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[Department of Commerce and Labor. Bulletin of the Bureau of Labor.

No. 54. September, 1904.]


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The CHAIRMAN. There is not any question about that, but they are not drawn in question in the matter I was trying to inquire about.

Mr. HAYDEN. Perhaps I did not understand the question. (The chart above referred to is here set out in the record as follows:)

(Thereupon, at 12.50 o'clock p. m., the committee took a recess until 2 o'clock p. m.)


The committee met at 2 o'clock p. m., Hon. John J. Gardner (chairman) presiding.


Mr. DAVENPORT. Not to detain the committee very long, knowing you are very busy men, I will say that I wanted to talk about one or two aspects of this matter that occurred to me. We all listened with interest, and I think with conviction, to the argument of Mr. Hayden this morning on the constitutional inability of Congress to insert a provision of this kind in the contract that it makes for the production of a chattel where the ownership remains in the contractor until it is tendered to and accepted by the Government—that is, the contract between the Government itself and its immediate contractor.

Now, I want to direct the attention of the committee to other difficulties that lurk in this bill, even assuming that the Government could insert such a provision in its contract with its immediate contractor, for I take it that this committee, having in mind the public interest, would want to see to it that if possible protection be given to the contractor in his dealings with the subcontractor, and his subcontractor, and so on down the line, for of course it would not be just to require him to make such a contract as this if he could not protect himself from the acts of his subcontractors, and, in the second place, it would be very bad policy, because if such contractor can not so protect himself, then it would deter him probably altogether from taking contracts, and so the effect on the business of the Government would be disastrous, for in the existing condition of affairs, and in any condition of affairs that is likely to exist in long years to come, it can not be supposed that the Government of the United States could undertake to manufacture everything that is covered by the provisions of this bill without resorting to private establishments.

We may start, I take it, with certain fundamental propositions that will be conceded by everyone. Three ways, possibly, would be open to the contractor to try to protect himself. One would be by stipulating with his subcontractor that any fines or penalties that might be incurred by the contractor through the fault of the subcontractor should be withheld from the payment to the subcontractor. Another might be that by taking a bond from his subcontractor to indemnify him from any loss that he might sustain from the acts of the latter.

As to the first protection, of course, there is no relation whatever in amount between the contract price that the contractor is to pay to the subcontractor and the fines or penalties which might be imposed upon the contractor by the failure of the subcontractor to do as he agreed by permitting his men to work more than eight hours a day. The whole price, as I said the other day, that he would be paid might be only a thousand dollars, and he might easily impose penalties of $5,000 upon the contractor.

The other means of protection would be by a bond, assuming that the subcontractor could secure a bond from some company to indemnify the contractor; but as I said before, the litigation between the contractor and the subcontractor would necessarily be between citizens, and in the appropriate court, either a State court if they were citizens of the same State, or a Federal court if they were citizens of different States; in which' latter case the Federal court would have concurrent jurisdiction, assuming the amount was sufficient, with the State court.

Another way that might be suggested would be that there should be inserted in the subcontracts, either by direction of Congress or by contract between the contractor and the subcontractor and so on, a provision that the matter should be determined by the action of the Federal authorities. Of course the same difficulty would exist there, in view of the disputes arising between them. But let us now look at this thing from the standpoint of the constitutional power of Congress to so direct, of making it obligatory by law that there should be a provision of the latter character in the contract relations between the contractor and his subcontractors. Suppose a concrete case. Suppose the William Cramp & Sons Shipbuilding Company made a contract with the Carnegie Steel Company for the production of a certain quantity of armor plate according to certain specifications. Of course if the subcontractor made that armor plate and tendered it to the contractor and the contractor accepted it, the Government would not be obliged, and could not be obliged, by such acceptance by the contractor, to accept the ship in the respect that it was suppli with that armor plate. Of course the armor plate would be the property of the subcontractor until such time as it was delivered to and accepted by the Cramps. The ship would be the property of the Cramps until such time as it was delivered to and accepted by the Government. Now, we have all of us been educated in times past as to the proper sphere of authority of our dual form of Government; that the State possesses all powers not granted by it to the Federal Government except such powers as it is restricted by the Constitution of the United States from exercising. That is the doctrine in Connecticut, and I suppose it is the doctrine everywhere.

