1937 _CONGRESSIONAL- ~ECORD-HOUSE 2763 give the Senator from Alabama an opportunity to appear ADJOURNMENT OVER before the committee if he desires so to do. Mr. RAYBURN. Mr. Speaker, I ask unanimous consent EXECUTIVE MESSAGE REFERRED that when the House adjourns today it adjourn to meet on The PRESIDING OFFICER (Mr. JOHNSON of Colorado in Monday next. the chair), as in executive session, laid before the Senate a The SPEAKER. Is there objection to the request of the message from the President of the United States submitting gentleman from Texas? the nomination of Robert Lee Williams, of Oklahoma, to be There was no objection. judge of the United States Circuit Court of Appeals for the INCOME-TAX RETURNS Tenth Circuit, vice George T. McDermott, deceased, which The SPEAKER. Under a special order of the House here was referred to the Committee on the Judiciary. tofore entered, the gentleman from Pennsylvania [Mr. RicH] ADJOURNMENT TO MONDAY is recognized for 15 minutes. Mr. BARKLEY. I move that the Senate stand in ad Mr. RICH. Mr. Speaker, this morning we received a spe journment until 12 o'clock noon on Monday next. cial invitation to come over and hear the prayer that was The motion was agreed to; and SIMPLIFIED TAX RETURNS $1,855,000,000. ·In 1934 it was $2,954,000,000. In 1935 it was Mr. Speaker, it is the duty of the Members of Congress $3,621,000,000. In 1936 it was $3,899,600,000. You will note to enact laws that the ordinary, average citizen back home that in 1936 it increased over 100 percent above what it was may understand. It is our duty to enact laws so that when in 1933, a great increase. The reason for the increase is we the Treasury Department makes up an income-tax return have put so many tax laws into effect the people of this in accordance therewith the people back home may under country had to pay this additional amount. One of the stand how to make out the return without being surrounded great tax burdens we placed on the people of this country by a lot of Government officials to assist in doing something last year in one of the most iniquitous tax bills the country that the average intelligent citizen should be able to do him has ever seen was the tax on the undistributed incomes of self, or being compelled to hire tax experts to report to the corporations. Government what his income was for a certain year. I We all know the income the Government was supposed to have received many complaints about the complicated re receive from the -income-tax· returns as of March 15 fell turns, and I hope the Ways and Means Committee will short of the anticipated amount by about $150,000,000. It simplify the law so the returns can be understandable by has not measured up to the expectations of the authors of the average intelligent citizen. I quote from a citizen from the bill. Not only are the taxes falling short of what was West Virginia regarding the tax returns, and can supply expected, but the greatest damage lies in the fact many, many more just about the same sentiment: many corporations in this country have been put in jeopardy Personally I pay a good amount of Federal taxes. I have patd of financial disaster by not increasing surplus out of earn money and spent time in trying to get my reports correct. Not ings; if for any reason we ever go into another depressio·n, withstanding all of this, revenue inspectors also spend consider it will be just too bad, for the corporations cannot pay divi able time in rechecking, all of which cause the taxpayer trouble, time, and expense. The ordinary businessman (personally speak dends then unless they have earnings; the dividends they ing) wants to do business and continue in business but he is paid during the depression was a godsend to America and unable to keep up with the revenue laws governing his business. to those who owned the stock of corporations who paid divi He is discouraged and prefers to quit business rather than to continue under present conditions, especially so when there are dends. If you cut the corporation out of surpluses, you will so many complicated, misunderstood reports, laws, rulings, and not only lose the dividends in time of depression but you will taxe~ governing his business. wreck the corporations. Much could be -said on this subject · This is all I am going to say about congressional etiquette. alone. This danger of tearing down the structure of Ameri ·But I claim the right to criticize when criticism is justified. can business enterprises is the greatest damage resulting I might talk abOut the sit-down strike. Thank goodness, from the tax on undistributed surplus, and if there is one the President of the United States is coming back here on thing above all else this Congress · should do it is to recon Monday from his rest and sit-down and meet the leaders struct the tax bill of 1936. of the House of Representatives and the Senate. Mr. I believe firmly in the income tax. I think the more a Speaker, the President will no doubt call you into this con man earns the more he ought to pay. I think with the in ference on Monday to talk about the sit-down strikes, and come tax and the inheritance taxes which we can impose he will call in the majority leader. When you get together and have imposed we ought to regulate pretty well how much ·you can make up your minds to one thing, . remembering a man should earn and how much of this world's goods he you have taken an oath to supp01t the laws of the United should accumulate during his lifetime. States, that the laws of the United States do not permit There is nothing which will do the people of this country sit-down strikes and the confiscation of another's property, more good than to work and save. This has been the theory whether it be his factory, his farm, or his home, without I have always been taught by my father, and thank God, due process of law. I congratulate the President of the I had a father who taught me to work hard, work long hours, United States, and I hope when he calls you together you and then save a part of what I earned. This theory was ·will do your duty. We wish him every success in preventing good when I was a boy, and I am firmly convinced it is good any more unlawful sit-down strikes. today more than ever _in the history of our Nation. · In the past 4 or 5 years we in Congress have been trying SPEND LESS-TAX MORE~R BUST to make people believe they ought to get all the world's However, this was not the object of my speech today. On goods, they ought to have everything they need, and yet have last Tuesday I addressed the House on "spend less, tax more, to do nothing to _get it. We must stop that kind of preach _or bust." I talked on the "spend less" on all the time I was ing. That will wreck any government or any nation, and ~llowed. It seems to have awakened some of the Members surely it will wreck the people in it and make them a nation .of Congress on the Democratic side of the House. It is of dependents on their government rather than a nation of one of our serious questions of government today. The gen people who support and maintain their government tleman from North Carolina [Mr. BuLWINKLE] took the :floor Tuesday and told you about the enormous expenditure NEW TAXES YOU HAVE IMPOSED of Government funds; and my good and genial friend, the We had the A. A. A. tax of 1933, theN. I. R. A. tax of gentleman from Virginia [Mr. WooDRUM] has asked for 1933, the non-intoxicating-liquor t.ax of 1933, the Railroad time to speak to the Members of the House next Tuesday. Retirement Act tax of 1934, the Bankhead Cotton Act tax of The gentleman from Virginia [Mr. WooDRUM] is the admin 1934, the Revenue Act tax of 1934, the liquor tax of 1934, istration spokesman for the Appropriations Committee, and the Revenue Act tax of 1935, the Social Security Act tax -there is no :Qner speaker or finer gentleman in the House of of 1935, the Railroad Retirement Act tax of 1935, the Kerr Representatives. [Applause.] I know if the Members of Smith Tobacco Act tax of 1935, the Potato Control Act tax the House of Representatives listen to Mr. WooDRUM Tuesday of 1935, and the Revenue Act tax of 1936. they will hear him talk about economy in government. And I have spoken of the -Revenue Act tax of 1936, and if I it is about time some great Democrat realizes it. thought I had sufficient time I should like to dwell on that Mr. RABAUT. Mr. Speaker, will the gentleman yield? further, but I am afraid my time will not permit. Mr. RICH. I shall be pleased to yield to any Member on Let us see what the corporation had in the way of pay the floor if he will get me additional time after my 15 minutes ment of income tax. has expired; but I cannot yield now. - They have the c-apital-stock tax imposed by the Federal We must not continue the present extravagance in Gov Government, the corporate-loan tax imposed by the Fed ernment, as we are heading for ruin. We will wreck the eral Government, and they have the social-security tax. financial structure of the Government. The stability of our Then they have their State income tax, and in the State of Government is being shaken. Why, five issues of Govern Pennsylvania this amounts to 10 percent on the income. ment bonds sold below par in one day last week. They also have their State capital-stock tax and local Last Tuesday I gave considerable data with reference to taxes, such as county, borough, and city taxes, as well as our spending. I want to recite some things which have hap State social-security taxes and others. When you think of .pened in the last few years in regard to our taxation. In ·the ·taxes imposed on corporations, you realize that we have 1933 the income of this Government from taxation was left the wrong impression with the people of this country as 1937 CONGRESSIONAL RECORD-HOUSE 2765 to the effect of taxes on corporations. Claiming the _cor .. The SPEAKER. Is there objection to the request of the porations pay the tax-do not think you can fool the public gentleman from Texas? long on that. Those who do not pay. income taxes must pay There was no obiection. outgo taxes, and the outgo taxes of this country are 10 Mr. . SUMNERS of Texas. Mr. Speaker, I wish to an .. times the amount of the income taxes. Outgo taxes are con nounce that beginning on next Wednesday the Committee cealed taxes-you pay by proxy. Thus, the taxes assessed on the Judiciary will conduct hearings on the antilynching on corporations are reflected in every item you · buy; the bills that are pending before the committee. corporations must and do pass them on in .the price of the EXTENSION OF REMARKS commodities they sell in increased cost. Do not anyone be Mr. ROGERS of Oklahoma. Mr. Speaker, I ask unani fooled on that. All corporation taxes except income are mous consent to extend my own remarks in the REcoRD by passed on to the consumer by increasing the cost of your including therein a memorial resolution and a radio a.ddress bread and butter; the increased cost of gasoline, oil, and which I delivered. automobiles; shoes and shirts; the increased cost of your The SPEAKER. Is there objection to the request of the dresses, neckties, face powder, clothes, and so forth-every ·gentleman from Oklahoma? · thing you buy to eat and wear and use. There was no objection. I am not advocating increased taxes, Mr. Speaker, but I The SPEAKER. Under the previous order of the House, ·am trYing to show how the small-salaried man pays more the Chair recognizes the gentleman from Missouri [Mr. in proportion when you compare his small $1,200 income to SHANNON] for 30 minutes. the income of the man who makes $25,000. The smaller the THE SUPREME COURT income a man has, the greater proportionate ~hare he pays to support our extrayagant Government. I am advocating, Mr. SHANNON. Mr ... Speaker, ·a great deal is being said however, the reduction of our spending spree in Government. about the Supreme Court and the pending bill for judicial What the President has said about taxes, I agree to these ·reform. Members of the House and of the Senate have been ·quotations 100 percent; and when he is right I like to give deluged with communications~ ranging from the temperate him credit, but when he is wrong I am just as glad to criti to the torrid zone of propaganda, against the judiciary bill. cize him or any other individual. I am free to say that I have not been able to get greatly Here is the President's tax statement-and I quote: excited over the commotion that has been raised in certain