Mr. GREEN. Well, you are putting me in a rather difficult position in answering that question, because I cannot believe that this splendid, progressive Congress would refuse to go that far in the enactment of such splendid social justice legislation as this.

Mr. DUFFEY of Ohio. In other words, you believe that if we went so far as to eliminate child labor, convict labor, and home work, it would not be very far to go to establish maximum wages and minimum hours?

Mr. GREEN. No; and that is really the vital part of it, the decent wages and decent hours, because that involves all the competitive factors.

Mr. DUFFEY of Ohio. You recognize, as a matter of practical consideration, that is just exactly the hurdle that will occur?

Mr. GREEN. I did not understand it that way, because the Senate, when the Walsh bill left the Senate, did not seem to take that point of view. It seems whatever position there was

Mr. DUFFEY of Ohio. Well, the Walsh bill was not debated in the Senate.

Mr. GREEN. How is that?

Mr. DUFFEY of Ohio. The Walsh bill was not debated in the Senate. Mr. GREEN. That does not mean that the Senators were not for it. Mr. DUFFEY of Ohio. No; they passed it.

Mr. GREEN. I cannot imagine a Member of the United States Senate taking a position like that, because if they were opposed to it they love to object to such things and talk about them; and the Walsh bill, S. 3055, was debated 3 days in the Senate.

Mr. HEALEY. Mr. Green, there is one matter in your splendid presentation on which you neglected to comment, and that is the practice of bid brokers. Are you familiar with those persons who have no plant or factory or place of business, but merely have an office, with a stenographer or two, and bid on these Government contracts and then sublet them out after they get them?

Mr. GREEN. Well, I know something about that, but I do not know enough about it to go into it, Congressman; but I do know that that is the practice, and I think that it is wrong, because it tends to break down the standards. This contractor, whoever he may be, does not represent any manufacturing plant, but simply uses his Government contract as a means by which he can have a number of manufacturers bid, and in that way break down the standards.

Mr. HEALEY. Let me call this to your attention

Mr. GREEN. I think that is very serious and ought to be stopped. Mr. HEALEY. Let me call this instance to your attention: We had testimony here from one of the heads of the Government purchasing agencies, who stated that a bid was submitted by one of these brokers and after he had secured the bid he let it out to the next lowest bidder. Now, we will assume, of course, that the next lowest bidder had computed the cost and had submitted the very lowest bid which he believed it was possible to submit, and yet he was the one who actually performed that contract. Now, I ask you, would not there be a tendency to break down the working conditions in order to perform that contract under those circumstances?

Mr. GREEN. Decidedly so. That is a practice that has sprung up— that is an evil that has resulted in breaking standards down, that very thing; and to me that is a policy that ought to be condemned

and ought to be stopped, if there is any way to do it, if there is any way by which they can be stopped.

Mr. DUFFEY of Ohio. Mr. Green, we know that, back in Ohio, the law provides that a public contract shall be awarded to the lowest and best bidder. The Federal statute provides "lowest responsible bidder", and "responsible" has been defined before this committee as anyone who can furnish bond, regardless of the responsibility of the bonding company.

Mr. GREEN. That is right.

Mr. DUFFEY of Ohio. Do you think it would be of benefit, if the Federal statute was changed by striking out the word "responsible" and substituting the word "best"?

Mr. GREEN. That would improve it very greatly, because it would give the people, those who pass on contracts, some latitude, at least, I think. Of course, I cannot say what ruling Mr. McCarl might make on it.

Mr. DUFFEY of Ohio. If it was an act of Congress, he would have to accept it. But that could be done by having those words as an amendment to the present legislation?

Mr. GREEN. It would be helpful, but I would not want to accept that as a means and method of diverting us from our purpose of securing the enaction of this bill.

This is, I think, a most meritorious measure.
Mr. HEALEY. Any further questions?

Mr. GREEN. May I make this observation? There is not any purpose of trying to dictate to the committee, but I want to make this observation: That now is the time for action. I do not know just when Congress is going to adjourn. I see a number of conflicting press statements as to when it will be adjourned

Mr. DUFFEY of Ohio. We do not know who will be back here next year, either.