The Government of the United States is one of enumerated powers, and it can exercise only those powers which are expressly or by proper implication granted in the Constitution. Let us take the case of the arrangement between the Cramp Shipbuilding Company and the Carnegie Steel Company. Suppose the State of Pennsylvania should pass a law prohibiting the parties from stipulating for the doing of any work on that job from working more than eight hours; of course it would be invalid. It would be beyond the power

of the State under the decision of the Supreme Court of the United States in the New York case, the Bakery case, and their more recent decisions, because of the limitation on the action of the State in the fourteenth amendment, that no State shall pass any law which deprives any person of life, liberty, or property without due process of law. In the same way and for the same reason, and an added reason also, the Congress of the United States could not make a direct provision of that kind, for the reason that there is the same limitation on Federal power and Congressional action by the fifth amendment, which says no person shall be deprived of life, liberty, or property without due process of law; and for the added reason that the relation existing between those parties is beyond the purview of the Federal authority; it is not within the enumerated powers conferred upon the Government and it can not be found in them by reasonable implication. Therefore it is as far beyond the jurisdiction of the Federal Government, as a sovereignty, as would be the case if it was a transaction in Canada or in France. And that consideration is especially proper, when applied to the District of Columbia, and to the instance cited by the chairman in Arizona. While it has the powers of a sovereign in the District of Columbia and in the Territories, there is upon the action of the Government therein the limitation of the fifth amendment which prohibits it from depriving any person of life, liberty, or property without due process of law, and if you gentlemen care to go into the history of the matter--for it is new to everyone, I think, who sits in this committee except the chairman, and he was not in Congress at the time, though he came in shortly afterwards—in the discussions on the existing eight-hour law in the Fifty-second Congress, or in 1892, which must have been the Fifty-second Congress

Mr. PAYSON. It was.

Mr. DAVENPORT (continuing). A proposition was made to amend the proposed bill by including any corporation in the District of Columbia chartered by the United States Government. An amendment of that kind was proposed by a Member by the name of Haugen.

The CHAIRMAN. What was that amendment? Mr. DAVENPORT. It was proposed to amend the bill so as to include all corporations chartered by Congress and doing business in the District of Columbia, the attempt being to get at the employment of the street-car employees and others.

Mr. PaYSON. To bring them within the provisions of the then proposed eight-hour law.

Mr. DAVENPORT. The gentleman proposing the amendment did not get it before the House in such a way that it could be acted upon, but there was a very general discussion in the House over the scope of that bill and the constitutional limitations upon Congress. Will you tell me, Mr. Chairman, if the majority of that Congress was Democratic or Republican?

The CHAIRMAN. It was a Democratic Congress. Mr. DAVENPORT. Mr. Tarsney was chairman, I know, and the existing law was reported by him at that time.

The CHAIRMAN. It was a Democratic House; I do not know about the Senate.

Mr. DAVENPORT. Well, this matter was not discussed in the Senate at all. All the discussions in the Senate are in 3 inches of the Congressional Record of that time. It was stated, in the first place, that the purpose of this law was to make effective the provisions of the previous act of 1868. The act of 1868 had been passed fixing eight hours as the workday for Government employees, and it was not observed. There were decisions by one authority after another, and finally by the Supreme Court of the United States, and the result was that it was held that the act of 1868 did nothing more nor less than establish a standard day of eight hours on Government works, and the Supreme Court of the United States had held that a man might bargain and sell his labor to the Government through a contractor on the public work and not be under that act. So the act of 1892 was prepared, advocated, and pushed to its passage upon the theory that it was the means adapted to enforce and make effective the law of 1868, but it was conceded that the Congress of the United States could not go beyond that; that it could not go beyond making provisions in regard to its own work, its own employees, and that a contractor on the public work was only another form of an employee of the Government; and so I say the friends of the bill and opponents of the bill almost unanimously. if not quite unanimously, agreed that the act of 1892 was going to the verge of the power of the Government to deal with this matter, and that it could only be justified upon the principle that the Government as an employeer, employing its own men upon its own works, was a sovereign at the same time that it was a contractor, and that as a sovereign dealing with its own property in this way it could enact that statute.

The CHAIRMAN. Pardon me, I do not want to interrupt you, but I think that is a matter of record in the argument elsewhere. I think the committee claimed for its justification that it had done all that could be done under the Constitution.

Mr. DAVENPORT. At any rate, a casual examination of a few pages of the Congressional Record. perhaps 10 or 15 pages, which contain the debate on this matter, shows that the statement I have made is correct, and very likely, as the Chairman suggests, it is a matter of record in the proceedings of this committee.

The CHAIRMAN. What we want to find out is whether they were right or not.

Mr. DAVENPORT. As has been often stated, there is this inability of the Congress as a sovereign to legislate directly in this matter as between the contractor and itself in chattel work, in which the title does not pass from the contractor until acceptance by the Government, or to legislate as to the relations between the contractor and the subcontractor, and his subcontractor, and so on ad infinitum. It was suggested and has always been contended here by the advocates of this legislation that while Congress could not do that by direct legislation, it could have a stipulation inserted in Government contracts by which the parties immediately dealing with the Government would agree to a contract containing those stipulations by which the contractor would become the guarantor for all its subcontractors down the line.

I am not going to travel again over all the arguments which have been so lucidly presented by Mr. Hayden this morning in regard to the matter so far as it affects the Government and the original contractor. I come back to this. You gentlemen, of course, as just men and as wise legislators, having in view the welfare of the Government, which of course is a great business institution, will feel it incumbent upon you to in some way protect that contractor from the liabilities that he is going to assume in consequence of the failure of his subcontractors to work only eight hours in a day. Now, suppose you resorted to this particular means and you enacted that

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