quarters over the President's plan to enable the Supreme PRESIDENT ABOUT TAXFS ·Court Judges to retire on full pay at a certain age, and to Taxes are paid In the sweat of every man who labors. · • • • in If excessive, they are reflected in idle factories, tax-sold farms, ·give some of the superannuated Judges some assistance and hence, in hordes of the hungry tramping the streets and the way of fresher blood-call it a transfusion if you will- seeking jobs tn vain. Our workers may never see a tax bill, but in their laborious researches and in the study of the cases they pay in deductions from wages, tn increased cost of what they ·that come before them. buy, or (as now) in broad cessation of employment. • • • Om people and our business cannot carry its excessive burdens ot I am filled with wonder and amazement at the hysterical taxation • • •. (Franklin D. Roosevelt, PJttsburgh, Oct. 19, lengths to which public men-men of reason and common 1932.) sense-have allowed themselves to be led in the discussion I shall use this position of high responsibil1ty to discuss up and : of this subject. down the country, at all seasons, at all times, the duty of re~ ducing taxes, of increasing the emciency o1 Government, of cutting SUPREME COURT AN ISSUE IN THE CAMPAIGN out the underbrush around our governmental structure, of getting It is being repeatedly stated-on the floor of this House, in the most public service for every dollar paici by taxation. This I edit9rials in the newspaper chains, over the radio, and in ·pledge you; and nothing I have said in the campaign transcends in importance this covenant with the taxpayers of. thiff country. the flood of propaganda letters that are now cluttering up (Franklin D. Roosevelt, Sioux City, Sept. 29, 1932.) the mail boxes-that the people have given no verdict on Now, Mr. President, why do you not help the poor man, this Supreme Court question; that it was not made an issue stop the enormous spending of government; consolidate the in the last Presidential campaign. That argument is on a. ·departments, thus cut down Government overhead; and, par with the other stock argument that we are trying to Mr. President, do one more thing: destroy the Constitution, and is just about as silly and inane. I say it was an issue in the campaign. It was the PAYMENT OF FOREIGN DEBTS· paramount issue. The people themselves, who had been Mr. President, ask the foreign countries, who owe us over made the victims of the Court's adverse decisions, made it ·$22,0.QO,OOO,OOO, to start payment of their honest debts to an issue. The opposition challenged the issue, and made it a us rather than spending so much for war. Great Britain .subject of -public debate. From the town halls of the great owes us over- $11,000,000,000; France over ·$6,000,000,000; agricultural sections to the gilded palaces of the Liberty Italy over $2,000,000,000; P·oland over $435,000,000; Belgium Leaguers, we never heard a political speech made by a repre over seven hundred and twenty-seven million, and other sentative of the old guard of monopoly and -special privileges, countries are included in our list of debtors; and the interest nor read a political editorial in the partisan press, that did rate varies from four-tenths of 1 percent in tne case of not point with pride to the decisions of the Supreme Court Italy, to 3.3 percent in the case of Great Britain. .against the recovery measures. Mr. President, collect our debts, spend less, and· you can DEMOCRATIC PLATFORM IN ALTERNATIVE reduce instead of increase taxes, which bear heaviest on Let me read you the plank of the· Democratic platform of the poor. ·And, in closing, let me quote to you from that ·1936 that the opposition are trying to twist into a mandate great Democrat, because this is the most extravagant ad ·for amendment to the Constitution. Here it is: ministration in our Nation's history: The Republican platform proposes to meet any pressing national ECONOMY IN GOVERNMENT problems solely by action of the separate States. We ·know that I am for a government rigorously frugal and simple, applying drought, dust storms, floods, minimum wages, maximum hours, all the possible savings of the public revenue to the discharge of child labor, and working conditions i:n industry, monopolistic and the national debt; and not for a multiplication of omcers and unfair business practices cannot be adequately handled exclusively salaries merely to make partisans, and for increasing, by every by 48 separate State legisl&.tures, 48 separate State administra device, the public debt, on the principle of its being a public tions, end 48 separate State courts. Transactions and activities blessing. (Thomas Jefferson, in a letter to Eldridge Gerry, Jan. which inevitably overflow state boundaries call for both State and 26, 1799.) Federal treatment. Mr. Speaker, again I say, spend less, tax more, or bust. Now, listen to this. The Democratic plank continues: [Here the gavel fell.1 - We have sought and will continue to seek to meet these prob lems through legislation within the Constitution. ANTILYNCHING BILLS If these problems cannot be effectively solved by legislation Mr. SUMNERS of Texas. Mr. Speaker, I ask unanimous within the Constitution we shall seek such clarifying amendment as will assure to the legislatures of. the several States and to the ·consent to make a very brief statement on a matter which Congress vf the United States, each within its proper jurisdic I think is of interest to the House. tion,-the power to enact those laws which the State and Federal 2766 CONGRESSIONAL RECORD-HOUSE MARClt 25 legislatures, within their respective spheres, shall find necessary in .farther· I will say that the framers of the Constitution meant order adequately to regulate· commerce, protect public health and safety, and safeguard economic security. Thus we propose to every ~ord they wrote into it. They meant that "public maintain the letter and spirit of the -Constitution. · - · welfare" meant · public welfare, and not private welfare. · Here ~e h~ve an-alter~~tive · qu~tio 'n · upon which that .They meant that this Government should be composed of .three separate and distinct branches-the executive, the leg campaign was fought, an issue that was widely ~ussed. ·First the Democratic platform pledged itself to meet the .islative, and the judicial. .They meant what they said when situation· created by the adverse Supreme Court ·decisions theY. outlined the. duties and the prerogatives of each of through measures Within the Constitution as it stands and to those branches. They jealously and exactly defined the maintain the letter and the spirit of the Constitution. - We powers of each branch. They gave no hint that the Ameri believed and· so stated, that we had been at all times within .can people were to give ordinary respect to the legislative the lett~r and the spirit of the Constitution. One decisive ·and the executive branches, but to the Supreme Court some niember of the Supreme Coutt thought and wrote otherwise extraordinary species of, respect -amounting· almost to rell- in three of the most -vital pieces legislation· enacted to .gious worship. · of . The framers of the Constitution-knew that the men who carry into effect the needed reforms. - Minority". mem~!s. .of that Court believed that we were right and that the maJority were to function in .the _three departments of government of the Court wa.S wrong in those decisions. ·were ordinRry human beings, none of them infallible, all of . We had a right to assume and to pledge the people that them subject to human faults and human prejudices. And we would seek, first and foremost, to remedy the . situation .there was not a word in that Constitution, nor an utterance from those Constitution · makers, that could· be construed without recourse to amendments. we ·placed that issue be ·into an intention.to set the Supreme Court in a niche aside, fore the people. But, the platform continued, if th~t way should not be open, then we pledged"that we would, as a las_t as in a sort of Buddha temple, where one must kowtow before ·resort, seek to amend the Constitution to prevent nullifica entering, with reverent awe. It was to be an American court, ·made up of American citizens, to administer justice in accord tion of the reform laws in the future. ance with American principles of government and American That whole question was argued out in every State of this traditions of liberty, freedom, and public welfare. ·Union. The decisions of the Supreme Court were talked I prefer to take my_stand on this age-long question of the about and deplored and attacked as unfair interpretations judiciary with the man who wrote the declaration of our of the law. The issue, in its alternative fa~. to proceed independence, with the man who visioned the great develop within the Constitution, if possible, or by amendment, if ment of this country from ocean to ocean, with that great necessary, was fairly and fully presented to the electorate, statesman whose devotion to American freedom and civil and the 27,000,000 votes and the 46 St~tes that returned liberty was never questioned. Needless to say, I refer to ·President Roosevelt to the Presidency was a warrant and ~ Thomas Jefferson, whose principles of democracy were mandate from the J>eople to deal with the problem by their grounded in the very bedrock of the revolution that shook platform alternatives. the Old World traditions from our shoulders. PRESIDENT WITHIN CONSTITUTIONAL RIGHTS .TODICIAL DICTATORSHIP FORESEEN - The President chose the direct route of reforming the As far back as 1810 Jefferson foresaw the danger of a judi source of all the trouble-the Supreme Court-and there is cial dictatorship. When the power of the judiciary to annul not one opponent of his plan who can constitutionally chal the will of the people was assumed and used by Chief Justice lenae his right to do so. They may impugn his motives, as Marshall, Jefferson wrote to President Madison: the; are doing, but they cannot question that he is within His (John Marshall's) twistiftcations in the case of Marbury, tn his constitutional rights and that he is acting in accordance that of Burr, and the Yazoo case show how dexterously he can with the overwhelming mandate of the people who approved reconcile law to his personal biases. his course and elected him to carry on his recovery program Let me quote a few more utterances of Jefferson's on the along the same lines. subject of the Federal judiciary. It would have been just the same, as far as the opposition In 1819 he wrote to Judge Spencer Roane: are concerned, if the President had decided to submit an The Constitution • • • is a mere thing of wax in the hands amendment to the Constitution. I am satisfied they would of the judiciary, which they may twist and shape into any form have raised the usual cry that he was seeking to undermine they please. the Constitution, to destroy our civil liberties. In fact, they did say those very things during the campaign when an In the course of his debates with Stephen A. Douglas, amendment was talked about; and now they are shouting Abraham Lincoln quoted from Jefferson as follows: Our judges are as honest as other men, and not more so. They themselves hoarse for the amendment ·route. have with others, the same passions for party, for power, and the THE VOICE OF HAMILTON privliege of their corps. Their maxim is, "boni judicis est ampliare Here we have a recurrence of the old Hamiltonian doctrine jurisdictionem" (it is the part of a good judge to amplify jurisdic tion): and their power is the more dangerous, as they are in omce that the people are not to be trusted. Time and agai~, in for life, and not responsible, as the other functionaries are, to the the deliberations of the Constitutional Convention, Hamilton elective control. voiced his distrust of the people. In one of his speeches be In 1820, referring to opinions of the Federal judiciary, fore that body he stated: Jefferson wrote to Thomas Ritchie: I frankly acknowledge that I do not think favorably of a re publican form of government, but I am addressing my remarks An opinion is huddled up in conclave, perhaps by a maJ.ority of to those who do think favorably of it, in order to prevail on them one, delivered as if unanimous, and with the silent acquiescence to tone their government as high as possible. of lazy or tim!d associates, by a crafty chief judge, who sophisti cates the law to his mind, by the tti.rn of his own reasoning. In fact, if it had been left to Hamilton, we would have bad Thus we see that opinions by a majority of one are not a government toned so high that the people would have bad new. They were rendered in Jefferson's time, and he fore very little to say about it; it would have been a government saw and warned us of the dangers of such opinions "huddled as autocratic, as arbitrary, and as far rem~ve~ ~rom the ap up in conclave." proval or disapproval of the people ~s the JUdicial ~ranch of In 1823 he wrote to A. Coray: it is today. And it is Hamilton's vmce y;e are hean~g when At the establishment of our Constitutions the judiciary bodies we hear the opponents of the judicial program saYing that were supposed to be the most helpless and harmless members of we must shut our ears to the verdict rendered so overwhelm- the Government. Experience, however, soon showed in what way ingly in the late election. 