At present and in the past the Government has been a substantial buyer of textiles. Last year it purchased between 8 and 10 percent of the total output of cotton and rayon mils, and I understand about 45 percent of the total output of the woolen and worsted mills.

It is our position that it would be unwise for the Government, aș a purchaser, in an industry as highly competitive as this, to award its business and spend the Government's money on those employers who pay less than the prevailing minimum wage on a Nation-wide basis. Briefly, it is important to understand the character of this industry about which I am talking, which is similar, in turn to shoes and leather, and woolen and worsteds. It is highly competitive.

There are half a million employees in this industry in over a thousand plants from Maine to Mississippi.

Senator FULBRIGHT. Did I understand you to say that you think that is what the law actually provided or that it is a desirable thing that you approve of?

Are you a lawyer?

Mr. SULLIVAN. Yes, sir. I am a lawyer.

Senator FULBRIGHT. Do you think that is what the Walsh-Healey Act actually provides, that which you have just stated as being a desirable objective?

Mr. SULLIVAN. It has been so interpreted and applied.

Senator FULBRIGHT. Do you mean by the Department of Labor? Mr. SULLIVAN. Yes.

Senator FULBRIGHT. Do you so interpret it?

Mr. SULLIVAN. Senator, I would like to help you out on the legislative history of it, but I have not examined it. I listened to you this morning.

Senator FULBRIGHT. You have read the act, have you?

Mr. SULLIVAN. I have read the act, sir.

Senator FULBRIGHT. How do you interpret that language in section 1 (b)? Do you think it says that they should provide, not really minimums in the sense of the Fair Labor Standards Act, but, as it has been interpreted, rather a desirable medium, because they do not take, in any case, the actual minimum, and it would be applied on the basis of the locality.

Now what you are really arguing is that the local minimum in New England ought to be applied all over the United States.

Is that not the substance of your statement?

Mr. SULLIVAN. No, sir; that is not the substance.

Senator FULBRIGHT. I thought it was.

Mr. SULLIVAN. I think I will demonstrate that as I go along.. Senator FULBRIGHT. What do you think this language means that we read this morning?

Mr. SULLIVAN. I have assumed that because it was so interpreted by the Secretary and was found by the courts not to have been frivolously or arbitrarily interpreted

Senator FULBRIGHT. That has not been subjected to the courts. Mr. SULLIVAN. I understood that, in the Lukens case, it was. Senator FULBROGHT. Have you read the Lukens case?

Mr. SULLIVAN. I read it sometime back.

Senator FULBRIGHT. What did you understand?

Mr. SULLIVAN. That the Secretary's interpretation of the language was given particular weight and was virtually conclusive.

96315-52-pt. 5-5

Senator FULBRIGHT. Where did you get that understanding, from your own reading or from what the Secretary said this morning? Mr. SULLIVAN. Well, sometime back I read it.

Senator FULBRIGHT. Is it not a fact that all that case held was that one who wished to contract with the Government had no standing to question this interpretation?

In other words, the court was without jurisdiction to entertain this case. Is that not what it really held? It threw him out of court, in other words.

Mr. SULLIVAN. Senator, it has been sometime back since I have read it, and I have not read up on the law or legislative history part of this. I merely wanted to point out some of the economic aspects and its impact on our people in the event that this interpretation were changed.

Senator FULBRIGHT. As a lawyer, do you not think the committee and the Congress ought to be interested in whether the law is carried out as it is written?

Mr. SULLIVAN. I do, Senator, but I do not think I am your best witness for that, because I do not think I am qualified to express an opinion.

Senator FULBRIGHT. Being a lawyer, I felt you were qualified to give your view, at least.

I would like to hear you address yourself to the specific amendments that have been offered and not to the desirability of everybody having high wages.

Mr. SULLIVAN. I do not intend to address myself to the desirability of having high wages, but our experience, which has been very bitter, in New England and which has meant the loss of 125,000 jobs and $225 million

Senator FULBRIGHT. Because of the Walsh-Healey Act?

Mr. SULLIVAN. No; because of the economic forces in the industry. Senator FULBRIGHT. I wanted to pin-point what this committee is considering.

The CHAIRMAN. I come from a State that makes 90 percent of the print cloth in America. It is the largest cotton-manufacturing State in the Union. I have heard no complaint about the Walsh-Healey Act. Mr. SULLIVAN. I think, if I could go back, Senator Fulbright, particularly, to what led up to the situation in textiles, particularly in 1933, it will give you an understanding.

