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Senator CAPEHART. For example, this book I had here a minute ago in reality has the effect of law. That is correct is it not, your interpretations?

Mr. Ray. I sometimes wish I would agree with you, Senator, but unfortunately we have to fight these matters out in the courts.

Senator CAPEHART. Of course, I understand people have the right to appeal from them and go to court, but in reality they are interpretations of the general law which have the effect of law.

Why would it not be simple to bring all your rules and regulationsI am not thinking of you now; I am thinking of all the departments, before the Congress and let them enact them into law and pass upon them?

Mr. Ray. Well, if Congress had time to pass on them, I am sure that would be one way.

Senator CAPEHART. Perhaps Congress ought to take the time to do it. Mr. Ray. That is what is proposed by Senator Fulbright, now.

Senator CAPEHART. I question sometimes, and I am sure it applies generally to the great majority of Government employees, that they would like to follow the laws and the intent of Congress.

It seems to me you would make your life much more easy if you did insist upon the Congress approving these things. You could simply say, "Well, that is the law as passed by Congress," instead of having this continuous bickering and fighting we are always in and having you people come up here and saying, “That is not what you intended to pass into law.

You intended it this way. We just know you did, and some little court out there some place said you did.”

It seems you make your life and your work much harder than is necessary.

Senator FULBRIGHT. Was that decision you had there before or after the other Supreme Court decision?

Mr. Ray. I do not know. I have one or two other cases upon which I could give you citations, where questions have arisen under the Walsh-Healey Act.

Senator FULBRIGHT. In the Wunderlich case, what did the court rule?

Mr. Ray. That case came up under one of the procurement statutes and not the Walsh-Healey Act. If the contract set provisions and it said the determinations of the contracting officer would be binding when they were made, he was excused from going to court. think that applies to the Walsh-Healey Act, because that has an express provision in it that all decisions made by the Secretary shall be enforced in the courts, if they are supported by a preponderance of the evidence, and there is nothing in the act which makes his decisions not reviewable by the courts, on the preponderance of the evidence, and also the courts have held, on errors of law.

Senator FULBRIGHT. When he agrees to the provisions, he has no standing under the Lukens case, to challenge the interpretation of the word "locality," for example?

Mr. Ray. If he is only a prospective bidder, he would not, but once having taken a bid, once having put himself in the category of a person directly affected by the law as a contractor, then he is in a different status than he would be in if he were simply outside wanting to be a bidder on a Government contract.

That is the difference.

As these cases will show you, once he has a contract and is charged with violating the act

Senator FULBRIGHT. The only way he can do it is to violate his contract and subject himself to various and sundry very heavy penalties.

There is no way of getting review of this, as there is under the Administrative Procedures Act, which was passed for that purpose. So that a man does not have to go out and subject himself to penalties, plus the blacklisting.

Have you ever used the blacklisting provisions?

Mr. Ray. Yes, it has been used in a few cases where the violations were flagrant.

Senator FULBRIGHT. If a contractor gets into a position where he takes a tremendous risk, if he should make an effort to try one or two rulings

Mr. Ray. That has never in the past been the basis for the blacklist. It has only been where he falsified records.

Senator Fulbright. You have had very few challenges, have you not? Are not the penalties very severe?

Mr. Ray. The penalty is exactly the amount of money he would have had to pay had he paid what the wage determination was, or $10 a day in the case of child labor. That gets pretty steep sometimes.

The bulk of the money received, involves child labor.

Senator FULBRIGHT. I do not see why you would feel very badly about having these difficult matters reviewed in the court unless you have no confidence in the courts.

Mr. Ray. We have the utmost confidence in the courts; and, personally, it would be nice to go into court and get their stamp of approval on this question of hamstringing the administration of the act to a point where you could not move unless an expensive process had gone on. They would have to raise the appropriation for lawyers considerably in order to take care of it.

Senator FULBRIGHT. You would not object to that; would you?

Mr. Ray. I think, as a good tax-paying citizen, we should not do useless things like creating business that way.

Senator FULBRIGHT. If you interpret it in accordance with the language of the bill, I do not think you would have any trouble. The trouble all arises when you depart from the language of the bill.

Mr. Ray. We would still have to defend it, I think.
Senator FULBRIGHT. Do you have anything more to add to this?

Secretary Tobin. Only, Senator, I think a party should be aggrieved before litigation should be incited.

Senator FULBRIGHT. I did not hear that.

Secretary Tobin. I say there should be an aggrieved party before litigation should be incited. If we make an interpretation of the law that is an improper one, then the aggrieved party has a right to proceed in the courts. I think it would be most difficult to enforce the law if, before I had taken an action against a contractor, all of the interpretations were to be subject to court review. We would have a considerable time elapse before we could really get enforcement.