1 they were to become the most dangerous; that the insufficiency of LANGUAGE OF CONSTITUTION UNEQUIVOCAL . the means provided for their removal gave them a freehold and irresponsibility in of!lce; that their decisions, seeming to concern Now I want to say a few things in my own way about this individual suitors only, pass silent and unheeded by the public supre~e Court question. I will begin by saying that I have at large; that these decisions, nevertheless, become law by prece dent, sapping, by little and little, the foundations of the Con great respect for the Constitution. I think the men who stitution, and working its change by construction, before anyone wrote it wrote a great document of human liberty, a great has perceived that that invisible and helpless worm has been busily charter of free government. Yes; I will go that far and employed 1n consuming its substance. 1931 CONGRESSIONAL RECORD-- HOUSE_ 2767 Then in 1825 .Tefferson wrote to Edward Livingston: . . . BRADLEY NAMED nlMPAnTIAL . ARBITER .. ' One single object, 11 .-your provision attruns it, will entitle -you The four Associate Justices of the circuits specified in the to the endless gratitude of society, that of restraining judges act were Nathan Clifford (Demoerat), William Strong • 2770 _CO~GRESSIONAL JtECORD-HOUSE MARCH 25 Within the Constitution and that it is the present opposition Mr. McMILLAN. Mr. Chairman, I offer a further com to the judiciary bill who are trying to amend that Constitu mittee amendment. tion. But I cannot see that anything is in danger unless the The Clerk read as follows: Supreme Court's "rule of re::;t.son" becomes so fixed as a judi Committee amendment: Page 94. line 9, strike out "$661,400'" cial dogma that in the end the Constitution will become a and insert 1n lieu thereof "$666,900." mere parchment for that Court to amend at will without The committee amendment was agreed to. recourse to the electorate. The Clerk read as follows: HUMANITIES OF ADMINISTRATION'S PROGRAM Division of Public Contracts, salaries and expenses: For per Let me add that I have not favored all the men nor all sonal services 1n the District of Columbia and elsewhere, in per the methods employed by this administration to carry its forming the duties imposed by the "Act to provide conclltions for programs into effect. I know that mistakes have been made the purchase of supplies and the making of contracts by the United States, and for other purposes", approved June 30, 1936 both in men and in measures. But I have yet to find one (49 Stat. 2036), including supplies, stationery, printing and bind single critic who doubts the sincerity, the earnestness, and ing, telephone service, telegrams, furniture, office equipment, con the humanities of the administration's program. tract stenographic reporting services, and other necessary expenses, $265,000. In every law that the Congress has passed and that has received the present Executive's approval I find some hu Mr. McMILLAN. Mr. Chairman. I offer a committee manitarian motive-some provision for equalizing opportuni amendment. ties in this country; some plan for taking care of the unem The Clerk read as follows: ployed; some measures designed to take the children out of Committee amendment: Page 96, line 6, strike out "$265,000" the death-dealing factories; some relief afforded- to the and insert in lieu thereof "$315,000." farmer; some protection designed for the small-business man; The committee amendment was agreed to. some effort to increase the earning power of laborers and Mr. McMILLAN. Mr. Chairman, there is another amend to provide them higher standards of living. ment which I offer as a committee amendment. · If to promote these things is treason, if we have come to The Clerk read as follows: such a state of national mind that laws designed to better _ Page 96, line 6, strike out the figures "$265,000" and insert the conditions of our citizens cannot be enforced, if we are 1n lieu thereof "$315,000." never to question the right of any body of our Government to nullify such laws, then, indeed, I am afraid that our form Mr. McMILLAN. Mr. Chairman, this amendment seeks of government is really undergoing a change, and a change to restore to the bill the amount of the appropriation that in the wrong direction. was reduced by the committee for the enforcement of the I fear no revolution, I fear no dictatorships, and I fear no Walsh-Healey Act, appropriations for which are carried in military rule in this country, that was founded in the ideals this bill for the fir:;;t time. Originally there was recom of democracy and freedom; but I do fear the reactionary mended by the Bureau of the Budget $350,000 for this pur movement that seems now to be attempting to bear us back pose. The committee reduced that to approximately I to the uncontrolled domination of the baro~ of industry, to $295,000, primarily, would say, as a result of the doubt that those one-sided times when "wealth accumulated and men the committee entertained as to the question of the pur decayed." [Applause.] chase of goods in the open market. During the course of the hearings this question was gone into at some length, and it DEPARTMENTS OF STATE, JUSTICE, THE JUDICIARY, COMMERCE, AND was felt, at least on the part of the committee, that a ruling LABOR APPROPRIATION BILL, FISCAL YEAR 1938 or decision should be had from the Comptroller General as Mr. McMILLAN. Mr. Speaker, I move that the House re to that point in that it affected the question of the validity solve itself into the Committee of the Whole House on the of a contract that may be entered into between the Govern state ·of the Union for the further consideration of the bill ment or the manufacturer or concern that produced the • 1937 CONGRESSIONAL RECORD-HOUSE 2771 are generally frowned upon by reputable employers of labor. eluding · dairy, livestoclt, and nursery products; ar to agricul tural or farm products, processed for first sale by the original For many months the Committee on the Judiciary labored producers; • • • ." assiduously to perfect a bill that would meet with the ap The point raised in your letter and in the committee report- proval of those interested in this type of legislation. The that is, as to whether the exception in section 9 of the act of action just taken by the distinguished gentleman from South such materials, etc., "as may usually be bought in the open mar ket" comprehends all such patricular classes of materials or equip• Carolina [Mr. McMn.LANJ insures the enforcement of the ment as are usually available for purchase by the general public law. in the open market, or is restricted to materials, etc., which Gov The CHAIRMAN. Is there objection to the request of ernment agencies are authorized by law to purch~e in the open the gentleman from South Carolina? market--has not been made the subject of any formal decision by this office. However, the point w~ carefully considered in con There was no objection. nection with other questions presented here for decision involving The letters referred to are as follows: the operation of the Walsh-Healey Act, and, in disposing of those matters, I found no proper basis upon which to disagree with COMPTROLLER GENERAL OF THE UNITED STATES, the interpretation placed on this provision in the opinion of the Washington, March 24, 1937. Solicitor of the Department of Labor, on which the regulations Hon. THOMAS B. McM.ILLAN, of the Secretary of Labor in this respect appear to have been Chairman, Subcommittee of the based. See, for example, decisions of December 15 and Dacember Committee on Appropriations, 16, 1936 (16 Camp. Gen. 583; id. 590), holding that the act House of Representatives. applied and that the stipulations were required to be included in MY DEAR MR. CHAIRMAN: I have your letter of March 23, 1937, contracts in excess of $10,000 for automobiles and for tractors, ~fcl~~= . both of which classes of articles are available for purchase by the "The attached report on the blll mak.i.Iig appropriations for the public in the open market but which generally may not be pro Departments of State, Justice, Commerce, an~ Labor for the fis cured by Government activities by open-market purchase. In cal year 1938 indicates the necessity, in the mind of the Appr? the consideration of those cases there was not overlooked the fact priations Subcommittee, of a ruling being made by your office m that a similar provision in the 8-hour law of June 19, 1912 connection with appropriations to carry out the terms of the (37 Stat. 137-138), had been consistently construed to exempt so-called Walsh-Healey Act pa.Esed by the last Congress. I refer all articles and commodities which might be purchased by the you specifically to page 25 of the report, which clearly defines the public in the open market. But, considering the difference in pur problem. · pose between the two acts and the broad powers conferred on "Inasmuch as your office must ultimately determine the ques the Secretary of Labor to administer the provisions of the present tion raised in connection with the legality of contracts entered act and to make, amend, and rescind such regulations as might be into by the Government under the terms of the law, and that the necessary to carry out such provisions, together with the cogency decision so rendered in the matter of such contracts will essen of the interpretation on which the regulations prescribed by the tially affect the amount of funds required to administer the act, Secretary of Labor were based, I concluded that the administra I deem it of the utmost importance that an immediate decision be tive interpretation was not contrary law. had on the following question: · · to "Does the exception in the Walsh-Healey Act contained in para The Walsh-Healey Act applies only to contracts for the "manu graph 43, title 41, United States Code, affect only contracts for facture or furnishing of materials, supplies, articles, and equtp supplies, materials, etc., as may be bought by the Government in ment"-that is, to supply contracts as distinguished from con the open market under the restrictions imposed by law upon such struction contracts, and to give the open-market exemption purchases by the Government or does it pertain to any purchases provision of section 9 the wide application adopted under the by the Government of supplies, materials, etc., which are ready 8-hour law provision would appear in practical effect to defeat and available in the open market for purchase by anyone under the apparent purpose of the act. Under the construction of the established custom? 