACKSON. No. He can file a complaint.

Representative GRISWOLD (interposing). You say that he is out of court because he is not in interstate commerce.

Mr. JACKSON. I do not say that he is out of court; I say that his local business is not subject to the regulation of Congress as such. He can go to the Board and complain of any unfair labor practice under this act.

Representative GRISWOLD. Then he would operate under a different set of rules of evidence than Sears, Roebuck, is that it?

Mr. JACKSON. No; he would operate under the restriction of Federal power. In other words if you cannot regulate his business, that business does not become the basis of Federal legislation. I do not know that I make that very clear what I mean.

The CHAIRMAN. You mean by that, do you not, Mr. Jackson, that a small local merchant.

Representative GRISWOLD (interposing). Pardon me. What I am interested in is this country merchant, and the mail-order house 'or Sears, Roebuck or Montgomery Ward-it seems to me that they would have an advantage of this man here. Suppose all of the country merchant's stock were received in interstate commerce, would that make any difference? He is constantly selling from that stock and replenishing it through interstate-commerce channels.

Mr. JACKSON. The complaint can be made by the country merchant; he can make his complaint just the same as he can be complained against, but the basis of his complaint is not his own business. It is the business that is moving in interstate commerce. The basis of his complaint has to be not merely the effect on his business, but the acts which are being done in interstate commerce by his competitor; but if he can show that this competitor by substandard labor conditions is unfairly interfering with his business, he can get relief under section 9 of the act which provides that:

(a) Whenever the Board shall determine that a substandard labor condition exists in the production of goods in one State and that such goods are sold or transported in interstate commerce and compete to a substantial extent in another State with other goods in the production of which such substandard labor condition does not exist, whether or not such other goods are sold in interstate commerce, the Board shall make an order requiring the elimination of such substandard labor condition * * *

But he could not proceed on the theory that his business was subject to Federal regulation. He has got to appeal to the power to regulate the other man's business.

Representative GRISWOLD. That is what I mean. He has a chance, in your opinion, under this bill, to get his aid on the ground that the other man's violation of the act is interfering with his business.

Representative FITZGERALD. What provision is there in the bill to aid the handicapped or the subnormal worker?

Mr. JACKSON. That is at page 19 of the Senate bill, where the regulations or orders of the Board may provide for -

the employment of learners and apprentices at such wages lower than the applicable wage and subject to such limitations as to time, number, proportion, and length of service as the Board shall prescribe; (2) the employment of persons

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whose earning capacity is impaired by age or physical or mental deficiency or injury, under special licenses to be issued by the Board, at such wages lower than the applicable wage and for such period as shall be fixed in such licenses; (3) deductions for board, lodging, and other facilities furnished by the employer if the nature of the work is such that the employer is obliged to furnish and the employee to accept such facilities; (4) overtime employment in periods of seasonal or peak activity or in maintenance, repair, or other emergency work and the wage rates to be paid for such overtime employment and (5) suitable treatment of other cases or classes of cases which, because of the nature and character of the employment, justify special treatment.

Representative FITZGERALD. Then this Board will have the power to grant exemptions to the aged, the handicapped, and the subnormal workers?

Mr. JACKSON. Yes, sir.

Representative FITZGERALD. Also apprentices.

Mr. JACKSON. Apprentices and learners.

Representative FITZGERALD. And regulate the time? What does it mean where it states on page 19, "subject to such limitations as to time, number, proportion, and length of service as the Board shall prescribe?" Does that mean the time of the apprentices or the number of apprentices?

Mr. JACKSON. I assume that the purpose of that is, if you came in and wanted an exemption for two or three apprentices, where you are employing 15 or 20 or 30 workmen, that might be reasonable. But if you had 2 or 3 workmen, and you were trying to ring in 30 or 40 apprentices, they would probably come to the conclusion that your application was not in good faith; so that it is to enable the Board to see that the applications for apprentices are actually good faith apprentices.

Representative FITZGERALD. But it does give the Board the power to increase or decrease the amount of apprentices?

Mr. JACKSON. Yes, sir.

Representative FITZGERALD. Would there not be some conflict there with organized trades that already limit the number of apprentices?

Mr. JACKSON. No; I think not. There is no such purpose here - in the first place, there could not be anything that would require the employer to hire apprentices. It would merely be a permission, and he would still have to deal with his union in the case of collective bargaining, and the provisions of the act which are intended to protect collective bargaining would prevent that as a practical matter.

Representative CONNERY. When you spoke this morning about the minimum wages, there seems to be a little tendency among labor to worry about the minimum wage becoming the maximum wage. Do you believe under this $1,200 provision, is it not the idea of the legislation to take care of the poorest paid workers in the United States, in fact those whom labor has not been able to reach or to organize? A man getting $6 a week and working 60 hours a week. Is not the idea of this legislation to bring them, up to something like $16 a week, and then come up to the maximum of $1,200 a year, and then leave it to labor to build up from $1,200 on?

Mr. JACKSON. That is the purpose, of course, to establish the fair wage, to establish the floor above which labor may build.

Now, as to the economic effect of the minimum wage on higher standards, Mr. Henderson or Mr. Lubin of the Labor Department who have studied that extensively, would be able to answer much more intelligently than I.

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Representative CONNERY. Do you feel that this minimum wage would be likely to become the maximum wage, the bringing of these poorly paid people up to a minimum wage? Do you think that it is dangerous to those receiving the higher wages, to bring them down to the minimum?

Mr. JACKSON. I do not see how that is possible with collective bargaining protected as it now is. Mr. Pope calls my attention to the provision of the act which you will find on page 27:

(6) In case of an order relating to wages, may contain such terms and conditions as the Board may consider necessary or appropriate to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage; and it shall be the policy of the Board to establish such minimum-wage standards as will affect only those employees in need of legislation protection without interfering with the voluntary establishment of appropriate differentials and higher standards for other employees in the occupation to which such standards relate; * * *.

Representative CONNERY. In other words, where you have the lowest paid, the laborer, you do not feel that any wage set by the Board would be below anything which organized labor might have brought them up to?

Mr. JACKSON. No; I do not see that there is the slightest possibility if this law is faithfully carried out, of the Board ever lowering any wages fixed by collective bargaining. If collective bargaining had resulted in an unfair minimum, it might result in raising the minimum, but I do not see any possibility of this bill being used to lower wages in any brackets.

Mr. Pope calls my attention to the provision of the act making that policy effective, at page 41:

(b) Nothing in this act, or in any regulation or order thereunder, shall be construed to invalidate any contract, understanding, or collective-bargaining agreement whereby an employer undertakes to pay a wage in excess of the applicable minimum wage under thi6 act or to require a shorter work week than the applicable maximum work week under this act or otherwise to confer benefits or advantages upon employees not required by this act.

The whole purpose of this bill is to elevate the floor, so to speak, below which wages must not go. Certainly there is no purpose here to nullify the effects of collective bargaining where that has resulted in a better than minimum fair wage for workmen.

Representative CONNERY. If you get filling stations in interstate commerce, it is well ruled that they were in interstate commerce under this bill, you would have to consider going away down to 1 or 2 employees, wouldn't you, because in filling stations they employ sometimes 2 and sometimes 3, and if you set your number of employees so that it would affect say 15 or 10 or 5, you would strike thousands of people in the Nation who would not be affected even though they were in interstate commerce?

Mr. JACKSON. Yes; I do not think the filling station is in interstate commerce, ordinarily.

Representative CONNERY. Is a clerk in a department store in interstate commerce?

Mr. JACKSON. Probably not, but there may be circumstances in the management of the business, if it were managed as a branch, there might be a situation which would bring them in; but, as I said at the outset, under Senator Black's question, it is not intended by this bill to affect the retail trades or the service trades. It is intended

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to catch the unfair labor practices at the point of production. The goods which those people handle are of course affected. They must be fair goods if they move across-the state line.

Representative RAMSPECK. What is interstate commerce depends upon the facts of each case.

Mr. JACKSON. Yes.

Representative RAMSPECK. Isn't it entirely possible that the N. R. A. might have been upheld in a different sort of a case?

Mr. JACKSON. Well, that is pretty speculative. I think if you will compare the Court's opinion in the Jones and Laughlin case with the Court's opinion in the Schechter case, you can reach your own conclusion as to the degree of definiteness with which the Court has defined its own limitations. It is difficult to predict.

Representative GRISWOLD. Speaking of collective, bargaining, if you establish a differential, would there not be a tendency through the mere establishment of a differential, to affect, in a way, collective bargaining, to the extent that even collective bargaining between the employee and the employer is governed somewhat by supply and demand, and if with a differential established in one part of the country making the value of the services lower than in another part of the country, that that in itself would affect the supply and demand sufficiently to reduce the prevailing wage? Is that not possible? I mean in the locality with the higher wage established by collective bargaining?

Mr. JACKSON. I do not see that possibility, but I am not an economist. The differential which the Board would embody in an order is not a differential which the Board establishes; it is the differential which already exists, but which it recognizes, because the Board is required to find the value of the services at the point which is under consideration. Now, if the Board fixes south of a certain line, a differential of a dollar, it is fixing that because, it finds that that is what the differential is before it fixes the differential. Its authority in each case is to find what the value is in that community, taking into consideration the costs of living, tho collective bargining prices, and all of the facts set forth in the act.

So that if you have in mind the possibility of differentials being established for purposes of sliding industry from one community to another, that is not what the Board is authorized to do. The Board is authorized to recognize in each community the factors in its life which produce a differential, and to fix that differential into its minimum as collective bargaining will be expected to fix it in its maximum.

Representative GRISWOLD. That is what I am talking about. When you fix that differential, it seems to me that from the standpoint of business, that business is automatically going to avail itself of that differential in pay, just as the garment industry did under the N. R. A.

Mr. JACKSON. No, I do not think, if your differential is fairly established in both cases, that that is so. I do not think so.

Representative GRISWOLD. The garment industry moved because of that differential.

Mr. JACKSON. I could not answer that because I do not know the facts under N. R. A., but Mr. Henderson is here, who does, and he can tell you about it. But the differential exists before the Board makes any order. If there is a differential between northern and

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southern labor, it is not because of the N. R. A.; the N. R. A. recognized it. Maybe they did not recognize it just right, and I am not prepared to say as to that, but there is a differential due to living conditions.

Representative GRISWOLD. I will agree with you that the differential is there.

Mr. JACKSON. Now, your man may cross the State line to get into a cheaper labor zone, and he did not need to wait for the N. R. A. or for this bill or for anything else. The differential was there and all that the Board did was, all that the N. R. A. did, I assume, was to recognize it.

Representative GRISWOLD. I agree with you that the differential was there and he did not need to wait, but we are not dealing with a hypothetical case; we are dealing with facts. They did wait and they did move.

Mr. JACKSON. When he said that he moved because of the N. R. A., he was not telling strictly the facts. He was moving because of a differential which existed, whether the N. R. A. existed or not.

Representative GRISWOLD. The letter which this one particular manufacturer gave me was that he was moning because it made a $2,500 a month difference in his pay roll.

Mr. JACKSON. All of us lawyers have written letters.

Representative CONNERY. Mr. Jackson, right there. That is a very pertinent question of Mr. Griswold, because you can see that it will undoubtedly come up when the committees go into discussion of this. Take your textile industry. Mr. Ramspeck has his mills in the South, and we have our mills in Massachusetts. Suppose there is a dollar differential, which they had under the N. R. A.; wouldn't it be to the advantage of the northern manufacturer to move into South Carolina to get that differential?

Mr. JACKSON. Not necessarily.

Representative CONNERY. Why not?

Mr. JACKSON. Because he might have other factors to consider. The efficiency of labor, or other factors that I am not competent to discuss because I am not a manufacturer, but I do not think that it follows that because you can hire one assistant for $2 a week less than another, that the cheap one is better. In fact, sometimes the reverse is true. I think that you have to take into consideration more factors than that to decide - the availability of the market, transportation costs, and other factors. It is very complex, the things that make people move from one community-to another, and of course the same man that is moving will tell one authority that he is moving because of the labor conditions, and he will tell the tax assessors that he is moving because of his taxes, and really the real reasons for the movement of industry is because of more complex factors and factors too complex for me to discuss because I am not an economist.

Representative CONNERY. When we come to the economists, we can ask these questions. Now, as to the general constitutionality of this bill, I would like to ask you, do you think it is constitutional in every respect? Do you think it is airtight as far as you can see?

Mr. JACKSON. I do; I think so. With the single exception of Hammer v. Daqenhart. There is one section of this bill which will either have to be distinguished, as Senator Black has pointed out it

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can be, because it is now embodied in a real interstate commerce regulation, or it will have to be overruled, and I would expect that in a bill like this, the Court would distinguish or overrule as may be necessary.

Representative CONNERY. What particular basis under the decisions under the Wagner-Connery Act of the Supreme Court do you find that would apply and made the Court overrule their decision in Hammer v. Dagenhart? The Jones and Laughlin case?

Mr. JACKSON. The Jones and Laughlin case is one of them. The reversal of the minimum wage case is very convincing that the Court has a different attitude-

Representative CONNERY (interposing). I mean, for the particular point of law? On the ground that manufacture is commerce when it affects commerce?

Mr. JACKSON. I think they take a broader view of the interstate commerce power in the Jones and Laughlin case; distinctly broader than was taken in the Hammer v. Dagenhart.

Representative CONNERY. Do you think they come pretty close to Justice Holmes' dissenting opinion in the case of Hammer v. Dagenhart?

Mr. JACKSON. I think if the Court had had Hammer v. Dagenhart before it on that day and it had to overrule Hammer v. Dagenhart to have gotten to its decision, it would have done it; but, of course, that is merely an opinion, and you cannot tell what a Court has in mind or will do.

Representative THOMAS. I think under the wording of the bill, the bill intends to include all common carriers, whether they be water carriers, rail, or trucking. And that view is strengthened by the exception made on page 41 as to carriers. That is the only exception that I can find. And here is a question that puzzles me: Suppose that a shipment of goods is transported in interstate commerce, and when it arrives in a particular State, a truckman has a large fleet of trucks and he continues to distribute those goods even though he operates wholly intrastate. Is he covered by the terms of this act?

Mr. JACKSON. He acts as a common carrier. Of course if he is a common carrier who has filed his schedules with the Interstate Commerce Commission-

Representative THOMAS (interposing): He is doing a purely intrastate business, though. The Government does not attempt to regulate it.

Mr. JACKSON. I would have to give that some study. I have not considered that case.

Representative THOMAS. There are really thousands and thousands of employees who would be vitally interested ia a ruling one way or the other in a case like that.

Mr. JACKSON. Mr. Pope, who did a large part of the detailed study of this for the Department of Justice, takes the view that under section 7-A, if the journey had been broken so that the carrier was acting purely intrastate, he would not be within the act.

Representative THOMAS. Where in the act is there any yardstick laid down that defines directly "affecting interstate commerce"?

Mr. JACKSON. That is a very difficult thing to define. The courts define it for themselves. They hold some types of railroad labor are in interstate commerce; and other types of railroad labor that are

[PAGE 43

difficult for me to distinguish, the Court thinks are not in interstate commerce because of the effect of their work.

Representative THOMAS. The hypothetical question I put, I doubt if the journey has been ended. One carrier merely takes up the journey. The journey may be consummated in intrastate commerce.

Mr. JACKSON. That is what I say. If he has accepted a through billing of the goods and has accepted a tariff of other carriers, so that there is one rate from the point of consignment to the point of destination, he might be in interstate commerce, while he would not be if he did exactly the same physical acts but made a separate bargain for the haul. It is a very difficult thing to draw that line.

Representative THOMAS. Who is going to decide that very difficult question? Will it have to go to the courts, or will the Board decide this very baffling question?

Mr. JACKSON. The Board would decide it in the first instance in the matters before it. There is an appeal provided to the courts.

Senator PEPPER. Is it not a fact that that same question is already being decided by the courts now under existing law, where the States have attempted to regulate things which are in interstate commerce, and it is a question whether they come to rest within the State to such a degree that they become divested of their interstate character?

Mr. JACKSON. That is right. And it is also being decided in the Employers Liability cases and it is being decided in the Labor Act cases under the Wagner-Connery Act. It is being decided in all of these interstate commerce cases, and it is very perplexing to decide what the principle is.

Senator PEPPER. But this is no new problem? I mean, it is being dealt with all of the time by governmental agencies.

Mr. JACKSON. it is a problem that is inherent in interstate commerce regulation.

Representative CONNERY. Mr. Chairman, may I suggest that when Mr. Griswold finishes, if lie has any further questions to ask, that Mr. Jackson be permitted to go through the bill, section by section.

Representative GRISWOLD. Mr. Thomas was trying to convey the thought, and I think it is proper, that there are a lot of employees who come under this, that we are not perhaps even thinking about. This bill, under your interpretation of it, would bring in all of the taxi lines. Every taxi driver that has a terminal contract?

Mr. JACKSON. No, I would not think so.

Representative GRISWOLD. The Motor Carriers Act, it is now ruled that it applies - you buy a ticket to Chicago, a through ticket, and the taxi that has the terminal facilities at that station, that picks you up and take you from the Union Station over to the northwest station, comes under the Motor Carriers Act.

Mr. JACKSON. If they do it under your interstate railroad ticket, yes. But a taxi might do exactly the same physical act, pick me up at the station and take me to my hotel. One of them, because of having filed the tariff is under interstate commerce, and the other is intrastate.