I think where any individual contractor in the country would have the right to take any rule or regulation before it was applied and bring it into the courts, I think we would be in constant litigation before

there was an aggrieved party and before there was an application of the law.

Senator FULBRIGHT. You do not really believe in the idea of the Administrative Procedure Act, do you? That is supposed to settle some of these matters.

Mr. Ray. When the Congress decided on that act, they deliberately exempted the provisions of the Walsh-Healey Act.

Senator FULBRIGHT. Is there anything further?
Do you have anything further to say, Mr. McComb?
Secretary TOBIN. Thank you very much, Senator.

(Whereupon on 12:50 p. m. the hearing was recessed to reconvene at 2:30 p. m. in the Old Supreme Court Building, U. S. Capitol.)

AFTERNOON SESSION (4 P. M.)

The CHAIRMAN. Senator Saltonstall left a letter with me under date of May 8 to be printed in the record. (The letter referred to follows:)

UNITED STATES SENATE,
COMMITTEE ON ARMED SERVICES,

May 8, 1952.
Hon. BURNET R. MAYBANK,
Chairman, Senate Committee on Banking and Currency,

Senate Office Building, Washington, D. C. DEAR BURNET: I wish to thank you very much for your kindness and thoughtfulness in giving me a chance to speak to your committee concerning the amendments proposed by Senator Fulbright to the Walsh-Healey Act. I am very sorry that it will be impossible for me to do this on Monday, as I have a long-standing engagement in Massachusetts which I must keep.

The Walsh-Healey Act was passed on June 30, 1936. Its purpose was "to obviate the possibility that any part of tremendous national expenditures would go to forces tending to depress wages and purchasing power and offend fair social standards of employment."

The amendments to the Defense Production Act proposed by Senator Fulbright would drastically revise the Walsh-Healey Act without giving industry and labor a chance to set forth in detail how these amendments would affect the act and affect individual industries in New England.

The amendments would set the minimum wages on the basis of prevailing wages "in each separate city, town, village, or other civil subdivisinn," instead of on a Nation-wide "prevailing minimum ware in the industry.” This would seriously affect New Encland competitive industries, such as electrical goods, textiles, shoes, and leather. In the case of New England textiles, New England mills have a $1.1312 minimum waçe, whereas small towns and villages in other sections of the country are paying $0.75.

This amended lan: ua e would be administratively impossible, as thousands and thousands rf individual determinations would have to be made before any mill in any business could bid on a Government contract.

The amendments would further nullify the intent of the act by having it not apply to articles, etc., of standard type and construction. The interpretation of the language used might well include many textiles, shoes, electrical appliances, etc. It certainly opens a complete loophole for virtually complete nullification of the intent of the Walsh-Healey Act.

The amendments would apply the Administrative Procedures Act. This would obviously slow down the operation of the act. It could make it virtually impossible for the Government to procur any supplies because it makes it possible for anyone to fle frivolous lawsuits which could completely block the operation of the act.

The majority of American manufacturers who observe fair labor standards and working conditions cannot do so if the tremendous expenditures of the Federal Government can be funneled to low-wage operators who do not observe these conditions.

I enclose a memorandum which goes into the question which I raise in more detail, and which I trust may be included in the record.

Again, I thank you very much for your courtesy in asking me to appear before your committee, and as I am unfortunately not able to do so, allowing me to send you this letter. Sincerely yours,

LEVERETT SALTONSTALL,

United States Senator.

MEMORANDUM ON Walsh-HEALEY AMENDMENTS TO THE DEFENSE PRODUCTION

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New England competitive industries like electrical goods, textiles, shoes, and leather would be seriously hurt by an amendment to the Defense Production Act proposed by Senator Fulbright of Arkansas to drastically revise the WalshHealey Act.

The amendment would set Walsh-Healey minimum wages on the basis of prevailing wages in each separate "city, town, village, or other civil subdivision" instead of on the current basis of a Nation-wide "prevailing minimum wage in the industry.” This would mean in the case of textiles that hundreds of mills in small towns and villages throughout the Southeast paying 75 cents an hour and up would be rewarded with Government business. New England mills who have agreed on a $1.1344 minimum would get no Government business.

The same sort of situation would face the shoe and leather industry, and the electrical industry is a likely prospect for similar treatment in the near future. Westinghouse Electric Corp. has recently been endeavoring to prevent the establishment of a single prevailing minimum in the electric-lamp industry.

Ralph Stuart, vice president of Westinghouse, stated recently in a letter to Southern Congressmen, “it is absolutely essential that for the time being we have a very substantial differential in the wage rates in our Southern and Northern plants.”

He added that "impending damage to expansion of the lamp industry in the South, as well as to all Southern industrial expansion, can best be forestalled by dissuasion of the Labor Department” from setting a prevailing minimum wage for the industry.

The Westinghouse executive indicated his company will build more plants in the South “provided the present favorable climate continues to exist."