8-hour law provision there were exempted all classes and charac ters of supplies from twine and paper boxes to dynamos and "May I have your decision on this point at the earliest pos locomotives (30 Op. Atty. Gen. 24; id. 31; id. 49). To permit sible time?" such exemptions under the present act, which relates only to The statement in the report (No. 433) referred to is as follows: supply contracts, would so restrict its operation as practically to "By the terms of the Walsh-Healey Act, purchases that may be nullify its other provisions. Consequently, as between that inter made in the open market are exempted from the operation of the pretation and the one adopted by the Secretary of Labor, I felt act. In construing this exception in the law the Solicitor of the compelled to accept the latter-the plain terms of the provision Department of Labor has ruled that the limitation runs to all being such as to admit of only one or the other of those two commodities or materials for which the purchase contract must interpretations . . by law be negotiated as a result of competitive bidding: The effect Accordingly I have to advise that unless and until the matter of this decision is to give a narrow construction to the terms of the be clarified by further legislation, I am constrained to concur in exception by limiting the operation thereof to purchases that may the interpretation placed on the provision by the Department of be made by the Government under the terms of existing law in Labor. the open market, rather than extending the operation of the Sincerely yours, exception to purchases that may be bought by anyone under estab R. N. ELLIO'IT, lished custom in the open market. If the latter construction had · been placed upon the words of the act, the field in which the Acting Comptroller General of the Unitt-d States. statute would operate would be considerably narrowed. (It was Mr. HEALEY. Mr. Chairman, I move to strike out the testified that whereas between 3,500 and 4,000 contracts are now covered by the act, such a construction of the law would reduce last word. I also desire to express my thanks to the able the number of contracts to be considered to about 500.) and distinguished chairman of the subcommittee who is in "It is the feeling of the committee that the legislative intent charge of this bill on the floor for his generous act in offer has not been properly defined in the construction that has been ing this amendment. I had intended to offer a like amend placed by the Solicitor of the Labor Department on that section of the law excepting goods purchasable in the open market, and ment and had sent the same to the Clerk's desk. This before any of the money appropriated in this act is expended a amendment restores the original appropriation recom ruling of the Comptroller General should be had on this point." mended by the Budget to the new organization, Government The Walsh-Healey Act, approved June 30, 1936 (49 Stat. 2036), provides in part: . Contracts Division of the Department of Labor. If adopted, "That in any contract made and entered into by any executive it is believed that an effeetive working organization to department, independent establishment, or other agency or in enforce and administer the provisions of the Walsh-Healey strumentality of the United States • ·• • for the manufacture Act may be established. From the date of its enactment this or furnishing of materials, supplies, articles, and equipment in any amount exceeding $10,000, there shall be included the following division has operated without proper personnel and with representations and stipulations:" very little money. Yet its achievements, even under these [(a) That contractor is the manufacturer of or regular dealer in handicaps, indicate clearly the possibilities of this legislation the materials. to promote sound industrial practices throughout the Nation (b) Minimum-wage stipulation. (c) Maximum-hour stipulation. if provision is made for an adequate administration of the (d) Minimum age of employees stipulation. terms of the act. (e) Safe and sanitary working conditions stipulation.] The wage, hours, and labor provisions of this act were, • • • • • as we all know, designed to take Government business out "SEc. 4. The Secretary of Labor is hereby authorized and di rected to administer the prOvisions of this act • • • and to of the sweatshop and away from the bid peddler. Passed prescribe rules and regulations with respect thereto. • • at the last session of the Seventy-fourth Congress primarily The Secretary of Labor shall have authority from time to tlme as an offset to the subsidization of sweatshops, homework, to make, amend, and rescind such rules and regulations as may and bid-peddling resulting from rigid adherence to the low be neceESary to carry out the pro~isions of this act." bid statutes, the Government Contracts Act has now had · • • • • • • • an opportunity to prove itself. "SEc. 9. This act shall not apply to purchases of such materials, supplies, articles, or equipment as may usually . be bought in The steel industry, the largest concentration of private the open market; nor shall this act apply to perishables, in- enterprise ir. this country, recently reversed its traditional 2772 ·coNGRESSIONAL RECORD-HOUSE MARCH 25 policy of long working hours and promulgated wage and The CHAIRMAN. The question is on the amendment hour standards which have won the acclaim of progressive o1fered by the gentleman from South Carolina. leaders of labor and industry alike. It is significant that, Mr. CITRON. Mr. Chairman, I move to strike out the in its commendable industrial statesmanship, the steel in last two words. I also commend the authors of the bill, and dustry had its eyes fixed on compliance with the terms of I particularly congratulate the gentleman from Massachu the Walsh-Healey Act. Statements of the Bethlehem Steel setts [Mr. HEALEY], the gentleman from Pennsylvania [Mr. Corporation and the Carnegie-Dlinois Steel Corporation at WALTER], and the gentleman from Tennessee [Mr. CHAND the time of the announcement of the industry's new policy LER], the members of the Judiciary Subcommittee, who so testify. The Walsh-Healey Act has established the 40- worked strenuously upon this bill. I believe this is one of the hour week as government policy. Its adoption by industry best bills that has been passed by this House in the last 4 generally will fix it as the American standard. years. I also believe this bill will materially help to do n is estimated that because of the adoption of the tenns away with child labor and sweatshop conditions. The suc of the Walsh-Healey Act by the steel industry, some seventy cess of a law often depends on its administration and in this or eighty thousand additional men will be put to work in case the successful administration of this bill l.s due to the that industry alone, with an increased pay roll for the in energetic work of all those connected with the Department of dustry of $200,000,000. The extent of the indirect benefits Labor and the Bureau of Public Contracts, which is enforcing which will result, it is impossible to predict. the Walsh-Healey bill. [Applause.] Mr. McCORMACK. Mr. Chairman, will the gentleman It is further estimated that, if industry generally fol yield? lowed the example of steel, over 2,000,000 jobs would be · Mr. CITRON. Yes. It fUrnished for men who are unemployed today. is my pre Mr. McCORMACK. As a matter of fact, the real credit diction that the principle of the 40-hour week will soon is due to the gentleman from Massachusetts [Mr. HEALEY] be recognized as an economic necessity. It is generally rec and the subconunittee, Mr. HEALEY, Massachusetts; Mr. ognized today that it is the most effective answer to tech CHANDLER, Tennessee; and Mr. WALTER, Pennsylvania, who nological unemployment. drafted the bill. · After all if, as has been so well demonstrated by the Mr. CITRON. They have worked hard for a long time, accomplishments of this legislation to date, the Walsh and, as I said, they certainly are to be commended. [Ap Healey Act can promote the adoption of the 40-hour week plause.] generally and the consequent reemployment of men in pri Mr. McCORMACK. And I hope that the Secretary of _vate industry, is not this one of the best answers to the Labor will administer this law with sounder discretion than problems which have so seriously beset us. Is not this the she has shown in making some of her public expressions ·fervent wish and hope, not only of all Members of Congress in recent days. [Applause.] but of Americans throughout the Nation-to take men off Mr. CITRON. I have certain detailed facts pertaining to relief and welfare rolls and restore to them real honest-to the administration of this act that I have received from the goodness jobs. Department, and I hope I will be permitted to put them in The act also prohibits the employment of child labor and the ~coRD, showing that she has fairly, honestly, and equi convict labor and provides that a decent prevailing mini tably performed in every way the purposes of this act. She mum wage shall be paid on Government contract work. has done equity to everyone concerned. The Board set up under the terms of this act to determine Mr. WALTER. Mr. Chairm~ will the gentleman yield? the minimum wage that might be paid to workers on Gov Mr. CITRON. I yield. ernment contract work recently rendered a decision in the Mr. WALTER. To what extent has the distinguished men's work-garment industry-an industry which perhaps Secretary of Labor intere.sted herself in the enforcement of more than any other has felt the heavy hand of labor the provisions of this bill? exploitation, sweatshop conditions, child labor, and uncon Mr. CITRON. The bureau under which this act is being scionable wages. The Board determined that in this in enforced comes under her Department. Let me explain now dustry the wage throughout the country should be a mini about the bill and its enforcement. mum of $15 for a 40-hour week. The fact that this wage Mr. Chairman, at the last Congress we enacted a bill represented the union wage in plants which had been union known as the Walsh-Healey Act based upon the simple prin ized indicates the deplorable level to which wages had fallen ciple that the business of the Government should be awarded in that industry. And I do not believe that there is any only to firms which were complying with reasonable labor man here who would say that such a wage is excessive. standards to prevent the Government from being placed in These are some of the great objectives which have been the paradoxical position of urging the maintenance of en advanced by this legislation-objectives toward which we lightened working conditions in industry and yet awarding have all striven. With these ends in view we have passed its own contracts to firms which were :flouting the principles some legislation which has been declared unconstitutional. which the Government was advocating. We therefore pro Perhaps we have passed some legislation which may prove vided in the Walsh-Healey Act that bidders on Government ineffective. But this act has proven its effectiveness and contracts should stipulate that they were paying certain constitutionality has never been questioned. minimum wages, were refraining-from employing child labor its and convict labor, and were not permitting employees to I am very happy, indeed. that the doubts of the subcom work for more than 40 how·s in any one week or 8 hours in mittee on appropriations concerning the proper interpreta any one day. The administration of the act was vested in tion of section 9 of this act have been cleared by the ruling the Secretary of Labor. · of the Comptroller General which the committee has · Mr. WALTER. Will the gentleman yield? secured and which has been made part of this record. The Mr. CITRON. Yes. interpretation of the Comptroller General is in accord with Mr. WALTER. I am very much interested in what the that previously rendered by the Solicitor of the Labor De gentleman says and will he kindly explain further. partment. Both of these opinions, .in my judgment, clearly Mr. CITRON. We have recently heard the administration reflect the intent and purpose of Congress in the passage of this act assailed on the :floor of this House on the ground of this act. This removes all doubt of the propriety of that the Secretary of Labor has been refusing to grant ex restoring this appropriation to the figure approved by the emptions from its provisions and therefore jeopardizing our Bureau of the Budget, and I wish to pay tribute to my program of national defense. It is true that under the act genial friend and the other members of the committee who the Secretary of Labor does have authority to grant exemp have been so vitally interested in this question for their tions. There is a provision under section 6 reading as · conscientious performance of duty in determining the follows: proper appropriation for the administration of this act and Upon a written finding by the head of the contracting agency the proper construction to be · placed on the meaning of or department that the inclusion in the proposal or contract of the section 9 of the act. [Applause.] representations of stipulations set forth in section 1 will seriously 1937 .CONGRESSIONAL REC.ORD-HOUSE 2773 tmpalr the conduct of Government business, the Secretary