Representative GRISWOLD. What I am trying to bring out is this. Over here, this Diamond Cab Line can come and under their contracts, every one of their drivers who is going to pick up a passenger there, every one hired by that Diamond Cab Co. would come under your act.

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Mr. JACKSON. I don't know about that. You make your own bargain with the taxi driver. He is under a local tariff, I take it.

Representative GRISWOLD. The taxi driver that is transporting you on a through ticket might be different?

Mr. JACKSON. If he takes me on the through ticket, that is a part of the railroad tariff, if that is so, then he has subjected himself to the act. But you will find it impossible in any legislation to solve the question of just who is and just who is not in interstate commerce. It is one of those things that has to be thrashed out in every single instance.

Representative GRISWOLD. You spoke a while ago of the difference in the efficiency of labor. In this bill in section 19 you mention learners and apprentices. Does the bill at any place define learners and apprentices, that you recall?

Mr. JACKSON. I do not recall any definition of learners or apprentices.

Representative GRISWOLD. The reason I ask that question is this. Under the N. R. A. in the garment industry, they employed girls, and in a number of factories with which I am familiar, they put them on one machine, and for a certain length of time they were learners. Then they learned that machine and they were transferred to another machine and they were still learners. And I have some affidavits in my office of girls that performed as much as 6 months, the operations in a factory, worked say 6 months in a factory on numerous machines, and they were always learners. They never even received the minimum pay because they were always learners.

Mr. JACKSON. That is exactly why the provisions are in here which your colleague pointed out which authorize the Board, when they give the authority to employ learners or apprentices, to fix the limitations as to the time, the number, the length of time, and the service, so that they cannot pull that kind of abuse under this act if it is effectively enforced.

The CHAIRMAN. Now, Mr. Jackson, if you will proceed with your analysis of the bill.

Mr. JACKSON. Well, I think a great many features of this bill do not need explanation because they are obvious in connection with other legislation with which you gentlemen have worked. The legislative declarations contained in section 1 need no explanation. Some of the definitions do. Some of the definitions are important if we are to understand the bill, and they are not usual definitions.

I call your attention on page 4 of the Senate bill, to definition 7-

Representative CONNERY (interposing). Mr. Jackson, these bills are exactly similar in every respect except two. One of these, I think, was an oversight. I intended to mention that to Senator Black when we were drawing the bills. One has reference to the plan of representation - I struck that out of my bill for fear that that might be considered as a company union and I forgot to take it up with the Senator. And one other spot where I leave out the words, "in any State" which applies, however, to foreign imports as well as State, but every line outside of that in the bills is exactly the same.

Mr. JACKSON. The paging is a little different, is it not? The lines and the paging?

Representative CONNERY. I do not think so. It might be, because of those two changes. But I want you to know that the Senate bill and mine are exactly the same except for those two changes.

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Mr. JACKSON. The definition of "employee", at page 4.

(7) "Employee" includes any individual employed and any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unlawful discharge, and who has not obtained any other regular and substantially equivalent employment, but shall not include any person employed in an executive, administrative, supervisory, or professional capacity or as an agricultural laborer as such terms are defined and delimited by regulations of the Board.

So that those groups are excluded from the operation of the bill.

The next definition which I think might be unusual is at page 5.

Representative RAMSPECK. Is it all right to question Mr. Jackson as we go along?

The CHAIRMAN. Mr. Jackson suggested that he be questioned on these paragraphs as he went through each paragraph.

Representative CONNERY. Might I suggest, Mr. Chairman, that I think it would be better, because you must have found from past experience, if we question as we go along, we never end with questioning. I would like to see Mr. Jackson go right through the bill and then have them come back for their questions.

The CHAIRMAN. Whatever the committee desires is satisfactory to me.

Mr. JACKSON. All right. On page 5 the tenth definition is important because it enters into many of the sections that follow.

Subsection (10) at page 5 is the definition of an oppressive wage, and reads:

(10) "Oppressive wage" means, with regard to any employment to which the provisions of this Act with respect to an oppressive wage shall have been made applicable by regulation or order of the Board under section 4 (a), a wage lower than the minimum wage standard of - cents per hour, unless and except insofar as another minimum wage standard is established for such employment by regulation or order of the Board under section 4 (c).

There are three definitions of wages in the act, and if you will turn to page 7, definition (14) then defines a fair wage:

(14) "A fair wage" means a wage fairly and reasonable commensurate with the value of the service or class or service rendered.

Section 5 (a) which we will come to a little later, prescribes the rule by which the Board shall find the fair wage, but the fair wage is the wage based on the value of the services.

Then definition 16 is of a substandard wage and reads:

(16) "Substandard wage" means a wage lower than a minimum fair wage established by an order of the Board applicable to the employment in which such wage is paid.

So we have three wage standards mentioned in the bill to keep in mind. The one is the minimum fixed by Congress, and anything below that, unless the Board has granted an exception, is an oppressive wage. An oppressive wage is below the level established by Congress. Then there is a fair wage, which is what the man ought to get, as the Board finds, taking into consideration all of the facts; and then the substandard wage is anything below that. The substandard wage may be higher than the oppressive wage fixed by Congress, but not up to the fair wage fixed by the Board.

That is to say, suppose you established a 40-cent minimum. The Board went in and found that a particular employment should pay

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60 cents, and it was actually paying 50 cents. You would have the oppressive wage as fixed by Congress, you would have them paying a wage between that and the fair wage which would be a substandard wage. It is important as we read these wage provisions to bear those things in mind.

Definition 11 defines the oppressive workweek, and anything is oppressive above the length of the week that Congress fixes; but it must be borne in mind that when you fix these two figures as to the minimum wage and the maximum week, that when the Board comes to apply it to any particular industry, it may vary the minimum wage if it finds that the application of the strict minimum is going to throw men out of work, and it may vary the workweek if it finds it is going to curtail their opportunity for employment.

Then "oppressive labor practice" is defined, which means -

any practice by an employer constituting (A) the employment of any person to act as a strikebreaker during a labor dispute, and for the purpose of this clause a strikebreaker means a person employed to do work wholly or in part theretofore done by a regular employee (who has stopped, or been excluded from, such work by reason of a labor dispute) where such person is known by the employer to be unqualified for, or to have no intention of accepting, regular employment, or where such person is paid for work done by him a higher wage than the wage paid to such regular employee (whether or not such person fulfills additional tasks or duties) but no person shall be deemed to be a strikebreaker if his employment is necessary to prevent irreparable damage to physical property or to maintain essential public services and is confined to the prevention of such irreparable damage or the maintenance of such essential public services; or (B) the employment of any person to engage in espionage over any employee or the immediate family of such employee for the purpose of securing information regarding the affiliation of such employee with a labor organization, the activities or plans of such employee with reference to self-organization, or the political or economic views or activities of such employee.

Oppressively the practices generally are those practices which are designed to destroy the effectiveness of collective bargaining which you have protected in other statutes.

Oppressive child labor is defined in no. 13 as the employment of any child under the age of 16 years in any occupation, and between 16 and 18 if he is employed in an occupation which the chief of the Children's Bureau finds to be hazardous, particularly hazardous for the employment of children of that age, or detrimental to their health or well-being. So that it applies absolutely to children under 16, and with qualifications to children between 16 and 18.

I have mentioned the fair wage, but it might be well at this point to turn to 5 (a) and to see how this fair wage is established, because this is one of the questions involving delegation:

SEC. 5 (a) Whenever the Board shall have reason to believe that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, wages lower than a minimum fair wage are paid to employees in any occupation in which such employees are engaged in interstate commerce or are engaged in the production of goods which are sold or shipped to a substantial extent in interstate commerce, the Board shall conduct an investigation of the wages paid in such occupation and the value of the services rendered therefore. If the Board shall determine that wages lower than a minimum fair wage are paid in such occupation to a substantial extent, or that the payment of such wages by one or more employers in such occupation threatens to undermine a fair labor standard maintained by others, and that the establishment of a minimum fair wage in such occupation will not unreasonably curtail opportunities for employment, the Board shall make an order establishing the minimum fair wage for employees in that occupation. In determining and establishing a minimum fair wage for any service or class of service, the l3oard (1) shall take into account the cost of living and all other relevant circumstances affecting the value of the service or class of service rendered.

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Representative KELLER. May I interrupt you there?

Mr. JACKSON. Yes.

Representative CONNERY. Will the gentleman yield? I thought we had understood by unanimous consent, that Mr. Jackson would go through the bill section by section, and then you can question afterward, for the sake of saving time.

Representative KELLER. All right; pardon me.

Mr. JACKSON. I will play the game either way.

Representative KELLER. I stick by the contract.

Mr. JACKSON. Continuing with section 5 (a) -

that (2) shall be guided by like considerations as would guide a court in a suit for the reasonable value of services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid, (3) shall consider the wages established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing, and (4) shall consider the wages paid for work of like or comparable character by employers who voluntarily maintain fair wage standards in the occupation to be subject to the order establishing such minimum fair wage; but the Board shall not establish a minimum fair wage which in the judgment of the Board will give employees receiving not more than such minimum fair wage an annual wage income in excess of $1,200, or an hourly wage in excess of 80 cents except for overtime, night, or extra-shift work.

The first thing to notice about this in reference to the delegation of power is that the only power that is delegated there is the power to fix the fair value of services, and fair value is something that the courts have been fixing for many years, and it is not a new or a startling rule. If you go in and order some goods sent to your home and do not have any agreement as to the price, you must pay the fair value, which the court will fix. If you work for a man without a contract, the fair value is the test.

The other thing that should be noted is that the Board can only fix the minimum fair wages which would yield $1,200 per year, in the judgment of the Board in wage income, or such other figure as Congress may fix.

So that the purpose of this act is not to interfere with any wages fixed by collective bargaining, which presumably will be above the minimum levels, but is to reach that group who do not get, for one cause or another, the benefits of collective bargaining.

If collective bargaining is effective, the Government is probably not needed to work out the wage scale. They will work it out between themselves; but in the groups that cannot get the benefit, for one reason or another, of collective bargaining, those are the groups that chiefly can be helped by this act.

The 80 cents per hour is intended to apply where the work is causal or seasonal, and the annual basis cannot be computed.

With that limitation, the Board is empowered to fix the fair wage.

A reasonable workweek is fixed in much the same manner, and then the substandard wage, and the substandard workweeks are anything less than those fixed by the Board.

A substandard labor condition is referred to throughout the act, and that is defined in the eighteenth definition as -

a condition of employment under which (A) any employee is employed at an oppressive or substandard wage; or (B) any employee is employed for an oppressive or substandard workweek; or (C) oppressive child labor exists; or (D) any oppressive labor practice exists.

So that when the term "substandard labor condition" is used, it includes all of those things.

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The next definition that is perhaps new is the definition of "unfair goods", no. 22, on page 8:

(22) "Unfair goods" means goods in the production of which employees have been employed in any occupation under any substandard labor condition.

Note the definition of "produced" at section 24 on page 8:

(24) "Produced" means produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in the making of tools and dies used in the production of such goods in any State.

The last three words of section 24 "in any State" are omitted, as Mr. Connery has called to your attention, in the House bill.

The difference from the legal point of view is that the bill as introduced in the Senate would require the Board only to investigate the conditions in the United States. By leaving out the words "in any State", the Board might be required in fixing these standards to carry its investigations into conditions of production in foreign countries where some foreign goods were used.

I do not think it is necessary to review section 39, which establishes the Labor Standards Board, because it is not involved in legal problems, and is a conventional provision which explains itself.

Coming to page 12, part II of the bill, section 4, says:

Having regard to the policy of Congress to extend the applicability of the provisions of this act with respect to an oppressive wage to all employments within the scope of this act as rapidly as possible, the Board shall from time to time by regulation or order declare such provisions applicable to employments within the scope of this act as rapidly as the Board finds that such provision can be made applicable to such employments without unreasonably curtailing opportunities for employment.

I think that is a very important provision of the act, because from a constitutional point of view it means that the Board will investigate particular employments before it clamps the minimum wage upon it, and that it will thereby avoid applying the minimum to cases where particular employees might be denied work.

The question of the oppressive workweek is handled in much the same manner. The workweek above which any work shall be deemed oppressive is fixed by Congress, and then extended by the Board to particular maximums as fast as can be without curtailing the earning power of the employees.

The question may arise as to the constitutionality of fixing a standard and designating someone to alter the standard or to apply the standard according to the facts that might be developed. We think that a case in point which has been sustained by the Supreme Court is the flexible tariff, in which standards are fixed by Congress, and then the right to vary the rates, depending upon the effect upon commerce, is given. That theory was sustained in Hampton against the United States by the Supreme Court so that we consider that this delegation is within the rules laid down by the Supreme Court.

The next section, page 12, at the bottom of the page, authorizes variations in the workweek as to employees as to any class or classes of employees where a variation is necessary or appropriate to prevent the depression of general wage levels below those consistent with the maintenance of a minimum standard of living necessary for health and efficiency, without unreasonably curtailing opportunities for employment.

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Section 5 is the fixing of fair labor standards with respect to wages and hours, and we have just been over that. That is, the rules which the Board shall consider in fixing what is a fair wage. 5 (b) on page 15 is the same principle of procedure applied to the fixing of the reasonable workweek.

The standards in reference to the reasonable workweek are not quite so definite as the standards of reasonable value, but the standards which the Board shall apply in determining and establishing a reasonable and maximum workweek are set forth at page 16, beginning at line 7:

The Board (1) shall take into account the relation of the work to the physical and economic health, efficiency, and well-being of the employees and all other relevant circumstances affecting the reasonableness, of the period of working time for the work or class of work performed, (2) shall consider the number of persons available for employment in the occupation to be subject to the order establishing such maximum reasonable workweek, (3) shall consider the hours of employment established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing, and (4) shall consider the hours of employment for work of like or comparable character maintained by employers who voluntarily maintain a reasonable workweek in the occupation to be subject to the order establishing such maximum reasonable workweek; but the Board shall not establish a maximum reasonable workweek of less than (blank) hours.

Those standards are about as definite as can be laid down, it seems to us, although you may think of things that will be an improvement. Reasonable time is another somewhat indefinite term that the courts have repeatedly dealt with. If you make a contract to do some act and the contract does not say when, the court implies a reasonable time and it will from the evidence determine a reasonable time for performance.

So that reasonable time like "reasonable value" is not an unusual thing to delegate to a hearings tribunal to determine.

The question of exemptions from the labor standards is dealt with in section 6 at the top of page 17.

SEC. 6. (a) The Board by regulation or order shall provide that the payment of an oppressive or substandard wage or the maintenance of an oppressive or substandard workweek by any employer employing less than (blank) employees shall not be deemed to constitute a substandard labor condition, unless and except insofar as the Board finds that the maintenance of the appropriate fair labor standard by such class of employers is necessary or appropriate in order to carry out the provision of this Act.

The important feature of that section as it appears to us is that there are many employments in which the number of people engaged is too small to make it administratively practicable to get to them at this time with Government efforts to regulate. Small employers and home workers and things that perhaps it is best at the present moment not to attempt to regulate. The figure, of course, is something to be fixed by Congress as to the number that shall be exempt.

The legal power to exempt employers of a smaller number is very clearly established in the Social Security cases. One of the grounds of attack was that in one instance the employers of eight, or more, only were affected, and it was contended that it was invalid because Congress had no right, so it was claimed, to draw that line. The Supreme Court said it did have the right to draw the line and establish a limit below which they should not go.

The exception should be noted that even though a given employment obtained an exemption because it was so small in numbers that it was not practical to regulate it, it could be regulated if the Board

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found it necessary to prevent circumvention of the act. And the point to that, of course, is that if you say that employers of less than 10 would be exempt, some employers might try to split their business up to make 10 different employments, each employing 10, so as to avoid regulation; and so it is necessary to have some flexibility in that rule in order to avoid evasion of the act.

On page 17, provision 6 (b) refers to the substandard workweek, and in connection with that perhaps the most important thing to note is that an automatic check is provided of this substandard workweek in requiring time and a half for overtime. It is felt that experience demonstrates that if time and a half is required for overtime, overtime work will not be used except where it is reasonably necessary.

There are also other provisions about the fixing of the substandard workweek by the Board.

I think that you should note that in the Senate bill page 18, line 8, there is an error in printing, apparently. The words "substantial labor condition" appear and it should be "substandard labor condition."

Taking up the next, section 6 (c) we find the provision by which exemptions may be made, or qualifications for employees who do not meet the usual qualifications of employment, so that there may be a certain tolerance established for the unfortunates who, if they obtain work, have to obtain it under substandard conditions or for learners or apprentices. We have already discussed that, I think, sufficiently.

Page 20, part III entitled "Unfair Goods Barred from Interstate .Commerce", section 7 is the provision which is similar to the act in the case of Hammer v. Dangenhart:

Sec. 7. (a) It shall be unlawful for any person, directly or indirectly, to transport or cause to be transported in interstate commerce, or to aid or assist in transporting, or obtaining transportation in interstate commerce for, or to sell for shipment in interstate commerce, or with knowledge that shipment thereof in interstate commerce is intended, any unfair goods.