Senator FULBRIGHT. These are difficult problems, but I do not see how it relates to Walsh-Healey, and why you think that medium should be used to prevent the development which has taken place as a result of economic factors.

One thing I wanted to put in the record is this: Is it true that employment as a whole in New England has gone down, or is there a shifting that is taking place out of some industries into others? Are there not other industries growing in that area while textiles are going down?

Mr. SULLIVAN. There is a growth, and there is a shift.

Take Manchester, N. H. That shift was made, but it was made after almost 10 years of hardship.

Senator DIRKSEN. Mr. Chairman, may I ask a question?

Mr. Sullivan, what areas up there have been declared to be distressed areas by the Secretary of Labor under powers which he now has?

Mr. SULLIVAN. Practically all the cotton and woolen and worsted. textile centers have been declared distressed areas.

Senator DIRKSEN. Can you particularize a little?

Mr. SULLIVAN. Fall River, New Bedford, Lowell, Lawrence; I think Lewiston, Maine, has now been declared a distressed area. The whole Providence area.

Senator DIRKSEN. The second question would be, Why were they declared distressed areas? What is the reason for the unemployment or disemployment?

Mr. SULLIVAN. Let me say this: Probably a year ago-I would not be here at all and it would not have been a problem.

You see this Walsh-Healey legislation was depression legislation. These mills are, and a large part of the cotton textile industry is, in serious condition.

More than half the people in the industry are working less than 5 days a week. It has made us examine some of the reasons behind this Walsh-Healey legislation which we do not think is any complete cure-all but is an indication of a Government endeavor to stabilize wages in an industry which is two-thirds unorganized. That is without any union representation. It employs over a half million people in over a thousand plants. Some of them only employ a hun

dred people or less.

In that big, sprawling industry, which is the very epitome of free competition and enterprise, and in which, particularly in our New England mills, the cost of labor wages to the workers is the single most important element in making a yard of broadcloth. It is 45 percent of the cost.

There is a danger of lack of stability in that industry. From 1923 to 1933-let me give you just a few figures as to what happened to that industry and what led it to be NRA Code 1, at the request of employers from all the States who came to Washington to try to solve this problem which had come up.

During that period a $180 million a year less was paid in wages between 1923 and 1933.

The value of the product produced dropped by over $1 billion, and yet the production in yards, or pounds, remained the same.

In other words, the production was the same, but, because of depressing forces, the vicious spiral of inflation brought those items down.

The CHAIRMAN. But did not everything go down then?

Senator DIRKSEN. Take Providence. There is quite a custom jewelry center there, is there not?

Mr. SULLIVAN. Yes.

Senator DIRKSEN. Now is it conceivable, because they could not get gold or silver or metal, there was a wholly different reason for unemployment there.

Let us take the Textron Corp. up in New Hampshire. I suppose they moved at least one plant down to Puerto Rico for the very good reason that they felt they could manufacture more cheaply and still get the stuff back here and pay the transportation charges and probably sell them a little cheaper to the consumer.

The residual question then is, Do we depend upon the law in order to prevent this sweep of economic forces which reorients industry in the country?

We have a similar problem. Coal mines are being abandoned in southern Illinois. I do not know whether we ought to resort to Federal law or rather avail ourselves of whatever we can under this free system to get some new industry in there to develop some of the timber resources that are native to that area of the State, rather than take an arbitrary or perhaps a capricious method for trying to stabilize it.

Mr. SULLIVAN. Take the Textron case, Senator. Were the United States procurement authorities to say that Mr. Little pulled so many mills out of New Hampshire and set them up in Puerto Rico, and he is paying about 30 cents an hour on the average, whereas the mills in the Senator's State are paying, I do not know what, but easily five times as much as that.

The CHAIRMAN. We pay just as much as New England pays.

Mr. SULLIVAN. I think it would be a mistake to use the Government purchasing authority to funnel the procurement of Government orders into that low-wage Puerto Rican plant.

Senator DIRKSEN. That was not a case of Government order, was it? Mr. SULLIVAN. No; but if you do not have some provision-the Government buys on a competitive-bid basis, and the man with the lowest wages is going to have the lowest costs.