of La (5) December 3, 1936: The two bids on a proposal for. one b?r bor shall make exceptions in specific cases ·or otherwiSe when ing, drilling, and milling machine contained qualificati?ns w1th Justice and the public interest will be served thereby. respect to the act. Reservations of one bidder were Withdrawn after conference, and the award of the contract to him was recom Several days ago the eminent chairman of the Committee mended. on Naval Affairs, whom I respect and deeply honor, told (6) December 12, 1936: The same bidder took exception to an the House that it was the intent of Congress where the head invitation for horizontal boring machines. Interpretation of the law by the Department of Labor resulted in the withdrawal of the of the contracting department made such a finding the exceptions. Secretary of Labor "was, it was assumed, compelled to grant (7) December 4, 1936: All bids on a request for three ratio an exemption to the·stipulations of the act." It is true that heavy duty drills were qualified on account of the Walsh-Healey stipulations. After a conference one manufacturer withdrew its this language places considerable responsibility upon the exceptions, and is now bidding in full compliance with the act. contracting agency of a department in regard to the inclu (8) December 4, 1936: Qualifications were made by both bidders sion of these labor stipulations but it is quite clear from the on invitation for gun directing power plants. A conference hav final clause in this sentence that regardless of what the tno- disclosed that one of the bidders is in a position to comply with the act in full, the impasse is now removed. finding of the head of the contracting agency might be the (9) December 30, 1936: Exemption was requested on an entire Secretary of Labor is to make exceptions only "when jus lot of 25,000,000 pounds of steel for ship construction upon which tice and the public interest will be served thereby." It is no proper bids were received. On March 1, 1937, all principal bid true also that the Secretary of Labor has repeatedly denied ders announced new wage and hour schedules which make it pos sible for them to comply fully with the Public Contracts Act. exemptions requested by the Navy Department, but there (10) January 4, 1937: Conferences promised to remove the ob seems little ground for saying that these refusals were not in jections of bidders on an invitation for three heavy-duty lathes. the public interest. The request for exemption has not been denied. (11) January 7, 1937: An invitation for reinforced steel _ba~s It is no secret that the Navy Department was hostile to was supended pending settlement of the impasse over the prrnC1- the Walsh-Healey bill from the start. It opposed it through pa1 steel contract. out the 1935 session and even on the day of its passage by ( 12) January 11, 1937: No bids were received on invitations fqr this House it sought to block action on the bill. Scarcely a large quantity of copper ingots. Conferences with prospective bidders have made possible the award of two contracts on Febru a month after the Public Contracts Act became law, a request ary 3. Navy Department officials have expressed themselves as was made by the Secretary of the Navy for a blanket exemp satisfied at present and as believing that future proposals will tion of all contracts relating to naval and aircraft construc bring out additional ellgi~le bids. In tion. accordance with the terms of the law, the Navy It therefore cannot be claimed that every request for ex 4 Department was advised that the request could not be emption by the Navy Department has been denied or that granted, since there was no showing that the application ~f the Walsh-Healey Act has jeopardized the national defense. the act would "seriously impair conduct of Government busi- In no instance has the delay between the date of request and . ness'' and since contracts for construction are not covered the time when eligible bidders have been found been such as by the act as it was finally passed. · to delay the Navy Department in the construction of a single Of 19 requests for exception or exemption made by con ship or to cause the lay-off of any employee. tracting agencies between the effective date of the law, Sep The Secretary of Labor, in denying the request of the tember 28, 1936, and February 1, 1937, 12 have come from Nayy Department for the exemption of steel contracts,_recog the Navy Department alone. It has been the experience nized that the public interest by which she must be guided of the other contracting agencies that only a small portion in determining her action demanded that the Government of bids have been qualified on account of the stipulations stand firm until stable labor relations had been evolved in required by the act. Failure to understand the law and the steel industry. Since the firm stand against an exemp misinformation as to its effect which has_been circulated tion hastened the settlement in steel, the administration of by bidders alarmed at the prospect of vigilant inspection by the Walsh-Healey Act may well have avoided a costly strike · the Government were responsible for most of the difficulties in the steel industry which would have delayed indefinitely encountered. The patience and cooperation of contracting all branches of Government construction. I did not su~ officers in explaining the act to the prospective bidders, pose that anyone believed it to be the intention of Congress upon which the initial success of the act depends, has dis in passing this act that the exceptions and exemptions posed of most of these difficulties. ·The Department of would be made wherever bidders found it inconvenient to Labor, recognizing the necessity of educating contractors, comply with the required stipulations. The provision in has in each instance where exemption has been requested section 6 authorizing the Secretary of Labor to grant relief on the ground that no bids were received held conferences, in the interests of justice and the public interest was, of and through explanation of the operation of the law been course, included in order to meet circumstances of an · able in each instance to find qualified bidders. At my extraordinary character. It was thought necessary to pro request the Depaitment of Labor has furnished me a sum vide sufficient leeway in the act for emergency purchases in mary of it.s docket of exemption cases. · case· of national disasters such as floods, or where a Govern The record of Navy requests for exemption and th~ rea ment vessel is in port only long enough to pick up supplies. sons for their denial are as follows: Were the law to be suspended every time bidders declined to (1) November 4, 1936. All bids on a proposal for three boring, submit to its conditions, it would soon become an empty drilling, and milling machine~ containe~ qualifications wi~h re spect to the Walsh-Healey Act. By personal contact with bidders collection of words whose meaning depends upon the gra and explanation of the Department's regulations applicable to ciousness of Government contractors. In conclusion, Mr. this contract, the reservations of one bidder were withdrawn and Chairman, it is my belief that this Department is performing the contract awarded to it. {2) November 5, 1936. All bids on invitation for 157,000 pounds a great service and is effectively carrying out the intentions of fiax twine took exception to the Publ!c Contracts Act. Pend and purposes of Congress in enacting this legislation. [Ap ing an investigation of the circumstances in which these reserva plause.] tions were made and of conference with bidders, the request for Mr. Chairman, I withdraw the pro-forma amendment. exemption was denied. The denial was without prejudice and · renewal of the application may be made at any time, but no new The CHAIRMAN; Without objection, the pro-forma request has reached the Department of Labor, for the- Bureau of amendment is withdrawn. Supplies and Accounts of the Navy requested the local purchasing The question is on the amendment offered by the gentle officer to buy a substitute. (3) November 16, 1936: On a proposal for the purchase of one man from South carolina [Mr. McMILLAN]. of its airplanes, the Beech Aircraft Co. took exception t? th:e stip The amendment was agreed to. ulations required by the Public Contracts Act. InvestigatiOn re The Clerk read as follows: vealed that the manufacturer was already complying with the standards required by the law, and no exception was therefore BUREAU OF LABOR STATISTICS required. - Salaries and expenses: For personal services. including tempo (4) December 1, 1936: No bids were received on an invitation rary statistical clerks, stenographers, and typewriters in the for hydraulic shaper planers. Conference with a manufacturer District of Columbia, and including also experts and temporary with whom the production of these machines is standard resulted assistants for field service outside of the District of Columbia; in the award of the contract to a firm complying fully with the the appropriation for traveling expenses 1n Title IV shall be requirements of the act. avaUable, in an amount not to exceed $ , for expe~es of 2774 CONGRESSIONAL RECORD-HOUSE MARCH 25 attendance at meettngs eoneerned with the Bureau of Labor Statts credit. I know, because the gentleman from Massachusetts tics when incurred on the written authority o! the ·Secretary of Labor; purchase o! periodicals, documents, envelopes, price quota (Mr. HEALEY] worked for approximately 3 months, together ·tl.ons, and reports and materials .for reports and ,bulletins of said - ~th his subco~ttee, to correct the bill as it came from Bureau, $784,000, of which amount not to exceed $658,000 IIiay be the Senate. He ·has done a great job. He is entitled to -the . expended for the salary of ·the Commissioner and other personal :services In the District of Columbia. commendation of-labor. He is entitled to the commendation and _iespect of all persons who believes iii progressive fegi.s Mr. McMILLAN. Mr. Chairman, I offer a committee lation, for the great work that he and his subcommittee did ·amendment. in connection with this matter. I also want to compliment The Clerk read as follows: -the gentleman from Connecticut [Mr. Ci:rioN] for the excel Committee amendment offered by Mr. McMn.LAlf: On page 96, lent work that he did. in the full Committee on the Judiciary line 12, -strike out all a!ter the semicolon, down to and including in seeing the report and recommendations of the subcommit . the semicolon .in line 19, and insert a new paragraph, beginning on line 22, as follows: ,tee were_adopted by the full committee.