That is the application to all unfair goods, all goods produced under the unfair substandard conditions of exclusion from interstate commerce. That is the section that is based on the dissenting opinion in Hammer v. Dagenhart, and which we believe the Court will sustain. If it is not disposed to sustain it, we are confident that in this setting, in an act which does regulate competition in interstate commerce, that it will be distinguished and this act sustained. The second or the (b) subparagraph of section 7 is designed to get the benefit of the Kentucky Whip decision, which upheld the Ashurst-Sumners Act in reference to applying State standards:

(b) It shall be unlawful for any person, directly or indirectly, to transport or cause to be transported, or to aid or assist in transporting or obtaining transportation for, any unfair goods or any goods produced by employees under the age of 18 years into any State where such goods are intended by any person interested therein to be received, possessed, sold, or in any manner used, either in the original package or otherwise, in violation of any law of such State relating to the receipt, possession, sale, or use of goods produced in violation of labor standards or practices prescribed by such law.

We feel that that section will be sustained and should be sustained by the court under the decision in the Ashurst-Sumners Act case.

Section (c) is designed to get the benefit of still another constitutional theory. Section (c) provides that it is unlawful for "any person to employ under any substandard labor condition any employee

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engaged in interstate commerce or in the production of goods intended for transportation or sale in violation of subsection (a) or (b) of this section."

The right of the Federal Government to regulate somebody in his business or acts in business just because he is producing goods intended for transportation in interstate commerce, might sound a little farfetched if it had not been sustained by the Supreme Court in reference to labor unions. In the case of Coronado Coal Co. v. United Mine Workers, the Court upheld its jurisdiction to grant injunctions against labor unions upon the ground that their strike was intended to interfere with interstate commerce.

This is simply a reversal of that rule and an application of it to employer, on the quaint doctrine that what is sauce for the goose is sauce for the gander, and that if the union might be restrained under a Federal court from certain acts because of an intention to interfere with interstate commerce, that a competitor who employs substandard labor conditions with intent to affect interstate commerce can also be reached.

This provision is of considerable importance in enforcement, because if au effort were made to look into the affairs of a particular employer suspected of a violation, he might decline to submit until he had shipped his goods, on the theory that until he had actually engaged in interstate commerce, there was no Federal jurisdiction.

We feel, however, that under the doctrine of the Coronado Coal case, if it is sustained in reference to this act, which we think it must be, unless we have one rule for labor and another for capital in this country, then we have the right to expect where a man engaged in manufacture is systematically putting his goods into interstate commerce that whatever he does in his plant with reference to labor standards is intended to affect that commerce.

Section 8 (a), page 21, is entitled "Protection of Interstate Commerce from Effect of Substandard Labor Conditions." This proceeds under the Shreveport case and the New York Central case, to take advantage of the doctrine that even local matters may be regulated where they have the effect of introducing any unfair competition with interstate commerce.

The key to the section is that substandard labor conditions create an unfair competitive advantage over employers engaged in interstate commerce. Now, we consider that it is within the law as it has been declared by the court for Congress to determine the kind of a national traffic it will foster and support. You can support a traffic based on decent labor standards and in fostering that interstate commerce, you may protect it from competition of commerce whether intrastate or interstate where it seeks to destroy the commerce you are trying to foster. In other words, the power of Congress is not limited to regulating and holding down commerce. It may build up commerce which is helpful to the country's general economic life.

We think this provision is valid under the doctrine of the Shreveport and New York Central cases, where the Board finds that there is a competition which is tending to destroy the commerce that Congress is trying to foster.

The next provision, 8 (b), is designed to take advantage of the doctrine that was laid down by the Supreme Court in Dayton v. Goose Creek, relating to the capture of excess profits of the railroads,

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where the Court held that whore the proceeds of interstate and intrastate commerce were so confused and mingled that you could not tell which was which, that the Federal jurisdiction could attach to the entire proceeds.

Representative KELLER. What case was that?

Mr. JACKSON. The case of Dayton v. Goose Creek. I will file the actual citation with you later.

And this provision provides that where the Board shall determine that-

goods shipped or sold in interstate commerce are marketed so regularly and continuously in competition with unfair goods not shipped or sold in interstate commerce that fair and nondiscriminatory application of any provisions of section 7 requires the discontinuance of any substandard labor condition among all employees employed in any occupation or in connection with the production of such unfair goods, the Board shall make an order requiring the discontinuance of such substandard labor condition in such occupation.

Section 9 (a) is "Protection of Fair Labor Standards from Interstate Competition."

Section 9 (a) provides that-

Whenever the Board shall determine that a substandard labor condition exists in the production of goods in one State and that such goods are sold or transported in interstate commerce and compete to a substantial extent in another State with other goods in the production of which such substandard labor condition does not exist, whether or not such other goods are sold in interstate commerce, the Board shall make an order requiring the elimination of such substandard labor condition and the maintenance of the appropriate fair labor standard in the production of goods which so compete.

In other words, this is intended to prevent substandard goods from being shipped in interstate commerce to break down local labor standards that are maintained within the standards which are being sought to be encouraged. The Sherman Act and the Clayton Act and the Federal Trade Commission Act are all based upon this theory, the theory of the right to regulate competition in interstate commerce.

The next provision, section 9 (b), is reversing the rule so that the local unfair labor standard cannot compete with the interstate commerce; so that sections 9 (a) and 9 (b) are intended to be the two sides of the competition; (a) to stop the interstate from crushing the fair intrastate producer, and (b) intended to prevent the unfair intrastate producer from crushing the fair interstate commerce.

Then section 10, other labor-standard orders. This section is designed to get the benefit of the Court's ruling in sustaining the Wagner Act. The Wagner-Connery Act, as you know, provides for the elimination of conditions which may affect interstate commerce, and section 10 provides:

Whenever the Board shall determine that a substandard labor condition exists to a substantial extent in an occupation, the Board shall make an order requiring the elimination of such substandard labor condition and the maintenance of the appropriate fair labor standard in such occupation if the Board finds-

(1) That the maintenance of such substandard labor condition by any employer or class of employers leads or tends to lead to labor disputes directly burdening or obstructing interstate commerce or the free flow of interstate commerce;

that is the Wagner Act directly.

And continuing:

(2) that the maintenance of such substandard labor condition by any employer or class of employers directly affects the movement of goods or the performance

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of services in interstate commerce or the price of goods or services in interstate commerce or causes undue price fluctuations in interstate commerce or directly threatens or interferes with the stability of prices of goods or services in interstate commerce or the orderly marketing of goods or services in interstate commerce; or

That section is designed to get the benefit for this act of the theory of the Court in the Stock Yards cases and the Grain Exchange cases, in which it was held that although those exchanges were local, yet they affected the flow of interstate commerce and the price of goods moving in interstate commerce moving in such a way that they were within the regulatory power of Congress.

Then the next provision, section 3 [reading]:

(3) That such substandard labor condition is maintained by any employer or class of employers with the intent to divert or substantially affect the movement of goods or the performance of services in interstate Commerce or to control or directly affect the price of goods or services in interstate commerce. If the Board shall find that any employer or class of employers maintain a substandard labor condition in an occupation and that the employer or class of employers maintaining such substandard labor condition do in fact thereby divert or substantially affect the movement of goods or the performance of services in interstate commerce or tend to control or directly affect the price of goods or services in interstate commerce, the facts so found shall constitute prima-facie evidence that the employer or class of employers maintaining such substandard labor condition did so with the intent to produce such effect or effects in interstate commerce.

.

There again we are taking advantage of the Coronado Coal case, where labor was enjoined because of the intention. And in that section is also contained the presumption that if the substandard labor condition maintained does have the effect of diverting or substantially affecting the movement of goods, it shall constitute prima facie evidence that the employer did so with the intent to produce such effect in interstate commerce. That, of course, is the rule designed to make the proof possible, because all of the evidence will be in the control of the manufacturer, and unless the Government can rely upon a presumption to put him on the proof, labor is under a great handicap. It is not an unreasonable presumption. He can come in with his proof and, say that he did not so intend.

Section 11 on page 25 deals with the violation of labor-standard orders. Subsection (a) affects the person; subsection (b) the product; subsection (c) applies the technique of the Ashurst-Sumners Act.

Then we come to the general administrative provisions, and there are not many things in that section which need to be discussed particularly. All labor-standard labor orders shall be made only after a hearing held pursuant to section 13.

Subsection (5) relates to the classifications and I think it was read in the discussion heretofore. It authorizes classifications, but declares that it shall be the policy of the Board to avoid unnecessary or excessive classifications, to exercise its power of classification only to the extent necessary or proper to accomplish the essential purposes of the act.

The hearings are required to be held according to the usual rules of notice and fair hearing.

Advisory committees on fair labor standards are authorized by section 14. That has been discussed and their recommendations are advisory only.

Most of the remainder of the act is taken up with conventional provisions found in most acts. There is a provision on page 34, section 18, which applies to child-labor standards.

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The Board is required to make all investigations necessary through the Secretary of Labor and its duly authorized representatives, so far as practical, and the Chief of the Children's Bureau in the Department of Labor shall have power concurrently with the Board to enter and inspect places of employment, and to inspect records, and to bring action under section 16 to enjoin any act which is unlawful by reason of the existence of oppressive child labor. The Children's Bureau can also enforce the child labor provisions. That was deemed advantageous because of their special familiarity with the problems.

The usual provisions which are self-explanatory, I believe, follow.

On page 40, line 1, it is perhaps worth noting that this act does not prohibit any State from establishing a higher minimum wage or a shorter maximum workweek than is established by this act; in other words, it does not place a limitation on the power of a State if it sees fit to establish higher labor standards than can be established here. That is section 22 (a).

Unless something occurs to someone else, I do not think there is anything else in the act which requires special elucidation and which is not apparent on the face of it. As you have seen, this is a complicated bill, and its complication is due to the effort to get into one bill all of the avenues by which the bill can be held constitutional, so that if one or more of these precedents which we think should be applied to this act are held not to apply to it, it won't be necessary to wait 3 or 4 years more and then draw another section. This act combines everything, and is an effort to take advantage of whatever theories may prevail on the Court at the time that the case is heard. Of course, that results in a good deal of complication.

It would be a great mistake to say, as some people have, that this bill is hurriedly thrown together or not the result of study. The difficulty with the bill, perhaps, is quite the opposite. It is the result of too careful study, if anything. It results in some overlapping which is unavoidable.

Now, we will be glad to try to answer any questions that you have, and we propose to file with you two statements which have been prepared.

Representative CONNERY. If there is no objection on the part of the Senators, Senator Black suggested that I conduct the hearing in his absence. He will be back very shortly.

Senator La Follette. I think those additional statements which Mr. Jackson has jest referred to should be incorporated in the record.

Representative CONNERY. Without objection, those statements will be incorporated in the record.

Mr. Jackson. One is the general review of the act, stating its general purposes in more detail than dated in the opening. The other is a constitutional analysis of the bill which follows through section by section and points out the authorities which are relied upon and gives the citations, so that if you want to make a study of the law from cases, it will aid you is doing so.

(The statements referred to by the witness are as follows:)

The Proposed Fair Labor Standards Act of 1937

Briefly stated without regard to qualifying detail, the bill proposes to bar from the channels of interstate commerce the products of child labor and of workers employed for unduly low wages, unduly long hours, or under conditions which violate the rights of labor by the use of strikebreakers or spies. The bill further

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authorizes administrative action to require the elimination of substandard wages and hours, child labor, and other oppressive labor practices which place goods produced under fair labor conditions at a competitive disadvantage in interstate markets, or which lead to labor disputes that burden interstate commerce or disrupt the orderly and fair marketing of goods in interstate markets.

The bill, therefore, calls for the exercise of the constitutional power of the Congress to regulate commerce among the States, for the purpose of putting a stop to traffic among the States in goods produced under substandard labor conditions and of giving protection to commerce among the States in goods produced under fair labor standards-standards which we should like to regard as American standards of labor.

.

The bill recognizes, however, the very practical exigencies which make it impossible to. prescribe for all goods which enter into interstate commerce any single minimum fair wage standard, or any single maximum reasonable work week standard. Even in the treatment of national problems there are geographic and industrial diversities which cannot be ignored. For that reason the bill makes a distinction between labor conditions which are clearly oppressive under any circumstances, and labor conditions which may be found unreasonable under circumstances prevailing in particular industries or in particular geographic areas. As to labor conditions which are clearly oppressive, the regulatory provisions of the bill are largely automatic; but as to labor conditions which depend for their unreasonableness upon particular circumstances, the regulations become effective only after appropriate administrative findings and orders. The administration of these provisions is placed in a Labor Standards Board of three members.

The bill proposes that as rapidly as possible the Board shall extend the automatic exclusion of goods from interstate commerce to goods which are produced under conditions so oppressive-according to any reasonable standard of social or economic justice-that little differentiation is required as between different industries or localities. These rudimentary standards demanded by the conditions of modern economic life are defined in the bill. The products of the labor of children under 16 years of age ought not to be accepted in any fair market. Workers ought not to be denied the right of self-organization by the fear of labor spies. The right to strike ought not to be rendered ineffective by use of strike-breakers. Allowing for appropriate qualifications and general classifications, the bill provides a floor below which the hourly wage ought not to fall and a limit beyond which the working week should not be stretched.

These are the rudimentary standards of human decency at which the relatively automatic provisions of the bill are directed. But even in the application of these rudimentary standards, a certain discretion is given to the enforcement agency so that it can protect the earning power of the workers and their opportunities for employment from unreasonable curtailment; and the Board is permitted to make necessary classifications and exemptions in appropriate circumstances. A degree of general flexibility is achieved by authorizing the Board to vary the minimum wage and hour standards upward or downward and by permitting work for longer hours without the necessity of a specific exemption if the incentive to abuse is removed by the payment of time and a half for the excess hours.

But the bill recognizes that it is not enough merely to outlaw from the channels of interstate commerce goods produced under these very low and oppressive labor conditions. The bill, therefore, further seeks to build up, through appropriate administrative machinery, standards of fairness and reasonableness, industry by industry, with due regard to local and geographical diversities-that, is to bring about in interstate industries the payment of a minimum "fair wage" and the maintenance of a maximum "reasonable work week." The bill carefully safeguards the rights of the workers to obtain by their own efforts, singly or collectively, a wage higher or a work week shorter than that required by the bill.

A fair wage is defined as a wage fairly and reasonably commensurate with the value of the service or class of service rendered; and a reasonable work week as a number of hours of employment in a week which is reasonably appropriate to the nature of the service or class of service rendered. The bill requires the Labor Standards Board to establish a minimum fair wage or a maximum reasonable work week for a particular occupation whenever the Board determines that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, the payment of lower wage or the maintenance of a longer work week prevails to a substantial extent in such occupation or threatens to undermine fair labor standards maintained by other employees. In establishing these standards, the Board would consider the needs and requirements of each industry and would give due regard to geographical and other diversities. Once a minimum fair wage or maximum reasonable hour standard is established by order of the Board, it is made unlawful

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to ship in interstate commerce any goods on which workers have been employed for less than such minimum fair wage or for more hours per week than such maximum reasonable work week. Similarly, when the Children's Bureau of the Department of Labor determines that the employment of children between the ages of 16 and 18 in any occupation is particularly hazardous or detrimental to the health or well-being of such children, the employment of such children in that occupation constitutes oppressive child labor and the products of that labor are barred from the channels of interstate commerce.

In addition to its regulation of conditions of employment by the prohibition against the interstate shipment of "unfair goods", the bill, by part IV, further regulates conditions of employment by requiring the maintenance of fair labor standards in particular situations directly affecting interstate commerce. Thus, when goods produced under substandard conditions compete to a substantial extent in interstate commerce with fair goods, the Board is authorized to require the elimination of such substandard labor conditions and the maintenance of a fair labor standard in the production of goods which so compete. Further, whenever the Board determines that substandard labor conditions will lead to labor disputes directly burdening or obstructing interstate commerce, or otherwise will directly affect the movement or price of goods in interstate commerce, the Board is similarly authorized to require by order the elimination of such substandard conditions. Finally, if the Board determines that such substandard labor conditions are maintained with an intent to divert or control the movement or price of goods in interstate commerce, the Board may by order require their elimination.

These provisions of part IV are designed to be supplementary to the provisions which bar intestate shipment of unfair goods. They also provide an alternative legal basis for regulation since they are based upon the theory that substandard labor conditions which directly affect interstate commerce may be controlled by Congress. While there is some overlapping between the provisions of part IV and those which bar the interstate shipment of unfair goods, there can be no inconsistency between the two in operation.

The administration of part IV may, it is true, present practical difficulties. It may not always be possible for the Board to make the administrative findings necessary, even though the industrial facts urgently require the establishment of fair labor standards. Standing alone, part IV would be of value in protecting existing standards but would be seriously deficient where the industrial need is to establish decent standards where none now exist.

Throughout the bill the standards for the determination of fair wages and reasonable working hours are drawn with the fullest consideration of fairness to the employer. The standards are based on the value of the service rendered and the reasonableness of the period of working time. considering the nature of employment. Furthermore, fairness to all parties concerned and reasonable treatment of special cases is assured by the provisions of the bill which require the Board to grant exemptions from the wage and hour regulations as the need appears. Neither in its general scope nor in its special treatment of particular cases can the bill be pronounced arbitrary, for fair labor standards are required to be maintained only to the extent necessary in order to accomplish the purpose of the legislation.

