In Lochner v. New York (198 U. S., 45, 53, 56), which involved the validity of a State enactment prescribing certain maximum hours for labor in bakeries, and which made it a misdemeanor for an employer to require or permit an employee in such an establishment to work in excess of a given number of hours each day, the court said: "The general right to make a contract in relation to his business is part of the liberty of the individual protected by the fourteenth amendment of the Federal Constitution. (Allgeyer v. Louisiana 165 U. S., 578.) Under that provision no State can deprive any person of life, liberty, or property without due process of law. The right to purchase or to sell labor is part of the liberty protected by this amendment, unless there are circumstances which exclude the right. There are, however, certain powers existing in the sovereignty of each State in the Union, somewhat vaguely termed police powers, the exact description and limitation of which have not been attempted by the courts. Those powers, broadly stated and without at present any attempt at a more specific limitation, relate to the safety, health, morals, and general welfare of the public. Both property and liberty are held on such reasonable conditions as may be imposed by the governing power of the State in the exercise of those powers, and with such conditions the fourteenth amendment was not designed to interfere. (Mugler . Kansas 123 U. S., 623; in re Kemmler 136 U. S., 436; Crowley v. Christensen 137 U. S., 86, in re Converse, 137 U. S., 624.) In every case that comes before this court, therefore, where legislation of this character is concerned and where the protection of the Federal Constitution is sought, the question necessarily arises: Is this a fair, reasonable, and appropriate exercise of the police power of the State, or is it an unreasonable, unnecessary, and arbitrary interference with the right of the individual to his personal liberty or to enter into those contracts in relation to labor which may seem to him appropriate or necessary for the support of himself and his family? Of course the liberty of contract relating to labor includes both parties to it, although there was a difference of opinion in that case among the members of the court as to the general proposition that there is a liberty of contract which can not be unreasonably interfered with by legislation. The minority were of the opinion that the business referred to in the New York statute was such as to require regulation, and that as the satute was not shown plainly and palpably to have imposed an unreasonable restraint upon freedom of contract, it should be regarded by the courts as a valid exercise of the State's power to care for the health and safety of its people. * * * Mr. HASKINS. He is referring there to the judgment of the court of appeals, is he not? Mr. DAVENPORT. Yes, sir. Mr. HASKINS. They held it constitutional. Mr. DAVENPORT. Unconstitutional. Mr. HASKINS. The court of appeals held it constitutional. Mr. DAVENPORT. Yes, and it was reversed by the Supreme Court. Now, this committee should also bear in mind the decisions of the Supreme Court upon the validity of legislation looking to the making criminal the employment by any contractor or subcontractor upon the public works, whether of a State or of the nation, in excess of a specified number of hours. In the case of Adkin v. Kansas, in Thirtyfirst United States The CHAIRMAN. Pardon me, I do not want to interrupt you, but there is no proposition in this bill to make anything criminal. Mr. DAVENPORT. Oh, I understand. When I get the attention of the committee brought to these cases, I think I can very quickly make the application. The CHAIRMAN. Very well. Mr. DAVENPORT. In the case of Adkin v. Kansas, in the Thirty-first United States, and in the case of Ellis v. United States (236 U. S.), decided at this term, the Supreme Court held that it was within the police powers of the governments of both the State and the nation to make it a crime to do certain things such as are specified, upon the public work or works of the State or of the nation; but in making that decision, in coming to that result, they carefully abstained from con sidering or passing upon the question that arises in legislation of this character, for there has been a decision by an eminent court upon this sort of law which declared it to be unconstitutional for the very reasons which the Supreme Court have emphasized in this case of Adair v. United States. For the convenience of the committee and for the convenience of those gentlemen who may hereafter, on either side, have occasion to examine this, I want to call the attention of the committee to that decision. I refer to the case of the City of Cleveland v. the Clements Brothers' Construction Company (67 Ohio State Reports, p. 197). The provisions of that act were almost identical in terms with those of the Gardner bill and with the substantial provisions of the present pending bill. The syllabus reads as follows: 1. The act of April 16, 1900, 94 Ohio Laws, 357, entitled "An act to provide for limiting the hours of daily service of laborers, workmen, and mechanics employed upon public work, or of work done for the State of Ohio, or any political subdivision thereof, providing for the insertion of certain stipulations in contracts of public works. imposing penalties for violations of the provisions of this act, and providing for the enforcement thereof," is in conflict with sections 1 and 19 of article 1 of the constitution of Ohio, because it violates and abridges the right of parties to contract as to the number of hours' labor that shall constitute a day's work, and invades and violates the right, both of liberty and property, in that it denies to municipalities and to contractors and subcontractors the right to agree with their employees upon the terms and conditions of their contracts. Said act is therefore unconstitutional and void. 2. Said act is not a valid exercise of the police power, it not appearing that the services and labor to be performed were unlawful or against public policy, or that they were of such character that such limitation and restriction as to the number of hours' labor that should constitute a day's work was necessary to the public welfare. 