Senator DIRKSEN. If it were a foreign country, it would be a different thing.

Mr. SULLIVAN. That is right.

Senator DIRKSEN. But we have a problem there.

Mr. SULLIVAN. It is a peculiarily American problem.

Senator DIRKSEN. The management of Textron decides that maybe they can do a good turn when the men are not working in the sugar fields, which is a short season down there, and provide some employment. If employment is not provided, then we find Puerto Rico on our doorstep asking for sundry millions to keep body and soul together, so the question is, Where do these alternating forces finally wind up, unless we have total direction at the top to cure every dislocation as it comes along.

Mr. SULLIVAN. I do not think this question we have before us is a question of total direction from the top.

If you were an individual private purchaser of 10 percent of the output of this great industry and you knew-believed that there might be the possibility of a war in which you would have to purchase as you did in the last war, 60 percent of that production, and turn every wheel and loom to get it out and still not have enough, you might very well say to yourself, "Well, I think that the low-wage mills, those who are paying less than this prevailing Nation-wide minimum, they will get a certain amount of civilian business. I will give my business only to those mills which pay the prevailing minimum or better; by that way I preserve those mills in time of stress so that that capacity is available in the event of war."

I think large business purchasers frequently take that point of view; and, in a Government point of view, in an industry which is now in a depression and legislation which was born in that depression, which affected it and other industries, and dropped the wage rates-the wage rates both North and South were slashed between 1920 and 1933-in the North as a result of this competitive situation where each manufacturer was trying to meet the other man's price, wages

went down from 53.6 cents to 27 cents an hour, a drop of 26 cents or almost a 50-percent slash in wages. Included in that were bitter and long strikes, one extending 6 months.

During the same period-and it is not a sectional issue at allmay I say that the southern wages went down from 43 cents-this is the average wage-to 20 cents, or a drop of over 50 percent.

Mr. DIRKSEN. Let me get back to your earlier observation and then I think I will get to the conclusion that I seek:

You said the poundage that has been developed in the textile industry in New England is about the same as it was in earlier years, but that the take-home pay had gone down. Is that correct?

Mr. SULLIVAN. Between 1920 and 1933. Actually the poundage or square-yard output of the industry remained about the same, but the payroll index dropped from 122 to 44, or 78 points. Actually the employment index only dropped 30 points. In short, wages went down three times as fast or almost three times as fast as employment went down, and the production remained about the same. So that the industry, which at that time and probably now also, was burdened with overcapacity, was cutting its own throat. But when it cut its own throat, the only place, the place upon which the greatest pressure could be placed, was the employees themselves.

The CHAIRMAN. That may be true but the price of cotton went from 42 cents to 8 cents, so the poor farmer was in that cut.

Mr. SULLIVAN. That is right. I think legislation has been enacted to attempt to avoid that vicious down-cutting. It is in the employer's interest. An employer does not like to cut wages. He only does it because he has to meet competition to stay alive.

Senator DIRKSEN. We get into the burden of your argument which is roughly this: You favor the retention of the Walsh-Healey Act as is, because it equalizes to some degree competition for the mills that you represent, is that right?

Mr. SULLIVAN. And for mills in other States. I do not speak for them but I call your earnest attention to this: For example, all we have is average, but in Virginia, in broad woven fabrics, cotton, silk, and synthetic fiber, the average wage in that State, in January 1952, was $1.33 an hour. In Texas, it was $1.08. In Tennessee, $1.23. In New Jersey, $1.29, and in Georgia, $1.22. If there is no establishment of a prevailing minimum at which the Government will buy, then obviously the Government is forced under a competitive-bidding procedure to go to that mill which can produce cheapest. The South now holds at least 80 percent of the industry. We are just the tail of the dog up there.

The CHAIRMAN. Yes, but you are getting more Government contracts than the South gets.

Mr. SULLIVAN. More textile contracts.

The CHAIRMAN. Yes.

Mr. SULLIVAN. I have searched for those figures for a long time, sir. The CHAIRMAN. I have put those figures in the record. (See p. 2486.) Senator DIRKSEN. I wanted a definite answer on the record. You do agree with the point we have been leading up to, that where the procurement of Government supplies and materials is involved, you want the Walsh-Healey Act to remain because it is an instrument for making competition just a little bit easier for your area. Would that be a fair statement?