While the bill closes the channels of interstate commerce to goods produced under unfair-labor conditions, the bill does not attempt to cover purely local pursuits or intrastate service trades.

SECTIONAL ANALYSIS OF FAIR LABOR STANDARDS BILL

The bill is divided into five parts:

Part I contains the legislative declaration of purpose, the definition of terms used in the bill, and . section establishing the Labor Standards Board.

Section 1, the legislative declaration, recites the adverse effects upon interstate commerce of the employment of workers under substandard labor conditions in occupations in and affecting interstate commerce. It contains also a declaration-that the correction of such conditions affecting interstate commerce requires congressional action prohibiting the shipment in interstate commerce of goods produced under such substandard conditions, and providing for the elimination of substandard labor conditions in occupations in and directly affecting interstate commerce.

Section 2 contains a series of definitions. The terms defined which are of greatest importance for an understanding of the bill are the following:

"Employee" is defined to include all employees except executives and professional workers and agricultural laborers.

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"Oppressive wage" means a wage lower than the minimum wage standard of -- cents per hour in any employment to which the minimum-wage provisions of the bill are made applicable by regulation or order of the Board. This figure, set by the Congress, however, may be varied by order of the Board and when varied an "oppressive wage" is a wage lower than the minimum wage established by such a Board order.

"Oppressive workweek" means a workweek of more than - hours in any employment to which the maximum-hour provisions of the bill are made applicable by regulation or order of the Board; the figure set by the Congress may likewise be varied by the Board order establishing a different nonoppressive workweek.

"Oppressive labor practice" is defined to mean the employment of strike-breakers during labor disputes or the use of espionage by an employer among his employees or their families.

"Oppressive child labor" means the employment of children under the age of 16 years in an occupation within the scope of the act or the employment of children between the ages of 16 and 18 years in an occupation within the scope of the act which the Children's Bureau has determined to be particularly dangerous or detrimental to the health or well-being of such children.

A "fair wage" is defined as a wage established by order of the Board as "fairly and reasonably commensurate with the value of the service rendered", and a "reasonable workweek" as a workweek which is similarly established as "reasonably suitable to the nature of the service or class of service rendered." The factors which enter into the determination of these standards are specifically enumerated in section 5.

A "substandard wage" is defined as a wage lower than a minimum fair wage established by order of the Board, and a "substandard workweek" as a workweek longer than a maximum reasonable workweek established by an applicable order of the Board.

"Substandard labor conditions" is defined as a condition of employment under which any employee is employed at an oppressive or substandard wage or for an oppressive or substandard workweek, or in which oppressive child labor or any oppressive labor practice exists. Goods produced under any of these substandard labor conditions are designated "unfair goods." The definition of "produced" provides that goods shall be deemed to have been produced by an employee engaged in handling or working on such goods in any occupation in which he is employed. This definition is fortified by a presumption that an employee employed under any substandard labor condition was engaged in the production of particular goods if he was employed under that substandard labor condition within 90 days prior to the removal of such goods from the place of his employment.

Section 3 provides for the creation of a Labor Standards Board composed of five members appointed for staggered terms of 5 years each. The section contains the usual provisions regarding the filling of vacancies, the salary of board members, the appointment of employees, the maintenance of offices, and the filing of reports. It provides expressly that in the appointment and promotion of officers and employees of the Board no political test or qualification shall be permitted, but all appointments and promotions shall be made on the basis of merit and efficiency.

Part II of the bill provides for the establishment of fair labor standards with respect to wages and hours, the application of such standards to particular employments and classes of employments, and appropriate exemptions from such standards. This part deals only with the fixing of the standards; the consequences of noncompliance, and the powers of the Board to require compliance are defined in parts III and IV.

By section 4 (a) and (b) the Board is directed to declare the provisions with respect to oppressive wages and hours applicable to employments within the scope of the act as rapidly as the Board finds that such provisions can be made applicable without unreasonably curtailing opportunities for employment or the earning power of the employees. By subsections (c) and (d) of section 4, the Board is authorized to vary the minimum nonoppressive wage and hour standards established by the act with due consideration to the maintenance of the minimum standard of living, the health, efficiency, and well-being of the employees, and the avoidance of unreasonable curtailment of opportunities for employment and the earning power of the employees.

Section 5 provides for the establishment of fair wage and hour standards - standards representing the fair value of the services rendered and the reasonable period of working time for the occupation in question-as distinguished from barely nonoppressive standards. The Board is directed to conduct an investigation

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of wages or hours, or both, as the case may be, whenever it has reason to believe that owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, substandard wages or hours prevail in any occupation in which employees are engaged in interstate commerce or in the production of goods which are sold or shipped in interstate commerce. In establishing a minimum fair wage the Board is directed to take into account all relevant circumstances affecting the value of the service; the Board is to be guided by considerations like these which would guide a, court in an action for the reasonable value of services, and it is to give due consideration to wages paid under collective labor agreements and those paid by employers who voluntarily maintain fair wage standards. Similarly in establishing a maximum reasonable workweek, the Board is directed to take into account the relation of the work to the health, efficiency, and well-being of the employees, the number of persons available for employment, and the reasonable standards of working time maintained voluntarily or under collective labor agreements. Under this section, however, limits are set to the minimum standards which the Board may establish. No wage shall be established which in the judgment of the Board will give employees employed at that wage an annual wage income in excess of $1,200 or an hourly wage in excess of 80 cents except for overtime or night work. The lowest reasonable workweek which the Board may establish is one of -- hours.

Section 6 provides certain exemptions from the wage-and-hour standards established under the act. Subsection (a) directs the Board to provide by regulation or order that the maintenance of either an oppressive or substandard wage or workweek shall not be deemed to constitute a substandard labor condition in the case of an employer employing les than 15 employee, except where the Board finds that the maintenance of the appropriate wage-and-hour standards by such employers is necessary or appropriate in order to carry out any particular purpose of the act. Subsection (b) introduces flexibility in the regulation of hours by authorizing employment for more hours per week than the applicable maximum upon condition that payment for such overtime is made at one-and-one-half times the regular rate. In this case, too, the Board is authorized to remove or qualify this exemption if it finds that the maintenance of the appropriate workweek is necessary or appropriate in order to carry out the purpose or prevent the circumvention of any provision of the act. Subsection (c) authorizes the Board to make appropriate exceptions from the wage-and-hour standards for special cases such as learners and apprentices, disabled persons, to whom special licenses are to be issued, deductions for board and lodging necessitated by the nature of the work, overtime employment in seasonal or emergency work, and other similar situations.

With the standards thus established in part II, part III of the bill contains the regulatory provisions barring from interstate commerce goods which were produced under conditions which fail to comply with those standards.

Section 7 (a) makes it unlawful to ship in interstate commerce any unfair goods, i. e., goods on which any employee has been employed under any substandard labor condition. This provision is based directly on the constitutional theory of Mr. Justice Holmes' dissenting opinion in Hammer v. Dagenhart (the Child Labor ease), from which President quoted in his message. It proceeds from a conviction that the experience of the past 20 years has demonstrated the wisdom and soundness of Mr. Justice Holmes' view of the commerce clause and that that view will now prevail with a majority of the Supreme Court. Under this view of the Constitution, Congress has power to adopt the policy which the President described when he said in his message that "Goods produced under conditions which do not meet rudimentary standards of decency should be regarded as contraband and ought not to be allowed to pollute the channels of interstate trade."

To provide for the unlikely contingency that this constitutional theory may not be immediately adopted by the Supreme Court, section 7 (b) contains a further prohibition, making it unlawful to transport any unfair goods into any State where they are intended to be received or used in violation of any law of such State relating to the use of goods produced in violation of prescribed labor standards. This provision is modeled on the Ashurst-Sumners convict-made goods statute, which was recently upheld by the Supreme Court in Kentucky Whip and Collar Co. v. Illinois Central R. Co. (299 U. S. 334). In the event that the general prohibition against the interstate shipment of unfair goods should for any reason be ineffective, this provision will provide protection to States which have enlightened legislation against the possible breaking down of their standards by the influx of goods produced under conditions which do not meet the Federal Standards.

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Section 7 (c) makes it unlawful to employ under any substandard labor condition any employee engaged in interstate commerce or in the production of goods which are intended for transportation in interstate commerce in violation of the preceding subsections of this section. It is well established that conditions of employment of workers immediately engaged in interstate commerce, may be regulated by Federal law. Wilson v. New (243 U. S. 332); Virginian Railway Co. v. System Federation No. 40, October Term, 1936, decided March 29, 1937; Washington, Virginia and Maryland Coach Co. v. National Labor Relations Board, decided April 12, 1937. The regulation of employment conditions among workers engaged in producing goods intended to be shipped in interstate commerce is merely a device designed to make effective at an early stage the prohibition against the interstate shipment. Stafford v. Wallace (258 U. S. 495, 520); Coronado Coal Co. v. United States (268 U. S. 295).

While the main regulatory features of the bill are thus directly confined to interstate commerce, the bill recognizes the necessity for protecting employers who produce for interstate markets from the competition of overreaching employers engaged only in local trade. Within recognized constitutional precedents the. bill affords to those employers the protection necessary to prevent a discriminatory application of section 7. By Section 8 (a) the Board is authorized to issue orders requiring employers engaged in intrastate commerce to maintain particular fair labor standards whenever the Board determines that the failure of such employers to maintain such standards gives them an unfair competitive advantage over employers engaged in the production of goods for sale or shipment in interstate commerce or causes the provisions of section 7 to create discrimination against such interstate producers. This provision proceeds on the constitutional theory which was applied in upholding Federal regulation of local railroad rates to the extent that such regulation was found necessary to prevent discrimination against interstate commerce subject to such regulation. Shreveport Rate Cases (Houston E. and W. T. R. Co. v. United States) (234 U. S. 342), and Railroad Commission v. Chicago B. and G. Co. (257 U. S. 563).

Similarly, section 8 (b) directs the Board to make an order requiring the discontinuance of particular substandard labor conditions whenever the Board determines that goods sold in interstate commerce are marketed so regularly and continuously in competition with goods produced under such substandard labor conditions that a fair and non-discriminatory application of section 7 requires the maintenance of fair labor standards among all employees in that occupation in the production of such goods. This provision embodies the constitutional theory of the recapture clause of the Transportation Act which was upheld as to all railroads because of the impossibility of distributing excess income between interstate and intrastate traffic. Dayton-Goose Creek R. Co. v. United States (263 U. S. 456). Subsection (c) of section 8 makes it unlawful to employ any employee in violation of any provision or order made under the prior subsections of section 8.

A further method for the regulation of employment conditions is embodied in part IV of the bill. Instead of relying solely on prohibition of interstate shipment of unfair goods, part IV authorizes the Board to make orders requiring the maintenance of fair labor standards in particular situations directly affecting interstate commerce. But the provisions of this part do not operate until the Board has made a specific determination that substandard labor conditions have one or more specified effects upon interstate commerce. These provisions are thus supplementary to the provisions of part III, and provide an alternative legal basis for regulation based upon the theory that the Congress may require the elimination of substandard labor conditions directly affecting interstate commerce. It must be admitted that it may be extremely difficult to establish the facts necessary to support the administrative findings in part IV when the need for the establishment of fair labor standards is the greatest. Part IV may be of little value in building up a fair labor standard when none exists; but it should be of value in protecting existing standards in particular interstate industries. Constitutionally, the orders of the Board under part IV would seem to be clearly within the rule of the Wagner Act cases which recognized that employment conditions in the production of goods which are sold in interstate commerce may have "such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions." National Labor Relations Board v. Jones and Laughlin Steel Corporation, October term 1936, decided April 12, 1937.

Sections 9 and 10 specify the findings necessary to enable the Board to order the elimination of substandard labor conditions directly effecting interstate commerce. Section 0 (a) provides that the Board shall require the elimination of

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substandard conditions in the production of goods which are sold in interstate commerce and compete to a substantial extent with fair goods produced in another State. Enforcement of such an order is a means of protecting workers in one State from the use of interstate commerce as an agency to promote the spread of the evil of substandard labor conditions from one State to the injury of another State. Kentucky Whip and Collar Co. v. Illinois Central R. Co. (299 U. S. 334). It would seem immaterial from the constitutional point of view whether the Congress exercises its control over interstate commerce to Protect fair labor standards required by law to be maintained by employees in the State of destination or to protect fair labor standards voluntarily maintained by employers in the State of destination. In either case, the condition which impairs the fair labor standards is a condition which arises outside the State of destination and which cannot be corrected by any legislative power except that of the National Government (cf. Baldwin v. Seelig, 293 U. S. 522). Orders of the Board under this provision are also supported by cases upholding the power of Congress to eliminate unfair methods of competition in interstate commerce (Federal Trade Commission v. Winsted Hosiery Co., 258 U. S. 483; Federal Trade Commission v. Keppell and Bros., 291 U. S. 304).

Section 9 (b) deals with the converse of the situation covered by section 9 (a). It authorizes orders requiring elimination of substandard labor conditions existing in the production of goods which are not sold in interstate commerce but which compete to a substantial extent with fair goods brought in from another State. The elimination of such conditions is the removal of a burden, handicap, or obstruction upon interstate commerce (Stafford v. Wallace, 258 U. S. 495; Chicago Board of Trade v. Olsen, 262 U. S. 1).

Section 10 provides for the issuance of similar orders requiring the maintenance of fair labor standards in three other situations. In each case the Board must determine that a substandard labor condition exists to a substantial extent in an occupation. But it must also make an additional finding as the basis of its order. The first of these additional findings is that the maintenance of such substandard labor condition leads, or tends to lead, to labor disputes directly burdening or obstructing interstate commerce. Orders under this clause find full constitutional support in the Supreme Court's decisions sustaining the Wagner Act, which uphold the power of the Congress to employ regulatory measures calculated to prevent such labor disputes. Even before those decisions, the Supreme Court had decided, in cases under the antitrust laws, that labor disputes involving employees engaged in the production of goods may impose such a burden on interstate commerce that they come under the regulatory power of the Congress (Coronado Coal Co. v. United Mine Workers, 268 U. S. 295).

The second situation in which the Board is to make an order under section 10 is that in which it finds that the maintenance of a substandard labor condition directly affects the movement of goods or the performance of services in interstate commerce or the price of goods or services in interstate commerce or causes undue price fluctuations or directly interferes with the stability of prices or the orderly marketing of goods in interstate commerce. Constitutionally this provision proceeds on the basis of the decisions upholding Federal regulation of commodity exchanges (Stafford v. Wallace, supra: Chicago Board of Trade v. Olsen, supra.) The rule of those cases, recently reaffirmed in the Wagner Act cases, is that the Congress may regulate activities "usually lawful and affecting only intrastate commerce when considered alone" whenever such activities have a direct effect upon interstate commerce. Stafford v. Wallace (258, U. S, at 520-521)

Finally, section 10 directs the Board to make an order requiring the elimination of substandard labor conditions when the Board finds that such conditions are maintained by employers with the intent to divert or substantially affect the movement of goods or the performance of services in interstate commerce, or with the intent to control or directly affect the price of goods or services in interstate commerce. Because of the difficulty involved in technically proving such intent, the bill provides that if the Board finds that any employer maintains a substandard labor condition in any occupation and does in fact thereby divert or substantially affect the movement of goods or the performance of services in interstate commerce the facts so found shall constitute prima-facie evidence that the employer maintaining such substandard labor condition did so with the intent to produce such effect or effects upon interstate commerce. The power exercised by the Congress in situations of this character to combat intentional interference with interstate commerce is well recognized (Coronado Coal Co. v. United Mine Workers, 268 U. S. 295). The presumption embodied in this section may, of course, be rebutted by the employer, within whose possession and control all the evidence lies. Such a method of treating the burden of proof in order to prevent ready evasion of a statute or

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where the burden of proof would otherwise be too difficult, has been consistently recognized by the Supreme Court in analogous cases-even to the extent of upholding a conclusive presumption of fact where deemed necessary (cf. Jacob Ruppert v. Caffey, 251 U. S. 264; Purity Extract Co. v. Lynch, 226 U. S. 192; Everard's Breweries v. Day, 265 U. S. 545; United States v. Patten, 226 U. S. 525, 543).

Section 11 prescribes the consequences of violations of orders of the Board made under sections 9 and 10. By subsection (a) the employment of any person in violation of any such order is made unlawful. Subsection (b) makes it unlawful to ship in interstate commerce goods produced by employees employed in violation of any such order. This additional sanction is designed to reach any case in which direct enforcement of the order may be found to be too remotely related to interstate commerce, in that event the order may still be indirectly enforced by barring from the channels of interstate commerce goods produced in violation of its terms. Likewise under subsection (c) such goods may not be shipped into any State where they are intended to be received or used in violation of any law of such State relating to the use of goods produced in violation of labor standards prescribed by State law.. By this provision the method of the Ashurst-Sumners Act is again invoked to protect States maintaining fair standards from the depressing effect of goods produced in violation of the Board's orders.

The last part of the bill, part V, contains the general administrative, procedural, and enforcement provisions.