3. Said act being unconstitutional, in an action brought by a contractor against the city to recover an amount due him for labor performed for said city under a contract containing a stipulation as required by said act, that said contractor should not require or permit any of his employees to labor more than eight hours in any one day and providing as penalty for a violation of such stipulation the forfeiture of $10 for each employee who should be so required or permitted to work more than eight hours in any one calendar day, where by way of answer, and as and for its only defense, such city relies upon and pleads its right to withhold and retain from such contractor, by way of forfeiture and as penalty for his breach of such stipulation, an amount equal to the amount claimed by said contractor to be due him on said contract, such answer does not state a sufficient defense, and is bad on general demurrer. 4. Where a statute peremptorily requires certain stipulations or agreements to be inserted in a contract, and the same are, by force of such statute and because of its provisions, inserted by the contracting parties in their contract, the obligatory and binding force of such stipulations and agreements so inserted depends upon the validity of the statute requiring their insertion. And where such statute is itself unconstitutional, such stipulations and agreements, although incorporated in the contract, are in law without any obligatory or binding force upon the parties to said contract. The CHAIRMAN. Do you not want to correct the record? I think you stated that under such a contract the decision meant, of course, that they could not recover. I take it you meant just the oppositethat the law was no bar to recovery. Mr. DAVENPORT. The required stipulation was invalid. The CHAIRMAN. And therefore was no bar to a recovery under the contract. Mr. DAVENPORT. No, sir. We all know that in the advocacy of this bill an attempt is made to distinguish it from other cases by claiming that it is merely a direction from a principal to its officers to insert in all contracts that they may make in its behalf certain requirements which the other party is at liberty to accept or reject at will, and that therefore there is no invasion of those fundamental rights. The idea, I take it, as stated by Mr. Gompers, being that Mr. Gardner's theory was that you could not directly prohibit this thing, but that you could accomplish that result by inserting these provisions in a contract which the party was at liberty to accept or reject at pleasure. It so happens that that very point was pressed upon the court, and after a careful examination of the cases it is deliberately rejected. In connection with this matter-because it is of vast importance to the proper administration of the government of this nation, vitally affecting the rights of every workingman in this country as well as the rights of every employer--I would ask that this opinion, which is not very long, be inserted in the record at this place in full. The CHAIRMAN. That is in the Sixty-seventh Ohio? The CHAIRMAN. Do we gather from that case what the constitutional provision of the State of Ohio is? Mr. DAVENPORT. You can readily gather that. Mr. PAYSON. You read it in terms, Mr. Davenport. Mr. DAVENPORT. So that we start, gentlemen, with the fact that a most eminent court in this country has declared legislation of this character unconstitutional and void. Mr. EMERY. Is there any dissenting opinion? Mr. DAVENPORT. None; it is unanimous. I do not propose to spend very much time discussing the constitutional question further than as I have thrown out these suggestions. I am reminded right now of an experience I had in the Senate Committee on Interstate Commerce where this employers' liability bill was pending. I happened to be present, and I happened to have the One hundredth United States, and Mr. Fuller, representing the railway employees, was insisting upon the passage of that act, and I called the attention of the committee and his attention to the fact that this bill would cover the case of half a dozen Italians in a railroad yard at Bridgeport carying a rail, where if they stumbled and dropped it and mashed their feet the railroad would have to pay all the bills; and I said that that was manifestly intrastate and that it was beyond the power of Congress, and that it was, under the Trade-Mark cases, in the One hundredth United States, invalid. When I called Mr. Fuller's attention to that he said: "We hear these constitutional objections urged to all such legislation. My friends here always, when there is any bill proposed to benefit the laboring man, come forward with constitutional objections. If this bill is good, the part of it that is good will stand, and the other part that is bad will fall." "But the precise point, Mr. Fuller, is that this bill is bad under that decision.' He said that he would take his chances on the constitutionality of it. Now, I suppose that grave gentlemen, selected here to represent the people of this country in the management of the affairs of such a great business institution as the United States Government is, will give heed to constitutional objections that may be urged, as well as others. But I pass from that to a consideration of other matters. I read to you the act of 1892. We have this act, and you will notice in this act that it provides that this shall not alter, modify, or repeal the act of 1892, and the first question that arises is, What contracts does this proposed bill cover? Does it cover all contracts which are covered by the act of 1892? I have no doubt that it was the intention of the draftsmen of this bill that it should, or their supposition that it did, cover such contracts; that this bill was sup plementary and in addition to the act of 1892; that, for instance, a contract to build a capitol or to build a building for the city of Washington or for the District of Columbia or any Territory would be covered by the terms of the bill. In the discussions that were had here at various times it was so considered. But let me call your attention to what the law officers of the Government have said in regard to it. When this bill now pending before this committee was last before it, which was in 1904, this bill was referred by this committee to the Secretary of the Department of Commerce and Labor for the answering of certain questions, and of course one of the questions that he had to consider was what contracts were included within it. I invite the particular attention of the business men on this committee to this, because you can see