Mr. GREEN. No; and I wish you would take the possibility of early adjournment into account, because here is the process: Your subcommittee must make its report to the full committee, then the full committee must act on the subcommittee's report, then the House must act, then the bills will go to conference, and then the conference report must be acted upon by both Houses. That is all going to take a little time, and I know I speak for labor, all of labor, when I say that we hope you will pass the matter as rapidly as you can.

Mr. DUFFY of New York. Mr. Green, have you any figures or estimates covering what percentage of Government contracts may be on purchases in industries where conditions of hours and of labor and wages are broken down?

Mr. GREEN. I could not give you that just now; no. I have not assembled any figures on that.

Mr. DUFFY of New York. It is your opinion, however, that if this bill were passed, there would be some effect as to correcting those conditions within the industries?

Mr. GREEN. It would, very largely, I think. For instance, in the C. C. C. camps, there are several hundred thousands of people employed, and the Government is a heavy purchaser of clothes, shoes, clothing, supplies, and food for all of these young men in these conservation camps, and there is also the furniture and equipment of different kinds that must be provided. Now, then, this bill would

provide that, if the industries supplying all of these goods to these C. C. C. camps, that the manufacturers must establish and maintain the minimum wage and hour standards. That would help industry very greatly and help the decent manufacturers-and they are very numerous and help the workers also.

Mr. DUFFY of New York. You feel, then, Mr. Green, that this bill is very much broader than merely covering Government contracts? Mr. GREEN. Oh, yes.

Mr. DUFFY of New York. It has some social influence upon industry itself?

Mr. GREEN. I am sure of that; because when an employer who supplies goods to the Government maintains these minimum standards in order to get the contract, he possibly or probably will maintain those standards; and as I understand it, it is not the rule that a contractor operates steadily in supplying or filling Government contracts, but that he has other business and other sales to the public, and when he establishes standards, he maintains them. So that the benefit is broad and comprehensive and helps all along the line.

Mr. WALTER. Some of us are wondering whether there ought to be the delegation of authority to the Secretary of Labor to determine what the minimum wages should be. Do you not feel that if we were to provide for the awarding of contracts to people who pay the prevailing rate of wages we might meet that objection?

Mr. GREEN. Well, that would open up the field in some of these miscellaneous industries to controversy, because it is more difficult to find what the prevailing rate of wages would be, say, in an industry as complex as textiles as it would be to find what the prevailing wage would be for the construction industry in some community.

I think you are sound in setting up some board or some authority that must go into that matter and determine what the prevailing rate of wages or what the minimum rate of wages should be.

· Mr. MICHENER. Mr. Green, just one question further there, because I think the country pays more attention to what you say about unemployment than any other agency or individual: You said there were, in round numbers, 12,626,000 people out of employment? Mr. GREEN. Yes.

Mr. MICHENER. And that included the people engaged in Government activities like the C. C. C. camps and W. P. A. work? Mr. GREEN. Temporary; not steady Government employment. Mr. MICHENER. Temporary emergency employment?

Mr. GREEN. Yes; emergency employment.

Mr. MICHENER. And what is the number of people unemployed now? Have you made any estimate as to the additional number of people who would be unemployed if there were not-if these agencies like the C. C. C. were not using supplies? In other words, how many people are working for the Government in private industry today?

Mr. GREEN. Well, I have not gone into that, because that would be a little difficult. That would require a careful survey and careful study.

Mr. MICHENER. It would be a considerable number, however, would it not?

Mr. GREEN. Yes. These emergency enterprises, of course, constitute quite a market for the sale and use of goods manufactured in

private industry. I have reference now to shoes and clothes and furniture and utensils

Mr. MICHENER. Everything?

Mr. GREEN. Everything that is used; yes.

Mr. MICHENER. The great power projects, steel, and everything else if the Government was not buying that there would be a lot of people out of employment who are not listed?

Mr. GREEN. I could not tell about the market that is created by these Government agencies.

Mr. HEALEY. Any further questions, now, of Mr. Green?