Section 12 contain provisions applicable to orders of the Board made under sections 4, 5, 6, 8, 9, and 10. It provides that such orders may be made only after a hearing, that they may be based upon more than one provision of the act, shall define the occupations to which they relate, may classify employers, employees, and employments, and make appropriate provisions for different classes, and may contain terms and conditions necessary to carry out their purposes. This section contains important directions to the Board as to the policy to be enforced in the administration of the act. The Board is directed to avoid unnecessary and excessive classifications. Provision is made for the inclusion in orders relating to wages of such terms and conditions as the Board may consider appropriate to prevent the minimum wage from becoming the maximum wage and to prevent the discharge, or reduction in wages, of employees receiving more than the established minimum wage. And the policy is declared that orders relating to wages shall affect only those employees who need legislative protection and shall not interfere with the processes by which higher wages are secured.

Section 13 contains provisions regarding the hearings which are to be held by the Board before orders are made. It requires, among other things, that notice be given and that the hearings be public.

Section 14 authorizes the Board to appoint advisory committees composed of representatives of employers, employees, and the public before making an order under section 5 establishing a minimum fair wage or a maximum reasonable workweek.

Section 15 contains the usual administrative provisions authorizing the Board to conduct investigations, subpoena witnesses, and compel testimony.

Section 16 provides for the enforcement of the act and the orders thereunder by authorizing the Board to institute suit in the United States district courts to enjoin violations.

Section 17 requires employers to keep such records to aid in the enforcement of the act as the Board shall prescribe; it also authorizes the Board to require that goods be labeled in order to facilitate enforcement.

Section 18 provides that the Board shall, so far as practicable, make its investigations and inspections through the Secretary of Labor and his representatives, and authorizes the Secretary of Labor to make such investigations and inspections. This section also gives to the Chief of the Children's Bureau in the Department of Labor power to conduct, inspections and to bring actions to enjoin violations of the child labor provisions of the act.

Section 19 confers upon the Board power to adopt regulations and orders which it deems necessary or appropriate to carry out the provisions of the act.

Section 20 declares void all contracts for the employment of any person in violation of the act or for the waiving of any provision of the act.

Section 21 provides for the payment of reparation to employees who have been paid lower wages or employed for longer hours than the applicable standards allow. In the case of wages this reparation amounts to the difference between

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the wage received and that which should have been paid. In the case of hours, additional compensation is required for the overtime at the rate of one and one-half times the regular wage. The right to this reparation is granted when the condition of employment in question is required to be maintained under the act as well as when goods are shipped in violation of the act, but in the latter case the employer is entitled to prove that he had no reasonable ground to believe that the goods would be transported in violation of the act. And the Board may exempt goods from the prohibition against interstate shipment if it is established to the satisfaction of the Board that every person having a substantial proprietary interest in the goods had no reason to believe that any substandard condition existed in the production of the goods, or that the exemption is necessary to prevent undue hardship or waste and is not detrimental to the public interest; but in order to secure such exemption, provision must be made for the payment of reparation by every employer having a proprietary interest in the goods who failed to maintain the required wage or hour standard.

Section 22 (a) provides that the act shall not justify noncompliance with any other Federal, State, or municipal regulation imposing higher standards. Subsection (b) provides that goods produced under substandard labor conditions in one State, when shipped into another State, become subject to the laws of such other State relating to the use of goods produced under such conditions. This subsection is like the Hawes-Cooper Act relating to convict-made goods, which has been upheld by the Supreme Court (Whitfield v. Ohio, 297 U. S. 431). It is designed as a further method of protecting labor standards built up by State laws.

Section 23 protects the rights of employees to self-organization, collective bargaining, and to engage in all concerted activities allowed by the law of the land. It also provides that the act shall not be construed to invalidate any contract for the maintenance of a higher wage or a shorter workweek than those established under the act.

Section 24 provides that common carriers shall not be liable under the act for the shipment of goods in the regular course of their business, and shall not be excused by the act from their obligations to accept goods for transportation. This provision is designed to place on the shipper responsibility for compliance, and to prevent the framing of unsatisfactory test cases through suits to compel carriers to accept goods.

Section 25 provides for review in the circuit court of appeals of the legal validity of orders of the Board.

Section 26 confers appropriate jurisdiction on the district courts over civil and criminal proceedings under the act.

Section 27 imposes a series of penalties for violation of provisions of the act. The penalties include fine and imprisonment, but no person is to be imprisoned for a first offense.

Section 28 is a separability clause.

Section 29 provides that the act shall take effect immediately but that its mandatory features and orders of the Board shall not become effective until 120 days after its passage.

Representative CONNERY. I think, when we were interrupted, that Mr. Keller was just about to question the witness, and then the Senator from Louisiana.

Representative KELLER. What has the cost to do with the value of the services rendered?

Mr. JACKSON. I think it would have a good deal. In the first place, it affects the market value; that is, what people are willing to take. In the second place, it seems to me that usually a workingman's wage is expected to keep him alive.

Representative KELLER. It ought to be expected to do more than that, should it not?

Mr. JACKSON. It ought to be expected to do a good deal more. The greater the cost for keeping him alive, the greater that wage has got to be, so that I would say that one of the very first considerations in fixing a fair wage was to find a point below which it could not go if the man was going to live in a decent way.

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Representative KELLER. Why should a given man working 8 hours a day in Alabama receive less than an equally good man working 8 hours a day in New York?

Mr. JACKSON. I do not know that there is any moral reason. As for the man in Alabama, it will cost him considerably less for his fuel, less for his clothing; he will live in a structure that is not adapted to 30 below zero, and his cost of living will be somewhat less, and I think that that accounts for some difference in labor standards. Whether it should or not is a question on which my judgment is no better than yours.

Representative KELLER. Is not the question of the cost of living largely a question of poor living, and higher cost, better living, in actuality?

Mr. JACKSON. There are others who could answer this question much better than I. I would say that the same wage in dollars would produce a higher standard of living in Alabama than it would in New York State, for the reasons that I have mentioned. Fuel and clothing and the necessities of life come under a little harder terms in the northern climate.

Representative KELLER. What do you do about the "graveyard" shift in this bill?

Mr. JACKSON. I don't think I could answer that.

Representative KELLER. Is there any provision in it about the "graveyard" or third shift?

Mr. JACKSON. Mr. Pope, who has worked on the detail of this bill, can tell you whether there is anything that applies to that.

Representative CONNERY. As I understand it, we are going to have economists come before the committee, and we are going to have representatives who were connected with the N. R. A. who went into all of that subject, and perhaps it would be better to wait, if the Congressman cared to, until these gentlemen come on the stand and then ask them the questions.

Representative KELLER. I am perfectly willing to do so, of course.

Mr. JACKSON. I am not an economist, and you would not get very reliable answers from me, but I will do the best I can.

Representative KELLER. Well, at least we know you are a good lawyer, anyway.

Mr. JACKSON. I doubt that at times when I read what the judges say to me.

Representative KELLER. If I can lay aside the economic questions and put them up to Mr. Henderson or some of the other witnesses, I am perfectly willing to do that; but before we leave this, I would like to talk to you about some of the provisions of the act.

Page 12 of the House bill concerns the effect of the employment of workers under substandard labor conditions. Does that mean that Congress, as a matter of legislative determination, finds that such effect is present whenever there is employment under substandard labor conditions, or is that a mere expression of opinion that in general such are the effects; and if it is the former, don't you think that such findings should be supported by extensive studies concerning the effect of employment under substandard labor conditions?

Mr. JACKSON. Well, in the first place, I hope that the investigations of this committee will produce a good deal of evidence bearing on those findings, because the evidence is helpful when the act is under

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attack. However, they are not findings that would enter into a particular labor order. There is no requirement in the Constitution that Congress make any findings. You could enact this bill without any findings whatever, and the bill is presumed to be constitutional.

However, a practice has grown up in late years of making findings and of supporting them with evidence, because it gives something tangible to present to the court when you come to argue constitutionality, but these are not findings on which orders would be made. hey may be untrue as applied to some particular situation, but generally, as applied to the industry of the country, they are designed to be fair portrayals of the problem that Congress is wrestling with.

Representative KELLER. Of course, you are more competent than I could possibly be on the effect of the decisions in the Guffey Coal case in which the Supreme Court brushed aside the findings of Congress and said that they were merely opinions.

It has been the attempt on the part of the subcommittee of the Committee on Labor, investigating the textile industry, to meet that entirely and lay in the lap of the Supreme Court a thoroughgoing statement of fact, and say, "Gentlemen, here it is."

Mr. JACKSON. That is good practice.

Representative KELLER. Thank you. And that is the reason I am bringing that subject up to you in this matter.

Mr. JACKSON. I hope there will be evidence brought here by the economists and others which will make these things so clear that no court can say that they are mere opinions.

Representative KELLER. Does the bill leave it to the Board to apply the provisions of this act in all conditions, or only in those industries or occupations where the effects are the same as set out in section 1 (a)?

Mr. JACKSON. I would not say that section 1 (a) was either a grant of that or a limitation of that by the Board. The Board would proceed on its own findings in the particular case.

Representative KELLER. If the Board need not make the similar findingswith. reference to each occupation, how do you reconcile that with the decision in. the Schechter case on the question of interstate commerce?

Mr. JACKSON. Well, to undertake to reconcile this with the Schechter case wuld require a detailed study of the Schechter case. The Court came to the conclusion in the Schechter case that the particular acts involved had no relation to interstate commerce. The chickens had come to rest, and it was out of the channels of interstate commerce and out of the effect of interstate commerce.

Representative WOOD. You talked about the particular act. Which act are you speaking of in the Schechter case that was out of interstate commerce?

Mr. JACKSON. The act of the sale of the chickens. That was not, the Court felt, within the flow of interstate commerce, because they had come to rest.

Representative WOOD. Do you think that that decision coincides with the Bedford Stone case, where the stone was on the ground and the stonecutters were prohibited from refusing to set the stone?

Mr. JACKSON. I have never felt that the Schechter case coincided with a number of the decisions of the Court on the scope of interstate ,commerce, but it is a decision of the Court.

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Representative KELLER. That is just what I am trying to get before us at the present time.

Mr. JACKSON. If we are going back to the Schechter case-if the Court is going back to the Schechter case reasoning - it will be most unfortunate.

Representative KELER. If the Board is to make such findings, why should it not be provided for in the act itself, specifically?

Mr. JACKSON. Well, the Board is to make findings in each case to sustain its order. Do you mean why should not the Board have to find on each one of these points in section 1?

Representative KELLER. No; I simply mean this: In reading the, bill, and I have read it to the best of my ability-which is not very large, perhaps, but the best I can-it seems to me that there is no specific direction for the Board to make these findings. If I am correct about that, it seems to me that that ought to be written in.

Mr. JACKSON. It would normally be the practice of the Board in issuing an order to make recitals of what it found; but personally I do not see any objection to having it stated that the Board should make findings on which its jurisdiction is based, if that is deemed desirable by Congress.

Representative KELLER. It seems to me so.

Mr. JACKSON. I would hope that they would do it.

Representative KELLER. But they ought to have the authority of Congress to do it, it seems to me, if you expect the Supreme Court to stand along and go with us in these things.

Mr. JACKSON. I think the provisions that they shall hold hearings and make orders —

Representative KELLER (interposing). Why not provide specifically that they shall make findings, so that there can be no question about that?

Mr. JACKSON. Mr. Pope thinks it is implied; on page 5. That implies there that they shall make a finding.

Representative KELLER. I do not want to be too technical.

Mr. JACKSON. I see no objection to making that more specifically, that they shall find and determine, instead of using just the word "determine."

Representative KELLER. It seems to me that section 2 (a) defines an employer as including any person acting directly or indirectly. Page 3, line 18, in the House bill -

Mr. JACKSON. (interposing). It is line 20 in the Senate bill and reads that an employer includes "any person acting directly or indirectly in the interest of an employer in relation to an employee."

Representative KELLER. Would that include such a person as an attorney who acts in the interest of the employer?

Mr. JACKSON. I think you would have to read that together. If he acts in the interest of an employer in relation to an employee. If the attorney were supervising the men and acting as the legal agent, it, would include an attorney, but only because he was representing the employer in the employment relationship. No, I do not think "representative" means representative in that sense.

Representative KELLER. I want the lawyers to get in on this, if we can.

Mr. JACKSON. They will, before this is over. [Laughter.]

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Representative KELLER. In section 2 (a), is it your understanding that Congress is to regard the conditions of the various industries or occupations to be taken into account or that the Congress leaves it to the Board to determine that a certain wage or workweek would be oppressive?

Mr. JACKSON. I do not know that I can answer what you have in mind, but the oppressive wage is fixed by filling in the blank in section 10, subdivision 10. That is not applied to any particular industry until the Board finds that it should be made applicable.

I think perhaps you have in mind what you were asking this morning, whether it would not be better to fix a fiat wage that would be oppressive under all conditions.

Representative KELLER. That is what I have in mind, in the ultimate; yes.

Mr. JACKSON. If you could fix a wage that you can say won't throw people out of work at any place, and at the same time is high enough so that it does anybody any good, then it would be well enough to adopt a flat wage for the United States. The difficulty with it is, from a legal point of view, that if you adopt one flat minimum wage which you say must apply in all conditions, you are apt to run into a situation where some man is thrown out of business as a result of it. He cannot meet that wage because of some condition. May be we cannot foresee just what the hardship is. Some employer will take that particular case and he will go to court and say that the act lacks due process, and say, "Here are men denied the right to work because of this law."

If you fix a wage that is so low that you are sure it won't do that any place in the United States, the chances are that it is so low that it won't do anybody any good.

That is the danger of it.

Therefore, there has been an effort in. this act to bring the two things together, establish what ought to be a fair wage in the United States

Representative KELLER (interposing): The subbase?

Mr. JACKSON. Yes. Apply it as fast as you can without doing the employees any damage and without throwing them out of work.

I agree with you that if you could fix a level that would be helpful and at the same time not be harmful to the employees, it would be simpler, but this seems to be the only way that the draftsman of the bill could work out by which you could establish a minimum wage and put it into effect and gradually building up your minimum without taking the chance of throwing people out of work.

Representative KELLER. I again suggest to the draftsman that I would be glad to turn over to him the last development of our bill on the National Textile Act, and that is so because we attempted and I think we attempted successfully, to write into the law the powers of the Commission in such a way that the court will have no right to intercede until and unless the Commission itself has passed fully on that subject, and therefore would prevent the granting of injunction by the Federal courts until the whole thing had been considered by the Commission, and if we have done that, I think it would be an important thing for this bill.

Mr. JACKSON. I am sure we will be very glad to get it. Mr. Pope will be very glad to get it whenever you can make it available to him, and I may say that the men who have worked on this bill have no pride of authorship. They know it is not perfect.

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Representative KELLER. We will try and help to make it as perfect as we can, because that will be difficult enough. But we have worked so long on our bill, and we may be able to improve it somewhat more, but I just want to submit to this committee, if I can, without intruding upon its own function, the work that we have done there to help along with this, so that if it is decided to lay that bill entirely aside ultimately and to go through with this, that we will have contributed our part to it.

Mr. JACKSON. We will be very glad to get it.

Representative IKELLER. I will be very glad to submit it in its new and different form, because I have written and rewritten notes and notes on it until I guess I had better rewrite them again in their complete and final form as developed up to date.

Representative KELLER. Yes.

Representative CONNERY. Senator Ellender, of Louisiana, has a few questions, Mr. Chairman.

Senator ELLENDER. Are there any provisions in the act to prevent an employee from engaging in any other gainful occupation?

Mr. JACKSON. Leaving one employment and going to another?

Senator ELLENDER. In other words, can an employee who is regularly engaged, say by a concern, is there anything in the act to prevent him from engaging in any other employment at the same time?

Mr. JACKSON. From occupying two positions at one time?

Senator ELLENDER. Right.

Mr. JACKSON. I don't recall anything.

Senator ELLENDER. Don't you think there ought to be something in that act to provide for that?

Mr. JACKSON. Well, that is a matter of policy, whether you want it. If Congress wants it in, there should be.

Senator ELLENDER. Would you mind preparing an amendment to the act to cover that situation?

Mr. JACKSON. Let us make sure that we understand each other.

What you want is an amendment which will provide in substance that any person who is getting the benefit of a minimum wage fixed by the act, shall not be permitted to engage in any other employment?

Senator ELLENDER. Right.

Mr. JACKSON. We will be glad to prepare it.

Senator ELLENDER. Suppose unfair goods are shipped from one State into another and are purchased by, let us say a department store doing intrastate business, which provisions in this act would prevent this department store from selling such goods?

Mr. JACKSON. Well, it could sell the goods which it had purchased if it purchased them in good faith, but as I recall it they would be subject to a penalty if they purchased it knowingly. Is that so, Mr. Pope? I am informed that the shipper would be subject to the penalty.

Senator ELLENDER. The shipper?

Mr. JACKSON. Yes.

Senator ELLENDER. So that there would be no penalty insofar as the seller of those goods is concerned, so long as that seller complies with such rules and regulations as may be established by the Board, is that right?

Mr. JACKSON. They tell me that is right. I have not given that point any thought.

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Senator ELLENDER. What other penalty is there to a manufacturer of unfair goods other than a fine or probable imprisonment?

Mr. JACKSON. I have not studied that provision. Mr. Pope can point it out to you. There is injunctive relief which can be obtained. The employee may sue the employer and obtain the wage that he would have been entitled to, and an injunction may be obtained by the Board and the penalties of the act may be enforced.

Senator ELLENDER. As I understand, one of the main purposes of this act is to prevent unfair goods from being transported in interstate commerce.