This could mean that New England lamp operations of companies like General Electric and Sylvania might eventually be faced with a similar loss of Government orders.

This isn't merely a case of North-South rivalry. Shoe, leather, electrical, or other plants paying substandard wages in small communities throughout the country would be able to underbid the majority of employers in these industries who have set a higher wage standard.

The problem is probably more acute in textiles where half a million people work in thousands of plants, some of them small, many of them located in rural areas throughout the Southeast and distributed throughout 18 or 20 States. The New England textile industry now pays minimum wages 34 percent higher than the Walsh-Healey minimum of 87 cents an hour. The Secretary of Labor is. working on a redetermination of this minimum that is likely to result in a new prevailing minimum substantially higher than the 87 cents.

The Fulbright amendment would not only make the minimum-wage part of the act practically meaningless, it would also increase the difference between the current low Walsh-Healey minimum and the New England minimum from 34 to 55 percent.

As if this were not enough, the Fulbright amendment would bog down administration of the act in a hopeless morass of administrative procedures. For one thing, where the Secretary of Labor now makes a single minimum-wage determination for the entire textile industry, he would be required to make thousands of them. But even if the Labor Department could handle this gigantic task, it would have to hurdle countless obstacles to make these thousands of determinations stick. The Fulbright proposal would make it possible for anyone to file frivolous lawsuits which could completely block operation of the act.

At a time when the textile industry is in a depression, delays of this sort could be fatal to a large number of New England mills, and to the jobs held by thousands of New Englanders in these mills.

While industry has severely criticized the Walsh-Healey Act, the minimum-wage provisions have been helpful to the majority of employers who pay fair wages to their employees. The Fulbright amendment would kill this one redeeming. feature but still burden the employers with costly reporting requirements of the act.

The majority of American manufacturers who observe fair labor standards and working conditions cannot do so if the tremendous expenditures of the Federal Government are funneled to low-wage cutthroat competitors. It was the purpose of the Walsh-Healey Act "to obviate the possibility that any part of tremendous national expenditures would go to forces tending to depress wages and purchasing power and offend fair social standards of employment” (Perkins v. Lukens Steel Co., 310 U. S. 113 (1940)).

For those familiar with the New England textile history of the 1920's and 1930's these words have particular meaning. Prior to the enactment of this legislation and following World War I, southern textile mills, by a continuing downward spiral of wages, cut wages by more than half, to an average of $8 per week, and in some cases to as low as $4 or $5 per week. This was accompanied in New England by the liquidation of over 225 mills, the permanent loss of over 125,000 jobs and the hardships and tragedies of dislocations in such textile centers as Manchester, Lowell, Fall River, New Bedford, and many others.

New England State governments, manufacturers and workers were helpless to prevent this unfair competition and the drive of southern communities to monopolize the industry. The Walsh-Healey Act introduced by a Senator and a Congressman from Massachusetts was one of several measures to arrest the forces which had depressed wages and purchasing power. The emasculation of this legislation now would not only be a step backward but would mean less employment and wages for New England workers and would be a serious blow to New England manufacturing.

The CHAIRMAN. I have a letter also from Senator Green, which, together with my reply, will be inserted in the record. (The letter referred to follows:)

UNITED STATES SENATE,

April 14, 1952. Senator BURNET R. MAYBANK, Chairman, Senate Committee on Banking and Currency,

Senate Office Building, Washington 25, D. C. DEAR SENATOR MAYBANK: It has been called to my attention that the Senate Committee on Banking and Currency in its consideration of legislation to amend and extend the Defense Production Act has been presented with a proposed amendment which would amend and weaken the Walsh-Healey Public Contracts Act in many respects.

The Walsh-Healey Act, as you know, was enacted over 15 years ago to protect prevailing labor standards from being depressed by Government expenditures. It had the additional purpose of protecting legitimate dealers, in bidding on Government contracts, from the competition of undependable contractors and brokers. With a few exceptions the provisions of this act have remained unchanged since its enactment, including the period during World War II.

It is obvious to me that the proposed amendment would considerably revise the present authority to establish labor standards in the field of Government contracts. As I understand it, probably one half of all Government supply contracts would be removed from the protection of the Walsh-Healey Act and the determination of prevailing minimum wages as now provided under the act would be completely disrupted.

I do not believe that the standards established under the Walsh-Healey Act are impeding the purposes of the Defense Production Act. I believe that any proposal of so drastic a nature will have broad implications in the field of labor standards in relation to Government procurement policies and should receive thorough consideration. With this in mind I believe proposed amendments to the act should be referred to the Senate Committee on Labor and Public Welfare for full discussion and hearings.

I request, Mr. Chairman, that this letter be made part of the minutes of the committee meeting and of the hearings on the Defense Production Act, and that my suggestions be given favorable consideration. Yours very truly,

THEODORE FRANCIS GREEN.

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