· ·I cannot, however, "The appropriation for traveling expenses 1n title IV shall be resist, the feeling that it is the duty of som·eorie to recognize available in an amount not to exceed $2,000 .for expenses o! attend the statement that appeared in the papers this morning ance at meetings concerned with the work of the Bureau of Labor Statistics, when incurred on the written authority of the Secretary and also the statement the Secretary made a few weeks ago. of Labor." ~ [Here the g~vel fell.] · Mr. McMILLAN. Mr. Chairman. that is merely a clarify Mr. McCORMACK. Mr. .Chairman, I ask unanimous con ing amendment. sent to proceed for 2 additional minutes. -- Mr. ~ McMILLAN. - .Mr. The-CHAIRMAN. The question is on the amendment Chairman, reserving the right to offered by the gentleman from South Carolina. object, I call the attention of the Members to the fact that The amendment was agreed to. we are interested in trying to finish this bill as quickly as Mr. McCORMACK. Mr. Chairman, I move to strike out ·possible. I hope that ·after the gentleman has concluded 'the last word. - ~ his remarks there will be no further requests ·for extended Mr. Chairman, the gentleman from Connecticut [Mr. debate ·in connection with these items and that the debate CITRON] was addressing the Committee a few moments ago will be confined to the bill: and I made an observation, .and I had a deliberate reason The CHAIRMAN. Is there objection to the request of ·the gentleman from Massachusetts? for making the observation. It is reported in the New York . Times this morning, _a reliable newspaper, that the Secretary There was no objection . of Labor, from its economic aspect, undertakes to place sit- · Mr. McCORMACK. A few weeks ago the Secretary of . down strikes in the category of picketing. That comes from Labor ~:xpre5sed doubt as to whether the sit-down 'strike was the Secretary of Labor, as reported in the morning preSs. I legal or illegal. Cognizance must be taken of that statement. do not know whether the newspa:Per quoted her correctly or Members ·of- Cabinets, whether· Republican or Democratic not; but if it did, someone in Congress should call to the should pe careful in their expressions. This is a matte; lady's attention the fact that there is a difference between · involving the welfare of our country. I take t11e floor reluc what is lawful and what is a violation of the law. tantly, hesitatingly, after waiting for 4 years for some evi- It is perfectly proper for labor to picket. It is perfectly . dence that would warrant me in formin" an opinion of confi proper for labor to organize to obtain improved conditions. dence in the Secretary. The Labor Department, under her I think I can say without any contradiction that I have been leadership, has not .as yet earned my confidence. I exclude one of the best friends of labor. In the Massachusetts Leg from that statement the Immigration and Naturalization islature 16 years ago, when an attempt was made to enact · BUreau, and also Edward F. McGrady, who is entitled to the a law to incorporate labor unions, I led the successful fight confidence of everyone for the great work he has done. against it. I also refer to my recent action in support of the If in the past the Secretary of Labor has been merely care bituminous-coal legislation, as indicating the support that less in her statements, I hope that in the future she will be · I have always give·n labor in its efforts to improve working more careful not to make inciting remarks. [Applause.] conditions. Labor legislation has constantly received my [Here the gavel fell.] support. However, I do not recognize the right of any group Mr. PLUMLEY. Mr. Chairman, I move to strike out the in the United States, no matter who they are, to undertake last two words. . · , to substitute themselves for the constituted authority of our Mr. Chairman, here are three questions which have been Nation, State, or city. [Applause.] asked me this morning. I am going to ask them of the I am just making a few observations on her reported re membership and I · hope somebody will answer them. . marks. The best friends of labOr are those who caution its Mr. McMILLAN. Mr. Chairman, I am sorry, but I am members at the proper time. The sit-down strike is the forced to make the point of order the gentleman is not con result of a state of mind which is in defiance of the law. fining his remarks to the bill. Picketing is the result of a state of mind which is in con The CHAIRMAN. The Chair sustains the point of order. formity with the law. The Secretary of Labor should be Mr. PLUMLEY. These, under permission to revise and careful in her public utterances. She can say things as an extend my remarks, Mr. Chairman, are the three questions I individual which have very little effect, but as a member of was undertaking to ask when the point of order was sustained · the President's Cabinet, any statement she might make has against my proceeding further in the Committee. I have tremendous e1Iect. I di1Ier with the lady if she made that been asked-I have answered-let somebody else answer them statement. If she did not make the statement, she should also: immediately repudiate it. There is a difierence between a Has the Labor Department, through its Secretary, taken · state of mind in defiance of law and a state of mind which any action denouncing the sit-down strikes as an open chal prompts actions in compliance and in conformity with the lenge to law and order and a bold threat to that stability law. without which no nation can long survive? Is it not true I am absolutely in favor of the Walsh-Healey bill. I that the Secretary has said that the legality of sit-down came here today especially to help the amendment, if ·a strikes has not been determined? fight occurred, and if my voice could assist its adoption by Is it not true that the man who with impunity may enter participating in the debate. I am glad that the gentleman your plant or industry and hold it against your will may from South Carolina [Mr. McMn.LANl o1Iered the amend do the same with your dwelling house, your home, your ment, recognizing the necessity for the increased amoilnt. farm, or your office? Is not the principle identical? The observation I made to the gentleman [Mr. CITRON] Is it not true that as between the right to strike and the had no relation at all to the Walsh-Healey bill. In the right to continue a so-called sit-down strike there is a final analysis Senator WALSH and the gentleman from Mas chasm as wide as the ocean itself which never can be sachusetts [Mr. HEALEY] and the members of the sub~om ~panned by constitutional and democratic methods and mittee are the ones who worked bard aild are entitled to · never be legalized? 1937 :coNGRESSIONAL ·RECORD-HOUSE 2775 The Clerk read as follows: The Clerk read as follows: IMMIGRATION AND NATURAL_IZATION SElt~CB Committee amendment o1fered by Mr. ·McMILLAN: On page 103, Salaries and expenses: For enforcement of the laws regulating -strike out . the paragraph. beginning on line 3 and insert in lieu the immigration to, the residence in, and the· exclusion and de · thereof. a new paragraph, as follows: · - portatiQ.n frpm the. United States of aliens_and persons subject to "The appropriation under:title IV for traveling expenses shall. be the" Chinese exclusion laws; for enforcement of the laws authoriz available for expenses of attendance of. cooperating officials and ing a uniform rule for the naturalization of aliens; salaries, trans consultants at conferences -concerned with the administration of - portatio!l, and other expenses of officers, clerks, and other -em title V, parts 1, 2, and 3, of the Social Security Act when called . ployees appointed to .eil!orce said laws; care, detention,, mainte by the Children's Bureau, with the written approval of the Secre ·. nance, and traDSJlortatio;t expenses ~ncident to the deportation tary of Labor, and shall be available alSo ·in an amount not to and exclusion of aliens and persons subject to the _Chinese exclu exceed $5,000 for expenses of attendance rat meetings related to . sion laws, as authorized by law, in the United· States and to, the work of the ehildren's Bureau when incurred on the written :.through, or in foreign countries;.-.purchase of-supplies and equip . authonty of th~ Se~etary - of·Labor." - ·. . ment, including alterations and repeJ,rs; purchase, e;xchange, oper- . Mr. McMILLAN . . Mr. Chairman, this, I may say, is merely ation, maintenance, and repair of motor-propelled vehicles, in- . eluding passehger-carrying vehicles for omcia.l use in field work; a clarifying amendment._ arms, ammunition, and -accessories; cost of reports of decjsions-- of - The · CHAIRMAN: .... The question is on the committee the Federal cour~ and digests thereof for om.cial. use; certifications · -amendment. · of legal papers; refunding of head tax, maintenance bills, and immigration fines, upon presentation of, evidence showing con- Tile committee amendment .was agreed to. , elusively that collection and· deposit was ·made through · error; Mr. GIFFORD. Mr. Chairman, I : move to.strike out the m.lleage and fees to witnesses subpenaed on behalf of the United . last word. · I do this to make a brief comment. States, and for all ot:t~er expe,nses neceJ;sary to enforce said· laws; Mr. Chairman, some little time ago I stood in this.Well and $9,055,000, all to be expended under the direction of the Secretary · of Labor, of which amount not to exceed $555,000' may be expended talked about sit-down strikes and quoted the . Secretary_of -for the salary of the Cominis5ioner of-Immigration and Naturaliza _Labor. Tile Secretary of _Labor has declared, as every, one . tion and other personal services in the . District of Columbia, in- of you probably know, that -tt had not yet· been determined cluding services of persons authorized by law to be detailed there whether the sit-down strike had a legalistic status. '_ for duty: Provided, That not to exceed $45,000 of the sum herein · appropnated shall be available for the purchase, including ex Mr. McMILLAN. Mr. Chairman, I am sorry to make the . change, of motor-propelled passenger-carrying vehicles: Provided . point of _order agaipst my friend, ·but I must make the point . further, That the Commissioner of ImmigratiQn. a~d Naturaliza- . of order that the gentleman from. Massachusetts is not con~ tion, With the approval of the Secretary of Labor, may contract with officers and employees stationed outside of the 'District of fining his remarks to the paragraph. _ . _ · Columbia, whose salartes are payable from this appropnation, for Mr. SNELL. Mr .. Chairman, inasmuch as the gentleman . the use, on official business outside of the. Di$trict of Columbia, _from MassacQ~tts, Mr. MGCo~cx, , on the other side of of privately owned horses, and the cop~ideration agreed upon shall · be payable from the funds herein appropriated: ·Provided further, the aisle, spoke out of order for 7 minutes without a point of -' That not to exceed $36,000 ·of the total amount herein appropri- order being: made against him, it would seem only just that - a.ted shall be available for allowances for living qUarters, including a Member on this side should be allowed to speak for a few he-at, fuel, and light, as authorized by ·the act approved Jl,lne 26, minuteS out of order. . ' .. 1930 (U. S. C., title 5, . sec. 118a), not to exceed $1,700 for any person: Provided further, Tha:t $125,000 of the· amount herein Mr. McMILLAN. Mr. Chairman, I cannot overlook the appropriated shall be available only for the payment of extra -fact that -otheis want tO make remarks out of order. I ob~ compensation for overtime services of inspectors and employees of .jected in the case of the gentleman from Vermon't ·and gave the Immigration and Naturalization Ser~ice for which the UI1ited · States receives reimbursement in accordance wlth the provisions warning that these remarks would have to be confined to the . of the act of March 2, 1931 (U. S. C., title 8, sees. 109a and 109b): bill. . Provided. further, That.no part of this appropriation sh_all be avail Mr. SNELL. That would be all righfhad the gentleman , able for the compensation of S¥istants to ~lerks of Unite9- _States _started ·out in that way, but as long as he allowed the gen~ courts: Provided further, That not to exceed $10,000 of the sum - herein appropriated may be expended for payment of rewards, tleman from Massachu.Setts, Mr. McCoRMAcK., to talk out· of when specifically authorized by the Secretary .of Labor, for infor order for· 7 minutes; he ought not tO object to a few minutes mation leading to the detection, arrest, or_conviction of persons on this side. violating the immigration or naturalization laws: Provided fur - Mr. ·McMILLAN. We ·are going have a field day here ther, That notwithstanding the provisions of the act_' of February tO 5,1917 (U.S. C., title 8, sec. 109), authorlzing. the Secretary of · after this bill is finished, and anyone who wants to talk will Labor to draw annually from the appropriations for the enforce ·have that ·opportunity this afternoon. ment of the laws regulating the immigration of aliens into the Mr. SNELL. I think the gentleman is all right, so far as United States, $200,000, or so much thereof as may be necessary to enforce the law excluding contract laborers and induced and that· is conceineci but he Should have· started it earlier in assisted immigrants, not to exceed $95,000 of the. sum herein ap the afternoon. · propriated may be expended for such purposes, &nd such expendi Mr. GIFFORD. Mr. Chairman, my remarks will be 'di ture shall be made in strict compliance with the pr_ovisions of the act of July 11, 1919 (U. S. C., title 18, sec. 201) . . _rected properly under the item of traveling expenses. Tile CHAIRMAN. The gentleman will proceed in order. Mr. McMilLAN. Mr. Chairman, I offer an amendment. Mr. -GIFFORD.