Mr. JACKSON. Yes.

Senator ELLENDER. And there is no other penalty attached to a producer of unfair goods except that he may be fined and imprisoned, in other words, his goods cannot be confiscated.

Mr. JACKSON. He may be enjoined and he could be proceeded against, if he is caught, to make up the wages.

Senator ELLENDER. Could he be prevented under this act from selling such goods in the State in which he is located or it is located?

Mr. JACKSON. If it is a wholly intrastate transaction and does not affect interstate commerce in one of the ways that we have pointed out, he can produce and sell in his own State.

Senator ELLENDER. I am only assuming now a lot of goods that the manufacturer has been caught up with as being unfair goods. Such goods as those could be sold by him within the State where they are manufactured?

Mr. JACKSON. That is subject to the same qualifications. If it was intended to go into interstate commerce -

Senator ELLENDER (interposing). Well, that is the point I am trying to bring out. In other words, if those goods are manufactured for the purpose of interstate commerce, and in the meantime something happens that they become unfair goods, that they cannot be shipped in interstate commerce, then as I understand it under this act those goods could be sold within the State?

Mr. JACKSON. Well, he would have to pay the wages that he had gotten out of, and he would have to make reparation to his employees.

Senator ELLENDER. And that is specifically provided for in the act?

Mr. JACKSON. Yes. Reparations are provided for on page 37.

Senator ELLENDER. I note that the Labor Board is to be composed of five persons, and that two can constitute a quorum for the transaction of any business. How is that figure of two reached, do you know, and why?

Mr. JACKSON. It has some possibilities of difficulty.

Senator ELLENDER. That is why I am asking you. I was just wondering if you could enlighten us.

Mr. JACKSON. If you have a Board of five, and two is a quorum, you might have two meetings of the Board running concurrently.

Senator ELLENDER. That is exactly the point I had in mind. Don't you think that would run into some difficulty?

Mr. JACKSON. However, the Board is given power to make its own rules, and I assume the Board would make rules which would provide for meetings on call.

Senator ELLENDER. Do you think it is wise to leave it at two?

Mr. JACKSON. I think it might be well reconsidered.

Senator ELLENDER. Will you kindly explain, on page 9, under (b) what is the meaning of that section?

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Mr. JACKSON. The difficulty, if you attempt to exclude unfair goods, and you find in the course of commerce a particular piece of goods, a bolt of cloth, and you have to trace that particular thing back to show who worked on it, and show all of the conditions of employment, then you have a burden of proof there which is impossible or impractical to meet. This section (b) is intended to make it possible to prove a case under this act. Section (b) reads:

(b) For the purposes of this Act, proof that any employee was employed under any substandard labor condition in any factory, mill, workshop, mine, quarry, or other place of employment where goods were produced, within ninety days prior to the removal of such goods therefrom, shall be prima-facie evidence that such goods were produced by such employee employed under such substandard labor condition.

That is a matter that would have a great deal of effect if you were to try a case against an employer under this act. You would be able to take the goods and show when they left the factory; show that within 90 days of that time some oppressive substandard condition existed in that factory, and you would not have to prove that the particular goods were produced under those conditions. The employer may come in and prove that those are goods that he has had on hand for 2 years, and that 2 years ago he was in better state of grace with reference to this act than he was in those particular 90 days; but those things are proof that he has in his possession, and the purpose is if you prove that within 90 days lie was using these substandard labor conditions, it is presumed that the goods were made under those conditions, unless he comes in and proves the contrary.

Senator ELLENDER. That they were made beyond the 90 days?

Mr. JACKSON. Under those conditions.

Senator ELLENDER. And beyond the 90 days?

Mr. JACKSON. No; not necessarily beyond the 90 days, but if within 90 days of that time he has had substandard conditions in his plant, it presumes that they had continued during the time that these particular goods were made.

Senator ELLENDER. Thank you.

Representative CONNERY. Mr. Thomas has some questions next.

Representative THOMAS. Mr. Jackson, turning to pages 37, 38, and 39 of the bill, we find a section there dealing with reparation and release of goods. The act, as I understand it, provides that where an employee is paid less than the minimum wage or a fair wage set by the board, or where there is an excess of the standard work week as set by the Board, that the employees can then more or less take these goods and recover for the excess time they spent in the production of the goods, and also to recover that amount of money that is due them for the lack of having been paid a fair wage. It also gives the right to the Board to accept an assignment from the employee for each one of these differences. It does not state in which court suit will be filed, but it is contemplated that the Board will bring the suit, and I presume that ultimately a question will he raised and all of these little suits ranging anywhere from $5 or $10 or $15 or up even to $100 will eventually find themselves in the Federal court, and the docket of that court, by virtue of the Federal question being involved will have to absorb those cases. It seems to me that it is going to put an undue burden on the dockets of the Federal court or even the State justices of the peace, all of these cases, and it looks to me like you would have to employ a corps of lawyers to file and prosecute

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these suits. I understand there is power to go into a man's place of business and procure the evidence to satisfactorily prosecute the case, but it seems to me that that is a bad provision. I may be in error. Do you think that that is a satisfactory provision and that it will work out satisfactorily in practice, or do you think that it might be better to give to the Commission a right to go in and seize and forfeit these goods wherever found, and by some proper provision, take care of the innocent purchaser or the innocent holder of the goods where he did not buy these goods that were produced under subnormal conditions knowingly. Of course, that feature of seizing the goods and forfeiting them to the United States may not help the employee, but then it could be arranged perhaps that the proceeds of the forfeiture may be distributed among the employees. It seems to me you will remove a large burden on the courts by such procedure.

Mr. JACKSON. Well, I do not think it is likely to result that way. If we find that it is when the law is enacted, then some other provision could be made; but it seems to me that as a practical proposition, if you had a hundred employees in one factory, and you take an assignment of all of their claims, the very purpose of this was to avoid a multiplicity of actions and to see that a single action was brought.

Representative THOMAS. It must be brought by a separate suit. This is a question of law. It is not an equitable relief. Of course, there is a rule of law in equity where you have a multiplicity of suits, they could be combined, but not in law.

Mr. JACKSON. As a practical proposition, if you had a hundred people all of whom had a claim, each of $10 or $15 each, and they went to court to get it and they found themselves up against a lawyer who had been employed by the employer, a lawyer employed by him by the year who said, "Fight them until you know what", the man would simply be up against it to get his remedy. So that in order to make it effective at all, the Government will have to apply his remedy for him. The fact that you bring these claims together in an assignment results in this. If the employer finds he is up against these reparation suits, if he has a legitimate question that he disagrees on, his lawyer and the Government lawyer will agree on one of the cases to be tried to test the whole thing. There is not any necessity to try a hundred cases which would be all exactly alike in their proof.

I think you avoid a multiplicity of cases by putting them under one head, if you are going to give them an effective remedy at all.

Then, too, the operation of this provision will probably be such that they will be willing to stipulate that one case shall settle them all, because recovery of attorneys' fees may be allowed by the court in each of the cases, and the employer may want rather to settle the matter in one test case, than to face 100 such fees, when he has a legitimate question.

As to forfeiture, there is some danger in that, from the point of view of constitutionality. Under the Customs Act and some other acts, forfeiture is applied and is quite effective.

Representative THOMAS. In the Food and Drug Act, for instance.

Mr. JACKSON. Yes; there are many examples. It is a remedy that could be used.

Representative THOMAS. Well, what is your guess as to the number of lawyers that the Board will have to employ to really enforce the provisions of this act? If you have 200 or 300 employees in one concern claiming a difference in pay, and you have a thousand different concerns all over the country, how many lawyers do you think the Government will have to employ? It is purely problematical, I know.

Mr. JACKSON. I could not give you much of an idea of that. My own notion is-and it is not any better than yours, because yours is as good as mine-but it is that this law is not going to be so difficult to enforce as it looks on the face of it, because I1 think when you get this thing started and it is found that the Federal Government means business-it will, of course, be fought until it is declared constitutional - but once that is done and a man knows that he can pay these wages without somebody undercutting him, then I think this law will enforce itself much faster than you might think. What will happen will undoubtedly be that there will be complaints by labor unions who will make a practice of looking after the welfare of their people, and there will be complaints from competitors who will point out that they are trying to do the right thing and somebody is undercutting them. You will get those two sources of complaints in a large way, but I do not think you are going to find as much difficulty in enforcement once you have overcome the handicap that now threatens a man who now has decent labor standards of competition. I may be wholly wrong about it. It will take experience to tell.

Representative THOMAS. I am through.

Representative CONNERY. At this time, in order to keep an even balance between the House and the Senate, Senator Holt would like to ask some questions.

Senator HOLT. I am interested in knowing just how far this bill goes. Will this bill cover the sale of newspapers in the street?

Mr. JACKSON. I don't think so.

Senator HOLT. Would that be in interstate commerce?

Mr. JACKSON. It is like everything else, when you come to draw a line between intrastate and interstate movement. The purpose of the law is to apply to it to the producer rather than to the seller, and it does not seem to me that the boy who takes the papers and sells them on the street can be held to be in interstate commerce, unless there is some unusual feature about it.

Senator HOLT. How would it affect the man in the transfer business taking goods, say, from Chicago to Richmond, Va., and delivering them to a store in Richmond, Va.; would that affect him?

Mr. JACKSON. We had a long discussion about that while, I think, you were absent, Senator Holt.

Senator HOLT. I am sorry.

Mr. JACKSON. The transfer might be an entirely new and independent transaction and within the State, or it may be the continuance of an interstate journey, and it is impossible without more detail as to the particular transaction, to say which side of the line it would fall in.

Senator HOLT. That would be determined entirely by the Board, would it not?

Mr. JACKSON. In the first instance, yes; with the right to appeal to the courts if the Board rendered a determination that it considered unfair.

Senator HOLT. Thank you, Mr. Jackson.

Representative CONNERY. Mr. Dunn.

Representative DUNN. You are not tired answering questions, are you, Mr. Jackson?

Mr. JACKSON. No, sir; I will be glad to give you any help I can.

Representative DUNN. I noticed when I had this bill read to me that there was not anything in it about the number of hours and the days that the people should work. My question is this: Suppose the Congress inserts in the bill a 5-day and 6-hour working week, would this Board have the right under that provision of this bill if it becomes law, to change that act?

Mr. JACKSON. When they came to apply it to a particular industry, they could vary it if they found it was necessary. In the case of such a wage, that, if applied in full, would throw a man out of work, for example, then they could apply it in part; so that the wage fixed by Congress is subject to variation if the circumstances are such that they produce hardship to the workman.

Representative DUNN. In your opinion, would that not have to be in the bill? In other words, if we just insert in here that no person in the United States shall work more than 5 days of 6 hours, would the Board have the right if we inserted that, to change that?

Mr. JACKSON. Well, it can under the terms as written here, that is, if the blank which you refer to is filled in with a certain wage, the .DtheT pmsiorns of the act in applying it authorive them tD -vary these in case it is necessary to prevent hardship.

Representative DUNN. In other words, if we took that out of that bill, that is giving the power to this Board, then that 5-day and 6-hour working week would be absolute?

Mr. JACKSON. Yes; then it would be absolute throughout the country.

Representative DUNN. You don't have to answer this question if you don't want to. It seems to me, if Congress would enact a law say, a 5-day of 6-hours-that is my working week-that it would relieve the Board of a great deal of responsibility and a lot of embarrassment.

Mr. JACKSON. It certainly would do that.

Representative DUNN. I do not see why we cannot do it.

Mr. JACKSON. The question that you have to consider there is whether you can fix a Nation-wide minimum wage that would be high enough so that it would do anybody any good and not throw some people out of work in various places.

Representative DUNN. Pardon me; I don't think I said anything about wages. I spoke only about hours. I know it would be almost impossible for Congress to establish a minimum wage, as you said to Mr. Keller a few minutes ago, because people in Alabama say it is much cheaper to live down there than it is up North and so forth. I was talking about the number of days and number of hours, the 5-day 6-hour working week. That is what I was talking about.

Mr. JACKSON. A 5-day 6-hour week could be established. It is provided here that it may be varied, and you will find in section 4 that they shall put this into effect as fast as they can, whatever workweek Congress establishes, without unreasonably curtailing the earning power of the employees in such employments. I think the economists who have studied the Nation-wide wage structure and the Nation-wide structure of industry as to working hours can better tell you the difficulties that you might meet in a Nation-wide effort of that kind, far better than I can. I can see difficulties in it, but I do not think I can define them as well as the economists.

Representative DUNN. It seems to me it would be wise for Congress if they don't put a 5-day, 6-hour working week, to put a limit at least on the number of hours and the number of days that a man or a woman could be compelled to work. Of course, I don't doubt that the Board which will be established will be composed of men who are progressive in the main, but taking it for granted that we are all weak at times, and some of them may be approached by some of these big capitalists and they may change their ideas; whereas if we had it as a law, they could not do that. That is what I mean. I think it is up to Congress to do a lot of this work and have it done so that nobody can creep in there and tear to pieces something that we did.

Now, I am going to quit by saying this - I know that when the N. R. A. was in existence, it had done a good deal in my State and every other State, and more or less wiped out a lot of sweatshops and gave people more money and a more decent living than they had been enjoying before the N. R. A., and I was sorry to see it abolished. It is my opinion that this bill if enacted can be the means of also wiping out the sweatshops and child labor and give working people better conditions. If this bill was enacted into law, that slaughter ont in Chicago last wik wlould not have otcxuryed, by thos gurnmen who slaughtered 5 people and wounded probably 100 more, and the sooner we can get a progressive piece of legislation like this on the books, the better off the people will be.

Representative WOOD. I was very much interested in Senator Ellender's request or suggestion that you draft an amendment providing that no employee who has had this minimum wage established in one industry, shall work for another employer at the same time. Don't you think it would be well to draw that amendment in view of the fact that it has also been suggested that Members of Congress, of the House and the Senate be not allowed to engage in any other business while a Member of Congress?

Mr. JACKSON. I have known of some legislation to be suggested along those lines but it did not get very far. I do not think they are having much chance now to engage in any other business; just now, anyway.

[Laughter.]

Representative WOOD. A great deal has been said, and it was reiterated today, about the cost of living, the difference in the cost of living in Alabama or the South, and the North. Do you think there is any difference whatsoever in the cost of living of the people in the rural sections in the South as compared with those of the rural element in the North?

Mr. JACKSON. I just don't know.

Representative WOOD. Do you think there is any difference in the cost of living of a family living in a one-room shack in Alabama, and a family living in a one-room shack in Pennsylvania or New York?

Mr. JACKSON, Well, I don't know what either one would cost.

Representative WOOD. If you have ever traveled through some of those sections where they say the cost of living is so reasonable and so cheap

Mr. JACKSON (interposing). Yes, sir; I have.

Representative WOOD. You notice that there are not many bungalows, and you will notice that the people are not as well dressed, and I think you will find if you make an investigation of it, that a suit of clothes or a garment of equal quality will cost very little different in Alabama from what it will in the North or the East. The very fact that the people in some of these sections live in squalid housing conditions and are on the edge of starvation is why they say that the cost of living is cheaper.

Mr. JACKSON. Well, I think you have to deal with temperature which makes a difference.

Representative WOOD. There were hearings in the House Labor Committee on the textile bill where a large textile manufacturer related that his employees, a number of them, had a cow, and they had a garden, and therefore their cost of living was cheaper than it was in the North where they could not maintain a cow and a garden and chickens and, of course, he contended that because the employee could live on his cows and chickens and his garden, that he should work for less wages, and his employers should get the advantage of it. I think you will find that this differential in the cost of living is infinitesimal when it comes to equal standards of living. Don't you think that is true?

Mr. JACKSON. Of course, if you consider a standard of living which just keeps you warm and just keeps body and soul together, you cannot say there is much difference in the standard of living. Yet it may cost more to just do that.

Representative CURLEY. Will the gentleman yield for a question? Did the gentleman in drawing his comparison in the cost of living between Alabama and New York, take into consideration the high cost of government, police, fire, and so forth, which runs into high sums annually, so that the cost to the city worker is on a higher plane than the worker in the rural sections of Alabama?

Representative WOOD. I am speaking of the cities in Alabama.

Representative CURLEY. So that it is necessary to maintain a higher wage to maintain a reasonable standard of living.

Representative WOOD. I am speaking of cities of comparable size.

Representative CURLEY. Where is a city comparable in size to New York?

Representative WOODs. I would like you to interpret that language at the top of page 15: but the Board shall not establish a minimum fair wage which in the judgment of the Board will give employees receiving not more than such minimum fair wage an annual wage income in excess of $1,200, or an hourly wage in excess of 80 cents except for overtime, night, or extra-shift work.

Mr. JACKSON. The purpose of that is to confine this board to the fixing of minimum wages. It is not the purpose of this to go into a general Government price fixing for labor. Where collective bargaining or other conditions enable labor to get an annual wage income in excess of $1,200, the Board does not function. The Board has that top limit-that it shall not establish a minimum fair wage which will yield more than a wage income of $1,200 per year. In other words, that is the point at which the minimum wage effort seeks. The 80 cents an hour is intended to operate in case the employee is employed for so short a time or in such circumstances that an annual wage cannot be computed.

Representative WOOD. I have been requested to ask you if an employer and a person who bought unfair goods in good faith could ship them in interstate commerce, a distributor.