into what absolute confusion the business of this Government would be thrown if this bill should be enacted as it stands. [Readings It should be stated in this connection that the Solicitor of the Department supplemented the report made in the above letter by a verbal statement to the effect that, according to his interpretation of the last sentence in the bill, the contracts falling within the scope of the law of August 1, 1892, would not be affected in any way by the proposed bill, but would continue to be governed by the provisions of that law. As I understand the purpose of this legislation, it is to include all the contracts that are covered by the act of 1892, as well as other contracts that may be entered into for the furnishing of certain materials to the Government, and here you have the deliberate opinion of the law officer of the Government that this act as it is drawn will apply only to the classes of contracts that are not covered by the act of 1892. Well, there may be a difference of opinion on that subject. If it does apply, then see what a condition you have placed the contractors with this Government in. All those persons who enter into these contracts for the erection of these public buildings, and doing the public work of the United States, will be subject to the act of 1892 in all its criminal provisions, and in addition to that they will be subject to all the penalties which this act imposes upon them by virtue of the contracts that they make that must necessarily follow-while other contractors will not be subject to the act of 1892; for, as Mr. Gardner has just said, there is nothing in this act which strictly makes it a misdemeanor or a criminal offense. Now, which horn of the dilemma will this committee. adopt? If it concludes that it shall be applicable only to contracts that are not covered by the act of 1892, it should be specifically stated in the bill. On the other hand, if it is intended to cover them, see what a condition you place the contractor in. It is sought by inserting in the contract these stipulations to make each contractor liable. The act of 1892 applies only where he intentionally violates it; but under the proposed bill, whether he intentionally violates it or not, he is responsible for the violation by himself, and there is a penalty of $5 a day for each man who works more than eight hours in any one calendar day upon such work, if he works five minutes or if he works five hours, and if the contractor has 1,000 men at work or 500 men at work, he is responsible for $5,000 or for $2,500; and he is also responsible for the acts of his subcontractor to the extent of the penalties incurred by the subcontractor, all to be withheld by way of penalty from the bill. The next proposition to which I would invite the attention of the committee is the peculiar position in which this law will place the contractor. This, in terms, does not apply to the subcontractor. The contractor is required to stipulate that there may be withheld. from what is due him this sum of money, whether it is done by himself or by his subcontractor. How is the contractor going to protect himself from the responsibility and from the loss which may be imposed upon him by this bill? Take the instance of a battle ship. The contractor may have, for aught I know, 500 subcontracts, and each of those subcontractors may in turn contract out parts of the work, and you have an indefinite and a very large amount of contracts and subcontracts. Now, the contractor is to be responsible, by the terms of this bill, for every violation of the stipulation by anybody. Manifestly the only way he could protect himself would be by inserting in his contract with each subcontractor that he might in some way withhold from the subcontractor a portion of his pay, or he might take a bond from him. That, apparently, is the only way by which any protection can be obtained by the contractor. Now, you have this situation, that the amount of the penalties is in no wise determined by the amount of the contract price to be paid to the subcontractor. It may be that for a job of $1,000 the subcontractor might incur penalties which the contractor would be responsible for to the amount of $5,000; for, mind you, the penalty is $5 for each man who may work any more than eight hours in any one calendar day on any such work-the work contemplated or involved in the performance of the contract. So the contractor might be obliged to pay a sum very much in excess of the amount that the subcontractor would be entitled to receive under his contract, and the only way by which he could protect himself, of course, would be by a bond. That would be an obligation between two individuals to which the Government was in no sense a party. The subcontractor could sue the contractor to recover the amount of money due him under the contract. The contractor, on the other hand, might say, "Why, I can not pay you because the proper officer here has withheld my money upon the claim that you have violated this contract." The contractor might bring a suit to recover the amount due to him. It would be no answer to a suit that the officer of the Government had provided that this sum should be withheld; because, unless it was so stipulated in his contract, that would not be according to the terms of his subcontract. On the other hand, he could dispute that there was any such violation, in a suit brought by the contractor against the subcontractor on his bond, and that question would have to be tried and determined, if they were citizens of the same State, in the courts of the State, and the facts found and determined by the verdict of a jury, and they might well find, notwithstanding the finding of the officer of the Government, that the subcontractor had not done what the inspector claimed he had done, and so the judgment would go against the contractor, and he would have to pay that money; and the fact that the Government had withheld the money from him upon the finding of the inspector would not be of any assistance to him. There is nothing in this bill which provides or contemplates or looks out for all those conditions and results which would necessarily follow from the bill as it now stands, and it so happens that this very bill was by this very committee referred to the Department of Commerce and Labor to answer certain questions. Naturally, the first question that you would like to know is, how is it going to affect |