· I . think t!verybody understands· perfectly The Clerk read as follows: · well exactly what I meant, as far as I was permitted to Committee amendment: Page 97, line 2, strike out the word proceed. [Laughter.] "transportation"; and in line 5, strike out the word "and"; ~lso _ I want to speak of these traveling items where they may · in line 5, after the word "transportation", insert the words "and traveling." · or may not tinder this or these ·pantgraphs be used for .trips to Europe. In order to overcome. our ignorance and Tile CHAIRMAN. Tile question is on the · committee broaden our vision, we· are to be reconstructed from Europe, amendment. · althoUgh the statu.S of labOr is so utterly different there The committee amendment was agreed to. ·than it is in America. · We have been transplanting from Mr. McMILLAN. Mr. Chairman: I offer a further com. Euroi:>e· many new ideas. The Secretary of Labor went to mittee amendment. · · ·Europe last summer to study the international problemS of · The Clerk read ·as follows: ·labor and perhaps import their ideas to .the United sta:fes. . Committee amendment: Page 97, .line 20, strike out the figures It is said that someone else also traveled over there last · "$9,055,000" and insert in lieu thereof the figtires "$9,586,600.'' autumn and imported the sit-down strike idea from France. The CHAIRMAN. The question is on the amendment. I think everyone knows to whom I have reference. . The-amendment was agreed to. ' · Mr. bbrurmari, I wanted to. comment on these various ex~ The Clerk read as follows: penses of travel, and I have done so. I congratwate the Members of the· Democratic side of the House on the fact The appropriation under title IV for traveling expenses shall be available in an amount not to exceed $3,000 for expenses of that after a long month. and when the fire seems to be attendance at meetings concerned with the work of the Children's out of control, y~u have finally waked up and . dared to ·Bureau when incurred on -the written authority of the Secretary ·make use · or soine of the expressions concerning respect ·ror of Labor. law t~at you are now making. [Applause.] Mr. McMILLAN. Mr. Chairman. I ·offer a committee · Mr. MEAD. Mr. Chairn'lan,"I offer an amendment, which amendment. I send to the Clerk's desk. LXXXI--176 C_ONGRESSIONAL RECORD-HOUSE MARCH 25 The Clerk read as follows: When the Interior Department deems tt advisable, such studies, investigations, and reports for the purposes of trade and industry Page 103, line 8, after the word ''labor.. , insert '"to enable the and industrial education- Division of Labor Standards in the Department of Labor to engage in a program to formulate and promote the furtherance of stand That is what this amendment applies to- ards of apprenticeship and appren~_ice tra~. $50,000." may be accomplished in cooperation with or through the Depart Mr. BACON. Mr. Chairman, I make a poinr of· order . ment of Labor. against the amendment. I submit, Mr. Chairman, in that function already in opera · The CHAIRMAN. Does the gentleman from New York tion, as well as in the law creating the Department of Labor, [Mr. MEAD] desire to be heard? there is ample authority for what I propose. It is not a new Mr. MEAD. Yes, -function of government. It is not requesting an appropria Mr. BACON. Mr. Chairman, I reserve the point of order. tion that has not yet been made. It is not delving into a Mr. MEAD. Mr. Chairman, I submit this amendment in new field of enterprise. My amendment merely gives the order to clear up a parliamentary question which, in my Department of Labor that prerogative intended by Congress judgment, merits the consideration of the House and the in passing the special acts to which I have referred. · Chair. I believe it will be helpful in the further considera The point was made in the debate that the statement of tion of this bill in the Senate, in conference, and later when the purpose for which the Department is established, as set the bill returns to the House. forth in the organic act creating it, ls not to be construed as My distinguished colleague from New York makes a point authorization for appropriations not specifically provided for ·of order. I presume it is based on the assumption that this in succeeding sections of the act, which provided for bureaus would be legislation in an appropriation bill and that there and designated these bureaus to carry out the intent and may be no authorization in support of an· appropriation ·purpose of the Congress. There were cited to the House of this character. · cases of appropriations to the Secretary of Labor to advance Mr. Chairman, I submit my amendment is merely a direc 'the opportunities for profitable employment of wage earners tion, coupled with an appropriation, to carry out what is in the United States and to establish em.ployment services. already the intent and purpose of the organic act creating It was held the general authority of the Department of the Department of Labor. In the REcoRD my distinguished -Labor under its organic act did not permit such appro- colleague explains that it also involves a transfer from a priations. · temporary agency of Government to a permanent depart- These precedents are not applicable to the present circum .mimt of Government, and that there is no authorization for stances, however. The power and authority contained in the a transfer of that kind. act of February 23, 1917-and this has not been brought out I find there is ample law for this transfer, because it is · in the debate, or in the precedents, insofar as pertains to this now a function of the DepaJtment of the Interior. There amendment or what· it attempts to put Ipto operation is an appropriation for this work, and it has been agreed dispose of the objections already made ·and, in my judgment, ·upon and approved by this House for a number of years in make this amendinent in order. the past. In addition, the language in question is not open to the I say it is not only justified by the organic law creating objection that it is legislation which may not appe.ar on an the Department of Labor, which was quoted in the RECORD appropriation bill. It- is an established precedent of this by my colleague from New Y!)r~, but it is also authorized 'House that mere directions as to the expenditure of funds, by the act of February 23, 1917, as amended by Executi:ve even though they involve the transfer of authority and money Order No. 6166, issued· on June 10, 1933. That order trans from one agency to another, are not contrary to the rules .ferred the functions of the VOcational Board for Education of the House, neither do they come under the prohibition to the Department of the Interior, and in .that there is ample mentioned by my colleague the gentleman from New York. authority for the work involved in the amendment which I As I have said, this is not a new function. It is a going have offered. · concern of the Government. It was recommended by the Mr. Chairman, the preface to the organic law creating the· President of the· United States in a letter addressed to the Department of Labor reads as follows: Secretary of Labor on September 19, 1936, in which he said: MY DEAR Mm. SECRETARY: I am much interested in the prog The purpose of the Department of Labor- shall be to foster, ress made in apprentice training in recent months, and I firmly promote, and develop the welfare of the wage earners of the believe that the Federal program of promotion should be con United States and to improve their working conditions and to tinued. advance their opportunities for profitable ·employment. It is my thought that the Federal Committee on Apprentice In addition, section 9 of the same act authorizes the Sec Training should function in an advisory capacity to the National Youth Administration during this fiscal year. In the meantime retary of Labor to make sucq special investigations as he I wish you would include in your regular budget a request for small may deem necessary. funds to support the committee's ~tivities for the y_ear 1937-38. It is felt that the work of the Divisiqn of Labor Standards, This is what I am doing. _ as an agency of the Department of Labor, clearly falls I submit, Mr. Chairman, the amendment is in order. within the scope of the statutory provision and is desig Mr. BACON. Mr. Chairman, I make the point of order nated to carry out the very purposes herein enumerated. that the amendment offered by the gentleman from New It does not appear that the activity under the appropria York is not germane to this paragraph. and place in the bill tion now requested in my amendment is subjeet to a point at which he has offered it, and that it·is also legislation on of order, not only by reason of the act of February 23, 1917, an appropriation bill. as amended by the Executive order of June 10, 1933, but by As to the first point, the gentleman from New York offers reason of the fact, Mr. Chairman, that the Department of his amendment to the· paragraph which has to do with the Interior under the law now has the power to cooperate grants to States for child-welfare services. In his argument with State boards in carrying out the provisions contained in the gentleman admitted this activity pertained to the Divi- this amendment. . sian of Labor Standards, which is on page 92, and which [Here the gavel fell.] we have already passed~ The gentleman also relies for au Mr. MEAD. Mr. Chairman, I ask unanimous consent to thority for this amendment on the so-called Smith-Hughes proceed for 5 additional minutes. Act, which permitted a somewhat similar activity to be con The CHAIRMAN. Is. there objection to the :request of the ducted by the Office of Education in the Department of the gentleman from New York? Interior. Again I raise the point of germaneness that, con There was no objection .. ceding for purposes of argument it may be germane to the Mr. MEAD. Mr. Chairman, 1n addition to that, the Inte Department of Interior bill, it is certainly not germane to rior Department is authorized to cause investigations to be the Departme-nt of Labor bill. · made and to make reports, and so forth. It is further stated Mr. MEAD. Mr . .Chairman,. will the gentleman yield? 1 in that law: Mr. BACON. I yield to the gentleman. t937 CONGRESSIONAL RECORD-HOUSE 2777 Mr. MEAD. I may say to the gentleman I intended. to propriations would end. If this-like the whereas of a resolu tion-should be held to authorize appropriations by the Commit offer the amendment at the end of the section pertaining to tee on Appropriations, there is absolutely no limitation that you the Division of Labor Standards, but was called from the could put upon your Committee on Appropriations. Chamber. If the amendment is germane, insofar as the And, of course, if the Appropriations Committee could bring· main objections offered by the gentleman from New York in a proposition, any amendment from the fioor would be in order. The Chair thinks this amendment that is offered by the gentle are concerned, I would be pleased to ask it be considered at man from Massachusetts makes new legislation, not authoriz~d the proper point in the bill. However, I understand from by any existing law, and that therefore it is obno:tious to the the objections made by my colleague the gentleman from rule of the House. Therefore, the Chair sustains the point of New York that he objects on the ground it is legislation in order. an appropriation bill. I desired to clear this point up if I Therefore it was definitely decided that an appropriation could. to enable the Secretary of Labor to advance opportunities Mr. BACON. I will pass on to my second point of order. for profitable employment of wage earners was not in order This activity of apprentice training was started under the on a bill making appropriations for the Department of National Recovery Act. Lately ·it has been carried out Labor. under the so-called National Youth Administration, to which This ruling held that "the general statement of purpose it was transferred by Executive Order No. 7086. It is now for which a department is established, as set forth in the sought to transfer this agency, which has been created under organic act creating it, is not to be construed as authoriza .the emergency powers as a temporary proposition, to a tion for appropriations not specifically provided for in suc permanent department of the Government as a permanent ceeding sections of the act providing for bureaus designated proposition. The Congress has never authorized this activity to carry out the declaration of purpose." by law. Two years later a similar question arose, and the Honor I may say, parenthetically; I am sympathetic with the able Joseph Walsh, of Massachusetts, Chairman of the Com ·purposes of this activity, and if the Committee on Labor will mittee