Mr. JACKSON. If a distributor bought them in good faith, can he ship them in interstate commerce? There is a provision covering that situation.

Representative WOOD. Could unfair goods be sold in interstate commerce by a distributor who buys the goods in good faith?

Mr. JACKSON. At the bottom of page 38:

(d) The Board shall, by order, exempt any goods from the operation of any provision of this Act prohibiting the sale or transportation of such goods in interstate commerce or into a State if the Board finds that every person having a substantial proprietary interest (as defined by the Board) in such goods had no reason to believe that any substandard labor condition existed in the production of such goods or that such exemption is necessary to prevent undue hardship or economic waste and is not detrimental to the public interest.

That requires that everybody, all of the partners if it were a partnership, should in good faith, have had no knowledge of the conditions of production.

Representative WOODS. That is all I have.

Representative JENKS. Mr. Jackson, isn't it fair to assume that under the bill that the standard of wages would be raised?

Mr. JACKSON. That is the purpose and that is the hope of the bill.

Representative JENKS. And that the maximum hours would also affect the cost of production? Those two items, hours of labor and wages, would naturally affect the cost of production. I bring that question up because since we have been in session here, I have been called on the phone from New York by the president of the National Boot and Shoe Manufacturers Association, who asked me this question: What protection would the manufacturer have from foreign competition if the cost of production should be raised, because at the present time Czechoslovakia is giving this country a great deal of trouble in the production of boots and shoes, and I am wondering just what protection the manufacturers might have?

Mr. JACKSON. Well, he has a flexible tariff which is designed to protect him from competition from abroad, and it has not been my observation that it has ever been very oppressively handled. I should think that the competition which might be feared from abroad as the result of this act would be negligible -certainly it can be readjusted if it proves there is any serious competition from abroad.

Representative JENKS. I think there is some question there.

Mr. JACKSON. My attention is called to the fact that the flexible tariff is for the purpose of providing for differentials of this kind.

Representative JENKS. But in the present instance, it is not giving protection to the shoe industry of this country from the competition from Czechoslovakia by any means.

Mr. JACKSON. I am not in a position to answer that because I don't know the conditions in the boot and shoe industry well enough.

Representative CONNERY. If the gentleman from New Hampshire will yield, of course, that is something that I am intensely interested in, and we got through the tariff, the late Congressman Andrews and I put them in the tariff. Boots and shoes were on the free list, and we got a tariff put on them. As high as they can go is 30 percent and they are up to that 30 percent and they are not protected over and above the 30 percent. We bad 6,000,000 pairs of shoes a year coming in from Czechoslovakia, which was putting us out of business in the shoe centers of the country. That is one of the reasons that I made this bill provide as to foreign imports, because I do not see how we can go on a 30- or 40-hour week and pay high wages, and then allow Czechoslovakia to work 60 hours a week and pay $10 or $12 a week. I want that for the purposes of the record.

Mr. JACKSON. That is a matter that should be adjusted in the tariff rather than by this bill.

Representative JENKS. I was trying to bring out the fact that this bill naturally would raise the cost of production on all goods.

Mr. JACKSON. Of course, every rise in the wage levels does that, and it also enables some people to buy shoes, which the manufacturers should bear in mind.

Representative CONNERY. Suppose you did allow it to affect foreign imports as in my bill. It is not mandatory, is it? It is merely permissive. In other words, in the N. R. A. we had a proposition where when the President found that in the administration of the N. R. A., that the foreign imports were interfering with the administration of the N. R. A., he was permitted to tax them or embargo them or put a tax on them to equalize the cost of production with goods in the United States, or other remedies. We have nothing in this bill which would protect us like that, and this Board if they saw fit, if foreign imports were interfering with the proper administration of this act or became a penalty on the American manufacturers, or the American employers, would it not be wise to allow the Board permissive authority to regulate that as long as you are not saying it is mandatory for them to do it?

Mr. JACKSON. I think your greatest difficulty-there may be others that do not occur to me-but I think the greatest difficulty is the difficulty of applying this law to production in a foreign country, because while we may know or have good reason to believe what conditions are in a particular country, it might be very difficult for the Board to apply that to these particular goods, and I think that if you were going to apply the Board's procedure here to foreign-made goods, you might have to have a little different procedure provided in the bill for dealing with foreign goods.

Representative CONNERY. We have no trouble in finding out what the wages are or the hours, and you have your International Labor Office now over at Geneva trying to work out a 40-hour week. Wouldn't it be helpful for them to have a weapon on the part of the United States to tell them that if they do not put in a 40-hour week, for instance, that we will put into effect the provisions of this bill?

Mr. JACKSON. Yes; but it is questionable whether you have evidence down to the point where you could prove that specific goods to which you propose to apply an order were made under those conditions. You see, you would not only have to know a thing but you would have to prove it when you come into these legal proceedings.

Representative CONNERY. You could make them declare it on their invoices and take their affidavits on that.

Mr. JACKSON. That is a question of policy.

Representative CONNERY. I really feel there is a danger there. I am not set on this. If the House and the Senate wanted that out of the bill, I would not insist on that staying in the bill to the last or to the nth degree, but I do feel that there is a danger there to American employers unless we give them at least permissive protection and give that Board permissive authority to take that up as we did in the N. R. A. or some such provision to be retained in the bill.

Representative CURLEY. Isn't the point that you have raised here taken care of in the Executive order relating to the reciprocal trade treaties?

Representative CONNERY. No; it has to be the treaty agreed to between the two countries. I am worried very much about those reciprocal trade treaties. I did not favor them in the House. If they go into a reciprocal trade treaty with Czechoslovakia, as they consider they might do here-Bata is over here now looking over the situation and may bring some more of his shoes in. I do not want to stay on that subject, because it is a long story to me.

Representative FITZGERALD. I would like to ask you just one question. Do the provisions of this bill take care of home work, which I claim is the biggest industrial cancer on the industrial life of America today?

Mr. JACKSON. Well, home work, of course, is not expressly included in any definition or provision. The home work would have to come within some of these definitions in order to be included.

Representative FITZGERALD. Isn't there a great danger if this bill should be passed, that these unfair manufacturers may do that, those who today have got a racket in home work, will extend the home work racket in this country by taking the work out of the factory and putting it into the homes at miserable wages, not sweatshop wages but miserable wages, away below sweatshop wages?

Mr. JACKSON. Of course, I did not refer to that particular kind of home work.

Representative FITZGERALD. I mean the work taken from the factory by the manufacturer and put into the home where women and children work.

Mr. JACKSON. I had in mind where the people knew how to make some little articles at home which they sell, and that of course is a different thing.

Representative FITZGERALD. Oh, no; not that.

Mr. JACKSON. Well, that would be caught in Section 6 (a) where the board by regulation or order shall provide that the payment of an oppressive or substandard wage or the maintenance of an oppressive or substandard workweek by any employer employing less than (blank) employees shall not be deemed to constitute a substandard labor condition, unless and except insofar as the Board finds that the maintenance of the appropriate fair labor standard by such class of employers is necessary or appropriate in order to carry out the purposes, or prevent the circumvention, of any provision of this act.

That provision, it is felt, can be used to reach the situation which you have described, because it continues:

The Board shall have power to define by regulation or order the method of computing and determining the number of employees employed by any employer to prevent the circumvention of the act or any of its provisions through the use of agents, independent contractors, subsidiary or controlled companies, or home or off-premise employees, or by any other means or device.

The family that engages in making some little commodity which is a homecraft as you might call it, on its own, would probably not be reached by the bill. That would be my judgment, but the factory which sends out and makes use of people in their homes are not exempted just because they are using premises they do not pay any rent for.

Representative FITZGERALD. You believe they would have to come under the provisions of the minimum wage and the hours, the same as if their work was done in the factory?

Mr. JACKSON. Yes; I think the Board has power under this section to frame regulations which will catch any of them that are doing that sort of thing.

Representative DIXON. I am just thinking about under the N. R. A. At that time, the big department stores were ordered to make a minimum wage of $13. They had perhaps 10 or 12 wrappers who were making $7 or $8 or $9. They had about 400 or 500 young women, some of them had gotten up to the position of assistant buyer and making $25 and $30. Is there anything in this bill that will stop the reducing the salary and increasing the salary of somebody that is earning less, like it did under N. R. A?

Mr. JACKSON. Except as an order is in existence as to them, there would be nothing to prevent their making any changes in their wage structure. I don't know whether the people that you refer to would come within the class that would be affected by this bill, that is whether they are under the $1,200 limit.

Representative DIXON. Oh, yes; they are.

Mr. JACKSON. Then they are within the group as to which an order might be made if the other conditions are complied with, and I would think that the order could protect them.

Representative DIXON. I know that that was done throughout the United States where hundreds of people had their salaries reduced, and of course 8 or 10 wrappers from one department had their wages raised to the minimum wage, which was a hardship on most of those girls because they were trying to protect their homes.

Mr. JACKSON. The provisions of the orders of the board are broad and purposely so, to cover situations such as you mentioned. I think we have already called attention to it, but it is on page 27:

(6) in case of an order relating to wages, may contain such terms and conditions as the Board may consider necessary or appropriate to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employers receiving more than the established minimum wage; and it shall be the policy of the Board to establish such minimum wage standards as will affect only those employees in need of legislative protection without interfering with the voluntary establishment of appropriate differentials and higher standards for other employees in the occupation to which such standards relate.

Representative CONNERY. I would like to ask Mr. Jackson one or two questions in reference to the 16-and-18-year age on child labor. The 18 only applies when things go into a State where the State has and 18-year-old law?

Mr. JACKSON. No; 18 may apply in case the Children's Bureau finds that the particular industry in which they are employed has conditions that make the 16 to 18 detrimental to health or well-being. That is found at the bottom of page 6.

Representative CONNERY. But it is only on hazardous cases that they go to 18?

Mr. JACKSON. Yes.

Representative CONNERY. Sixteen ordinarily?

Mr. JACKSON. Yes.

Representative CONNERY. When they go to a State that has an 18-year-old law, then the goods going in there would be subject to that law under another separate provision that you have there?

Mr. JACKSON. Yes, sir.

Representative CONNERY. Now, on the collective bargaining, Mr. Wood spoke to you and some others spoke today, and it is clearly interstate commerce. Collective bargaining in one State - Indiana and California, for example, have collective bargaining, and Indiana has $4 a day, and by collective bargaining in California they get $6 a day. Can the Board go in and set a minimum wage higher than that as long as it is under your $1,200?

Mr. JACKSON. They can set it higher - they ManL set and MiniMUta wage higher than the wage which might be established by any method, whether collective bargaining, or otherwise.

Representative CONNERY. That is what I mean. You can even go in by collective bargaining where you think it is too low?

Mr. JACKSON. You can raise the minimum but you cannot reduce. You can raise the minimum even though it is established by collective bargaining. You cannot reduce.

Representative CONNERY. In section 4 on page 12: the Board shall from time to time by regulation or order declare such provisions applicable to employments within the scope of this Act as rapidly as the Board finds that such provision can be made applicable to such employments without unreasonably curtailing opportunities for employment.

You spoke about investigating and such an investigation gave you a stronger position in reference to the constitutionality. Why do you say that?

Mr. JACKSON. Well, in the first place you would have a record which would contain your facts. That is always important-to be able to point to some place where something is definitely proven, rather than to just get up and say it and expect the court to take your word for it. Then, further, you eliminate by that method, the cases of hardship. And, of course, if a lawyer, or a group of lawyers, is talking about the constitutionality of an act, they always cast about to take the best case, naturally enough. Sometimes Government counsel have done the same thing. And they always pick the case that is most glaring in hardship, and will get the most sympathy from the court. There is an old saying among lawyers that hard cases make bad law.

So that you eliminate those cases that the Board feels would be cases of hardship, and when you come to really testing your act, you are apt to test it in a fair case. It is a great advantage sometimes. I think in the Wagner Act case, that it was a fortunate thing that the test came in the Jones and Laughlin cases and other cases where pretty definite facts existed which were helpful in sustaining the act.

Representative CONNERY. On the delegation of authority of Congress to a board. You said first of all that there is nothing in the Constitution that prevents such an authority.

Mr. JACKSON. Nothing in the Constitution about delegation whatever.

Representative CONNEHY. But it is better with the Supreme Court to set a certain standard where you delegate that authority?

My.3AC~O. It is bbtter ircoom t.hz point żAw of skxstainig it in the Court, and it is better from the point of view of good administration that you prescribe the limits as well as you can, so that the board will carry out your instructions.

Representative CONNERY. Would you be in a stronger position from a constitutional point of view if you set. a 40-cent minimum up or down for the board to decide whether they could go up or down on it, and a 40-hour week maximum, and then say the board could shrink below to a 35-hour week? Which would be the stronger constitutional position?

Mr. JACKSON. I think it is better to insert the figure.

Representative CONNERY. And give them the power of going up or down from that?

Mr. JACKSON. Yes.

The CHAIRMAN. It is also better from the governmental standpoint, is it not, to permit the law so far as possible to be enacted by the elected representatives of the people, rather than by appointed bureaus?

Mr. JACKSON. Oh, yes.

The CHAIRMAN. So that so far as the difference between the delegation of power is concerned and the enactment of legislation is concerned, it is always preferable to have the act go as far as it can without having such a rigid condition so that it would work great hardship?

Mr. JACKSON. Yes. It is much better also from the point of view of the citizens, most of whom want to live up to the law, to have as accurate a guide of what the law is as possible. Their point of view demands that the standard be made as definite as it can be.

Representative CONNERY. Why is competition good law? I mean from a constitutional point of view. Does that enter strongly into the picture as to constitutionality and taking that garment industry in New York, that the manufacturers in New York who sell in New York, and then who are in competition with goods made under fair labor standards in Indiana?

Mr. JACKSON. Competition is unquestionably one of the strongest grounds constitutionally for the regulation of any act. One reason is we are used to that, and the courts act more readily along lines that they are accustomed to. From 1890 when the Sherman Act was applied, down to the present time, we have constantly exerted Federal power over acts that were supposed to be contrary to the policy of Congress in reference to the building up of monopoly. Many of those acts were purely local acts, but since they affected competition in interstate commerce, the courts have held that there was power to regulate them. Likewise they hold that the local act which never got into interstate commerce itself, but which affected interstate commerce competitively could be regulated, so that we have a broader base for Federal action in reference to competition than we do without it.

Representative CONNERY. Would you figure logically - I mean logically legally-would you feel, in view of the situation in the Wagner-Connery Act, that a labor dispute is an interference to the free flow of interstate commerce, and that long hours and cheap wages and child labor are the most frequent causes, recurrent causes, of labor disputes? I mean now logically legally there; would you feel that that would strengthen your constitutionality?

Mr. JACKSON. Yes; we have felt that that, strengthened the case and have included it in this act for that reason, although in a sense the provisions which apply that doctrine overlap somewhat the provisions which apply the other.

Representative CONNERY. I mean on the grounds of what Chief Justice Taft said, where certain recurring practices are likely to interfere with the free flow of interstate commerce, Congress has the power under the commerce clause to stop that.

Mr. JACKSON. Yes.

Representative CONNERY. Thank you. Are local transportation systems-that is, local bus lines, streetcar companies, taxi companies, and service agencies, and so forth-not contemplated to be controlled by this act?

Mr. JACKSON. You mean so far as they carry goods that are declared to be unfair goods?

Representative CONNERY. I think you answered this question a little while ago. Where a taxi driver took you on a through ticket, that would be interstate commerce; but if he was an independent contractor on his own, it would not be wise, so I think you have covered that pretty much. Now, what about the newspaper business? Would the editorial staff and printers in the newspaper establishment itself-would they come under this, and how far do these go down? To the newsboys, or what?

Mr. JACKSON. If the newspaper moved in interstate commerce, the persons who were engaged in its production would come under the act.

Representative CONNERY. I am very much interested in this, because back in the A. P. case it involved that. Are you taking it from the standpoint of view of the newspaper itself, that it must go over a State line, or are you taking it by telephones and radio and that picture of them getting their news through the A. P., and all that?

Mr. JACKSON. It would not seem to me, although I have never investigated the subject, that the fact that the newspaper got its news from an out of the State source would be sufficient to make the newspaper itself in interstate commerce.

Representative CONNERY. I-low about the guild? The fellow that was in the guild?

Mr. JACKSON. The fellow that was in the guild was engaged by the Associated Press in the collection of news from all States, centralized it and sent it out. He was in the flow. But where a newspaper is getting its news in by wire, some of it, perhaps, from New York and some of it from Chicago, I do not think that the fact that they get it by wire would be sufficient to make the newspaper itself engaged in interstate commerce. There might be other conditions - I don't know what they are, and I don't know what their contracts are.

Representative CONNERY. Suppose the Boston Post ships up into New Hampshire. They do.

Mr. JACKSON. When it crosses the line, it is an act of interstate commerce.

Representative CONNERY. How would that affect the employees?

Mr. JACKSON. That would affect the employees just as any others would be affected by this act.

Representative CONNERY. How about the reporters?

Mr. JACKSON. They can come under the group of professionals. It does not affect employees who are engaged in a private capacity. I don't know whether the newspapermen consider that they are engaged in a professional capacity or if they are engaged at such low wages as not to come within the bill.