Mr. Green, I am sure the committee are very grateful to you for coming before it and submitting your splendid statement, and we appreciate it very much.

Mr. GREEN. I thank you, Mr. Chairman. I want to express to the committee my appreciation of the opportunity to come here and present labor's point of view.

Mr. HEALEY. Mr. O'Leary, I promised to call you next.

STATEMENT OF JOHN W. O'LEARY, REPRESENTING MACHINERY AND ALLIED PRODUCTS INSTITUTE

Mr. O'LEARY. Mr. Chairman, I have tried to cover our chief objections to this bill as briefly as possible. Many of them have been expressed, and I am making merely a statement of facts covering those particular points, and will be very glad to respond to any questions regarding them.

It was my privilege at a hearing on the proposed Walsh bill (S. 3055) before the Committee on Judiciary of the House of Representatives on August 19, 1935, to make a statement on behalf of Machinery and Allied Products Institute, presenting at that time the dangers involved in the type of legislation proposed. As members of that committee, the members of this subcommittee are familiar with the general facts then stated, and I will not here repeat them, except to remind you that the conditions existing at that time, while slightly changed, are fundamentally the same.

Both volume of production and employment have shown advance, but the industry still feels the effect of that lack of confidence which is necessary for any considerable improvement, and the effect of the inability to plan operations due to threatened legislation.

That employment has kept pace with production is shown by the following figures, Federal Reserve Board Index, 1929 base.

That both average hourly earnings and number of workers employed have increased is a gratifying change. That there has been an improvement in corporate earnings is also gratifying and necessary in order to make possible further wage distribution and rebuilding of surplus so essential after 6 years of depletion.

While the present substitute for the Walsh bill appears to have been simplified and the objections then existing appear to have been

overcome in some respects, our examination brings us to the conclusion that there is little real difference between the two measures.

I am very glad, in that respect, to agree entirely with Mr. Green, as regards them.

I have prepared, in my own observations, a summary of the objections to the Walsh bill, and as a matter of interest, I tried to read the Healey bill in the light of that, and I have, for any member of the committee who would like to have it, a very interesting comparison, which I think shows its up very well.

Mr. DUFFY of New York. How many objections were you able to eliminate?

Mr. O'LEARY. I think two, if I remember rightly, but that will show in this summary.

The Healey bill represents an attempt through the coercive power of Government purchasing to enforce observance of the rigidities of minimum and maximum hours in performance of Government contracts, and through such coercive power and the obvious difficulty of segregating plant production to accomplish indirectly the control over wages and hours held unconstitutional by the Supreme Court.

The wage and hour provisions of the bill apply not only to all persons "while engaged in the construction, or the production or the furnishing of articles, materials, supplies, and equipment", but also to "services, in connection with, or which may be identified as part of the subject matter of, the purchases or contract." The term "in connection with" is unlimited, and its interpretation might have serious consequences. Under a broad interpretation a major portion of the employees in industry would be brought under the provisions of this act.

The principal contractor is directly responsible for observance of the provisions in his own plants, and is responsible for the failure of subcontractors to comply in event of omission to inform subcontractors of contract conditions. Failure of a subcontractor to comply with contract conditions subjects the subcontract to cancelation, and in default of such cancelation by the principal contractor at the direction of the Secretary of Labor, renders the principal contract subject to cancelation. Delays, penalties possible to be imposed, and attendant confusion and uncertainties would make Government contracts substantially less desirable, if not entirely unacceptable, to many prospective and eligible bidders.

It is doubtful whether the delegation to the Secretary of Labor of power to fix minimum wages and maximum hours, without specification except as within the very general limitations of the bill, and then with wide discretionary powers as to such exceptions and exemptions as the Secretary of Labor may determine to serve "justice or public interest", comes within the congressional power of determining conditions under which public funds shall be expended. It may finally be held to be an unlawful delegation of the congressional power. While the bill sets forth certain conditions which may be considered in establishing hours and wages there is doubt that such conditions constitute definite standards or rules.

This bill enables extension of control of a Federal bureaucracy over every bidder on Government contracts, every subcontractor, and every material supplier as to hours and wages. This is too great