Representative CONNERY. Suppose they went into a labor organization, or suppose they have a guild, all of the reporters, and suppose just for the sake of argument, that their wages are down pretty low, would they come under it then? Could you set a definite minimum wage, in other words, for your newspaper reporters? I don't mean these "big shot" fellows, but I mean the small-town fellows.

municipalities?

Mr. JACKSON. You mean where the contract is let and the contractor employs the help?

Representative SMITH. The contractor takes a contract of a town or a city or a State.

Mr. JACKSON. The question whether his help would be included?

Representative SMITH: Yes.

Mr. JACKSON. I don't see any reason why his help would be exempted.

The CHAIRMAN. If they were engaged in interstate commerce?

Mr. JACKSON. Yes; if they were engaged in interstate commerce.

Representative RAMSPECK. I would like to ask you, Mr. Jackson, about the definition of agricultural labor on page 4, subsection (7). Am I right in assuming that the definition is left up to the Board?

Mr. JACKSON. I don't find the reference.

Representative RAMSPECK. Line 10, on page 4.

Mr. JACKSON. Yes; there is a provision authorizing the Board to define and delimit the definition of agricultural labor. There is another provision on page 35.

Representative .RAMSPECK. Then it would be a question for the Board to decide as to whether a man working in a dairy, for example, was an agricultural worker or a man who might pick peaches or pack peaches or apples.

Mr. JACKSON. The power to make regulations is not a power to alter the statute, of course. If you have a person who is clearly engaged in agriculture, the Board would not have any power to say that agriculture is not agriculture. Where you have doubtful cases, where it is hard to say whether a person is engaged in agriculture or is engaged in manufacturing because of the blending of their duties in such a way, the Board can then make regulations defining where the classification should fall.

Representative RAMSPECK. The same thing would be true as to naval-store workers, because, as I understand it, the growing of trees is an agricultural pursuit, but the question of whether the gathering of turpentine is would be a matter for decision by the Board.

Mr. JACKSON. I think the extent to which a person gathering turpentine or gathering sap, as we call it, from trees - I don't know much about the turpentine industry - that they might get into a question as to the extent in which he was devoted to that exclusively, and the other work involved, and the magnitude of the operation, and I think it should be for the Board to define where the line should be drawn.

Representative RAMSPECK. In connection with that discussion on page 8, subsection (24), I find the bill says:

(24) "Produced" means produced, manufactured, mined, handled, or in any other manner worked on in any State-

And it also goes on to say: and for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in the making of tools and dies used in the production of such goods.

That would indicate to me that unless it was purely an agricultural product or clearly an agricultural product, the right of the Board to define that employee as an agricultural worker would be somewhat limited?

Mr. JACKSON. Well, there are cases, as Mr. Pope has called to my attention, the case of a farmer who operates a canning factory in connection with his enterprise, and operates the two enterprises; or perhaps some of the companies making milk products also operate a farm and an ice-cream factory, or a farm and a candy factory or chocolate factory, or something of that kind. You have some very difficult borderline cases, and the Board will have to lay down the rules for them, but I do not think they would have any power-of course, their rulings are subject to review-but the Board would clearly have no power to make an unreasonable application of this power.

Representative RAMSPECK. It is not the intention, however, of the drafters of this bill, to apply it to agricultural workers?

Mr. JACKSON, Oh, no.

Representative RAMSPECK. And in reference to the independence of the Board, is there any value to that from a constitutional standpoint?

Mr. JACKSON. From the point of view of delegation, perhaps there is.

Representative RAMSPECK. Then I wanted to ask you something about section 5 (a). First, as I understand it, the limitations as to the hours and wages which Congress may put in this act do not apply to anybody until the Board applies them, is that correct?

Mr. JACKSON. Yes.

Representative RAMSPECK. In other words, we pass the act and it does not apply to anybody until the Board investigates a particular industry or group, and then they apply it, and vary it up or down as the circumstances may warrant?

Mr. JACKSON. That is right.

Representative RAMSPECK. With reference to what they shall consider in fixing the wage, it says on page 14 that –

If the Board shall determine that wages lower than a minimum fair wage are paid in such occupation to a substantial extent, or that the payment of such wages by one or more employers in such occupation threatens to undermine a fair labor standard maintained by others, and that the establishment of a minimum fair wage in such occupation will not unreasonably curtail opportunities for employment, the Board shall make an order establishing the minimum fair wage for employees in that occupation.

Take the case like this, for example. Suppose you have a cotton textile mill in a town where there is no other employment on textile work, and they have antiquated machinery. A given worker in that particular plant cannot produce as much as the same worker could in a plant with modern machinery. Could the Board take that situation into consideration in fixing thv N\'agb?

Mr. JACKSON. In determining whether to apply it, it could consider the production, because there is a very broad provision under class 2 that it shall be guided by like consideration as would guide a court in a suit for the reasonable value of services rendered. Of course, it could consider all of the working conditions, the effect of the work in the production to the employer, and they could undoubtedly consider another factor which is not included in this in reference to making the minimum applicable there, whether it would throw those people out of work.

Representative RAMSPECK. That is the point I am getting at, exactly.

Mr. JACKSON. It is in subsection 2.

Representative RAMSPECK. If they apply a wage there on the same basis as the modernly equipped plant it would destroy the opportunity of that manufacturer to compete, and therefore he would go out of business, and these people would be then out of employment, and no opportunity to get employment in that particular town. I happen to know of a case of that sort.

Mr. JACKSON. That is the difficulty in trying to lay down a fiat minimum wage for the entire United States, that you meet a situation of that kind, and you are doing a real hardship to somebody, and you get a test of constitutionality based on that when you have a bad situation from a legal point of view, and a bad situation from the point of view of the fairness of the legislation if it does that.

Representative RAMSPECK. In connection with that same question of fixing the wage, can the Board take into consideration differentials in transportation cost to the consuming market? For instance, suppose we have a mill, we will say a cotton textile mill in Massachusetts, and one in Georgia. The Georgia mill pays the lower wage rate, but its cost of transportation to the competing markets, say, Chicago, is 25 percent higher, would that be taken into consideration in fixing the wage scale?

Mr. JACKSON. It will be taken into consideration because it would enter into the value of the service performed at that point. Any factor, it seems to me, that would enter into the question of the continuance of that business and any question that would enter into the value of the service could be taken into consideration by the Board. If they failed to take into consideration the transportation differentials that were serious enough to affect the continuity of the business, they might put people out of work. So they would have to take into consideration all of the factors which affect both the plant and the enterprise and the individual worker.

Representative RAMSPECK. Then it follows, as I understand your statement, that they could also take into consideration the things furnished to an employee, such as company houses if rented at a lower rental than the rental in the community where the plant was established, and any conditions with reference to the employment that reduced the cost of living to that employee.

Mr. JACKSON. Yes, that is provided on page 19. That is a part of his compensation.

Mr. JACKSON. It would be a matter of interpretation, and different minds might disagree on it. I would not think that the newspapermen would be included, because I would regard them as a profession.

Representative CONNERY. But you would say that those Boston Post linotype operators, the men who were engaged in actually getting out the paper, printing the paper, with the machines and all that, would be in it?

Mr. JACKSON. I think they would.

Representative SMITH. Does the bill apply to municipally hired employees?

Mr. JACKSON. I think not. There is a specific exemption, page 3, section 6, that an employer shall not include the United States or any State or political subdivision thereof.

Representative SMITH. A municipality, then, who are engaged in the shoe business, or any other kind, could pay any price; is that right?

Mr. JACKSON. The employer does not include a municipality. I think there would be other questions involved, as to whether they could engage in the shoe business.

Representative SMITH. I happen to know of municipalities that are engaging in the shoe business, and they are testing the proposition whether they had a right to. There would be no way to prevent that condition in this bill.

Mr. JACKSON. Well, there is a constitutional problem involved the moment the Federal Government attempts to regulate anything that a State or municipality does in reference to its employees. Where the line would be drawn is hard to tell. In the income-tax statute, as you no doubt know, essential governmental functions are not taxable as to the salaries paid.

Representative SMITH. Is there anything to cover employees working under contract fm

Representative RAMSPECK. I am asking those questions, I may say, for the record, for this reason: Personally I am anxious to see wage scales in the South as high as anywhere in the world, but I do not want to see my employers put out of business in the South, and my employees then out of employment. We here in the House Labor Committee, everytime we meet nearly, there is a discussion of the low-wage scales in the South. Nobody deplores them more than I do, but there are other factors that enter into it which we cannot afford to disregard, such as freight rates, and no doubt Chairman' Black knows about it. I am glad to have that in this bill.

Representative CONNERY. I think, knowing you as a member of this committee so long, that you will agree that this bill is probably the closest approach to anything upon which we can get harmonious action along the various lines of which you spoke, of any bill that we could introduce.

Representative RAMSPECK. I think that is true. That is the reason I brought out, through the questions of Mr. Jackson, that without them, we down in the South in the cotton-textile industry, would be put out of business if there were not such considerations.

Mr. JACKSON. A bill could be drawn with great simplicity, of maximum hours and minimum wages, which might greatly disrupt industry. The whole complexion of this bill, and it does seem like a complicated bill when you try to read it-I have found it so-is in the first place to try to get the benefit of all the constitutional possibilities; and in the second is to get a bill that will begin to move in the direction of taking care of these minimum wage situations without destroying businesses that employ men.

Representative RAMSPECK. That also carries out the President's message, because he stated in one paragraph of it that geographical and industrial diversities could not be immediately overcome without causing serious hardship.

Now, that is all I have to ask.

Senator ELLENDER. Mr. Jackson, will you answer one question?

Mr. JACKSON. I will try.

Senator ELLENDER. We have in our State quite a few small factories that make raw sugar, let us say, and syrup, not made for the purpose of interstate commerce, but they sell this raw product to a refinery that may probably sell it in interstate commerce. Would the manufacturers of this raw product come under this act?

Mr. JACKSON. Well, they intend it to go into interstate commerce?

Senator ELLENDE1R. Not as far as they are concerned. They have been disposing of this material or this raw product to these factories and these factories, I presume, do engage in interstate commerce, but it has been a custom among them to manufacture the sugar in a raw state and also manufacture the syrup, and then the refinery in turn makes it into a merchantable product that is sold in the State and probably without the State. Would this act cover those people who manufacture the raw material?

Mr. JACKSON. Well, of course, in the first place, you have a question there whether the Board will apply the minimum wage and hour standards to them under those circumstances.

Senator ELLENDER. The point I want to know is, could they?

Mr. JACKSON. They could.

Senator ELLENDER. Under what theory?

Mr. JACKSON. That they are producing it with the intention and with the customary result.

Senator ELLENDER (interposing). They do not have that intention.

Mr. JACKSON. You are talking about a different thing. You have the prohibition of those goods from moving in interstate commerce. Their sale to the refinery would be lawful, because, as you say, they are not engaged at all in interstate commerce themselves and do not intend to, but the refinery may find that it was obliged to stay out of interstate commerce, if this product was produced under substandard conditions.

You have also the question that, as you frame it, that they are very small plants. You have the question whether the exemption to the employers would come in, resulting from some figure to be fixed.

Senator ELLENDER. I am assuming that they would not come under that exemption, but that they produced these raw materials, and as far as they are concerned, they do not intend that these raw materials should be shipped out of the State, but they in turn sell them to someone who does ship them in interstate commerce. I am just wondering whether under this law, would you have the right to make them come under that act and make them come under the jurisdiction of your Board.

Mr. JACKSON. Of course, when the goods move into interstate commerce, if the refinery sells them in interstate commerce, the refinery would have to have them produced under conditions that were not substandard. If the refinery bought those goods, the refinery when it attempted to move them into interstate commerce would be moving substandard goods or unfair goods.

Senator ELLENDER. How could you classify them as substandard if the people or the concern that manufactures them did not intend them to go into interstate commerce?

Mr. JACKSON. The point is this, if you could not do that, all that any manufacturer would have to do would be to contract out the amount of production that he wanted to do with child labor, and he could move his stuff all in interstate commerce and evade the law.

Senator ELLENDER. I could follow you on that, because such a procedure would be to evade the law, but where they have been doing this in the past for 50 or 100 years-they do not have the facilities, for instance, to manufacture granulated sugar. They have but a small mill where they make from 500 or 600 bags of sugar per year. They have no intention of shipping that through interstate commerce, but there has been a custom of selling that product to a large concern that in turn may ship it through interstate commerce.

Mr. JACKSON. It is my judgment there that it is the refinery who will not be able to buy and sell in interstate commerce, that product, if this bill goes through.

Representative RAMSPECK. I cannot find it in the law.

Mr. JACKSON. It is in the competition. It enters into competition, into the channels of interstate commerce, these unfair goods, and the fact that these goods have been produced by two producers instead of one, by a refiner and a local man.

Representative RAMSPECK (interposing). If that is a fact, then you might apply the same thing where you establish the minimum of 15 people. The product of these 15 people that you exempt might find their way through interstate commerce.

Mr. JACKSON. That would be true, but you make an express exemption of them.

Representative RAMSPECK. But here the people never intended that those goods should be produced for interstate commerce.

Mr. JACKSON. If they enter the competition, and I do not want to disagree with you about their intent, they surely are not raising it for local consumption entirely.

Representative RAMSPECK. The reason I am insisting on the view that I am taking is that they must have the intention of doing it, and the fact that they have been doing it in the past would clearly demonstrate to me that they had no intention of violating a law that did not even exist.

Mr. JACKSON. Even if they do not intend and still do enter into the competition, those unfair goods are excluded from interstate commerce, and the fact that you change the title by selling them from A to B before they go into interstate commerce does not affect it. If you did, of course, the law would be a nullity, because they could farm out the parts of the work that they wanted to do under substandard conditions.

Senator PEPPER. Is "agriculture" broad enough to include horticulture in a legal sense, for instance, cane growing and citrus-fruit production and so forth?

Mr. JACKSON. I would think so.

The CHAIRMAN. I would like to ask you one question, Mr. Jackson, before we get through. I think I understood what you meant, but I want to be sure. One of the standards is that the Board shall shorten the minimum wage and take into consideration what we call a quantum meruit in the law, which is the value of services, and the value of services might be one thing in one place and another thing in another, and under that legal rule which has been in existence practically since the beginning of the Anglo-Saxon law.

Mr. JACKSON. Yes.

The CHAIRMAN. It is true also, is it not, that the majority of judges might not have decided the minimum-wage case as they did from New York, if it had not been based upon a statute which was elucidated by Chief Justice Hughes, that the law provided that they must consider the real value of the services?

Mr. JACKSON. Yes.

The CHAIRMAN. That is correct?

Mr. JACKSON. Actual value; yes.

The CHAIRMAN. And one of the reasons for invalidating previous minimum wage laws, one of the strongest arguments had been that there was no provision in the law whereby the Board must take into consideration the value of the services. That is correct?

Mr. JACKSON. That is correct. That came into it.

The CHAIRMAN. Is it not also true that if that should continue to be the opinion of the majority of the Supreme Court, even though they have ratified the New York minimum-wage law, that we should pass the minimum-wage law which did not give the authority to the Board to consider these definitions based on the idea of the quantum meruit, that this law might also find itself meeting the fate of those that were stricken down on the ground of unconstitutionality?

Mr. JACKSON. I should think that a minimum-wage law, Federal or State, which paid no regard to the fixing of the value of the services, would be on dangerous constitutional ground.

The CHAIRMAN. And that in order to meet that situation, the law does, on the value of the services, take into consideration the value of the services at the place where the services are performed?

Mr. JACKSON. The place and the time where rendered.

The CHAIRMAN. That means, does it not, that without that provision for a wage differential, you could not give us the statement you did this morning, when you said that in your judgment this bill would meet the constitutional grounds?

Mr. JACKSON. Yes.

The CHAIRMAN. And if it did not meet that provision for differentials by including the idea of the quantum meruit, you would not have given the answer you did, would you, as to your opinion that this act would stand the constitutional test?

Mr. JACKSON. I certainly would not give it with any such confidence. I do not think I would want to have a bill that did not have this provision in.

The CHAIRMAN. The courts have emphasized that you must consider the value of the services and anything else would be arbitrary.

Mr. JACKSON. Yes, sir.

The CHAIRMAN. One other question which another Senator asked me to bring out, and that is this: What are the different methods by which a case can come before the Board?

Mr. JACKSON. Well, almost anything can bring a case before the Board. The Board would have the power to initiate an investigation on its own motion and, of course, having power to initiate an investigation on its own motion, it could initiate an investigation at the suggestion of any citizen, any officer, a Governor of a State, a member of a city government, Member of Congress, any Senator - they could do it, as could any person who gave the Board information on which it saw fit to act.

Union labor organizations would be enabled to make complaints about conditions, and one source of complaint that I think is quite likely to develop is that of one manufacturer complaining of another and saying "I am trying to live up to this law but this man is not. I want to be protected against this unfair competition." He is within his rights, because that is one of the purposes of the bill.

The CHAIRMAN. All right; thank you very much.

Representative CONNERY. I move that we thank Mr. Jackson and adjourn until tomorrow morning at 10 o'clock.

The CHAIRMAN. Before we adjourn until tomorrow, we will have before us tomorrow Mr. Robert Johnson, of Johnson and Johnson, and Mr. John G. Paine.

The committee will adjourn now until 10 o'clock tomorrow morning, Thursday, June 3, 1937.

(Whereupon, at 4:55 p. m., a recess was taken as noted.)