of the Whole House, reaffirmed the decision of Mr. bring out a bill to authorize this activity, I, as one member Garner and established the principle that statements of pur of the subcommittee, will gladly lend my aid in seeing that pose embodied in the organic act creating the Department of the necessary appropriation is made in the bill. However, Labor did not authorize appropriations for establishment of there has been growing up a tendency in the last few years, an employment service . .Mr. Chairman, to arbitrarily force new matters into appro It is interesting to note that after these rulings the proper priation bills which legislative committees of the Ho~se committee of the House brought in enabling legislation to have never discussed and never considered. I think the create the United States Employment Service, and, having House has always been very jealous of the authority granted made it legal, having authorized it by law, your committee to its committees. When the Committee on Appropriations has for some years carried the necessary appropriations was created the House specifically decreed that the Com in this bill to provide for the Employment Service. The .mittee on Appropriations could not consider legislative present amendment, now offered, providing for a new activ matters. . ity of apprentice training is in every way similar to the This is legislation in an appropriation bill that has never case and decision I ha-ve just cited. I think the Secretary been considered by one of the legislative committees of the of Labor should have gone to the Committee on Labor and .House, has never been passed upon by the House, but has requested enabling legislation. If the enabling legislation .simply resulted from an Executive order of the President had been reported from the committee, it seems to me it .under temporary emergency powers. I want tp cite a deci could easily have passed the House, probably, on the Con sion rendered by the Honorable John N. Garner, of Texas, sent Calendar. In line with previous decisions and prece .Chairman of the Committee of the Whole House on the dents special authorizing legislation is necessary to make .state of the Union, on February 28, 1919. At that time this proposed amendment in order on an apprQpriation bill. .the gentleman from Massachusetts, Mr. Gallivan, offered an The general language of the organic act, creating the Depart amendment to the Labor Department appropriation bill ment of Labor, is not sufficient authorization. -which would create the United States Employment Service. I make this point of order not because I am opposed to -The gentleman from New York, Mr. Gould, and the gentle- the activity suggested, but bec::mse I am completely opposed man from Texas, Mr. Blanton, made the point of order that in principle to an executive department ignoring the reg it was legislation on an appropriation bill and that such a ular legislative committees of the House and trying to run bureau of employment had never been authorized by law. in its new projects through the Committee on Appropria The subject was ably discussed by the gentleman from South tions. I believe the Committee on Appropriations has to Carolina, Mr. JAMES F. BYRNES, who made the principal keep faith with the House and do its best to keep legisla argument in favor of the point of order. tive matters out of its appropriation bills. This amendment After extended debate the Chair ruled: proposes a new activity in the Labor Department that has The gentleman from Massachusetts offers an amendment to never been authorized by law. It has never even been con insert a new section. as follows: sidered by a legislative committee of the House. It is, there . "To enable the Secretary of Labor to advance the opportunities fore, clearly new legislation and is not in order on an for profitable employment of the wage earners of the United States there is hereby appropriated out of available moneys in the appropriation bill. ·Treasury $10,023,000." The CHAmMAN (Mr. BucK). The Chair is ready to rule. To that amendment the gentleman from Texas and the gentle The gentleman from New York [Mr. MEAD] has offered an man from New York make the point of order. Arguing the point ot order, gentlemen who have discussed it cited certain language amendment to insert a new paragraph, as follows: in the organic act which created the Department of Labor. That To enable the Division of Labor Standards in the Department language is: of Labor to engage in a program to formulate and promote the "The duties of the Department of Labor shall be to foster, pro furtherance of standards of apprenticeship and apprentice training, mote, and develop the welfare of the wage earners of the United $50,000. States, to improve their working conditions, and to advance their opportunities for profitable employment." To this amendment the gentleman from New York [Mr. That language is relied upon, as the Chair understands, to make BACON] has made the point of order that the amendment is this amendment in order. The House has always been extremely not germane to the paragraph to which it is offered, and the careful in conferring the legislative power upon committees; at least it has been so for 50 years. It has withheld from the Com further point of order that it is legislation on an appropria mittee on Appropriations any power of legislation, and naturally, tion bill. having withheld that power, it has provided that no amendment Unquestionably the amendment is not germane to the to an appropriation bill if it carried legislation should be in order if offered on the tloor of the House. This is very peculiar lan paragraph to which it is offered, and on that ground the guage as contained in this organic act. If the Committee on Ap Chair could sustain the point of order. It is the under propriations could have rightfully brought in a proposition such standing of the Chair, however, that the gentleman from as is contained in the amendment of the gentleman from Massa New York [Mr. MEAD] under these circumstances would de chusetts, and, ot course, if it could not, an amendment from the floor of the House would be subject to the point of order. The' sire to return to the appropriate paragraph by unanimous Chair is unable to see where the limit on the Committee on Ap- consent of the Committee and again offer the amendment, 2778 CONGRESSIONAL RECORD-· HOUSE MARCH 25 and for this· reason the ChaiT desires to state that, after an • Mr. CELLER. Mr. Speaker, I demand the yeas and nays. examination of the authorities and the precedents existing The yeas and nays were refused. and of the act of February 23, 1917, which the gentleman So the amendment was rejected. · from New York has cited, the Chair feels that the rules and The bill was ordered to be engrossed and read a third time, precedents of the House have well established that a general was read the third time, and passed. statement of the purpose for which a department is estab On motion of Mr. McMn.LAN, a motion to reconsider the lished, as the Department of Labor, as set forth in its organic vote by which the bill was passed was laid on the table. · act, is not to be construed as an authorization for an appro EXTENSION OF REMARKS priation which is not definitely and specifically provided for Mr. WEARIN. Mr. Speaker, I ask unanimous consent to either in that act or in subsequent legislation creating extend my own remarks in the RECORD at this point, and to bureaus within such Department. No authority bas been include therein a brief quotation from a Government report. cited to the Chair, other than the new suggestion made by The SPEAKER. Is there objection? the gentleman from New York with reference to the Voca There was no objection. . tional Education Act, which would take this particular Mr. WEARIN. Mr. Speaker and Members of the House, amendment out of the ruling_cited by the gentleman from next week the House will take up for consideration the New York [Mr. BAcoN] made by Chairman Garner in the appropriation bill providing for the District of Columbia. I Committee of the Whole House some years ago. The Voca have been very much interested in that particular matter tional Education Act, insofar as it applies to the point raised 'for some time and, in fact, went so far in 1935 as to intro by the gentleman from New York, reads as follows: duce a resolution authorizing the Secretary of the Treasury When the Interior Department deems it advi.sable, such studies, to adequately compensate property owners of the District investigations, and reports concerning trades and industries for purposes of trade and industrial education may be made in coop of Columbia because of the handicaps under which they eration with or through the Department of Labor. live in the District until such time as we could relieve them by moving the National Capital out to the Middle West, The act, however, makeS such investigations, studies, and where it should be located. At that particular time many so forth, dependent upon the determination of the Depart people in the city of Washington were complaining bitterly ment of Interior for which the pending bill does not purport about a proposal to reduce the appropriation for the Dis to make any appropriation. trict of Columbia. The same people, of course, are now Without desiring to bind any future occupant of the chair emphasizing the vital necessity of making that appropria.. who may preside over the Interior Department appropria tion as large as possible. tion bill as to the germaneness of such an amendment as the In my judgment no increases are necessary, and in fact gentleman from New York offers today, the Chair feels it is the circumstances would justify not only the reduction but entirely beyond the scope of the present bill and that it would the complete discontinuation of the Federal Government's be definite legislation on an appropriation bill, transferring contributions to the District government. In the light of from the Interior Department to the Department of Labor the above circumstances, I want to point out a few signifi these particular activities which would be obnoxious to the cant things for the consideration of the Congress. I want rules of the House. For this reason the Chair sustains the to remind you that according to the Bureau of the Census point of order. of the United States Department of Commerce, gross sales The Clerk concluded the reading of the bill. in the District of Columbia in 1935 amounted to $331,000,000. Mr. McMILLAN. Mr. Chairman, I move that the Com That amount was greater than the gross sales in the entire mittee do now rise and report the bill back to the House with four States of Wyoming, Nevada, Delaware, and New Mex sundry amendments, with the recommendation that the ico. In fact, it was greater than the gross sales in any one amendments be agreed to and that the bill as amended do of the following 18 States of the Union: Montana ($189,000, .. pass. 000), Idaho ($140,000,000), Wyoming ($83,000,000), Nevada The motion was agreed to. ($44,000,000), Arizona <$121,000,000), New Mexico ($89,000, .. Accordingly the Committee rose; and the Speaker having 000), Utah ($132,000,000), Colorado ($303,000,000), North resumed the chair, Mr. BucK, Chairman of the Committee Dakota <$150,000,000), South Dakota ($148,000,000), Missis .. of the Whole House on the state of the Union, reported that sippi ($178,000,000), Arkansas ($241,000,000), South Caro that Committee, having had under consideration the bill lina ($248,000,000), Delaware ($77,000,000), Rhode Island • 2784 .CONGRESSIONAL RECORD~HOUSE MARCH 25 in this measure, and certainly he clearly indicates that he tiona! funds for this committee, bringing the total up to has no desire to follow the constitutional method of submit $110,000, I asked him: ting this question to the people for their decision. He delib If this money is appropriated, is it the gentleman's opinion he erately closes his mind to the fact that it is their Constitu- can come in here in January with proper legislation recommended tion-not his alone. ~ . to accomplish the purposes for which the committee was ap Mr. PATMAN. Mr.-Speaker, I ask unanimous consent to pointed? extend my own remarks in the RECORD and to insert in con To this question the gentleman replied: nection therewith two excerpts from a publication known as We think so. the Twentieth Century Fund. I asked that question because of my interest in securing The SPEAKER. Is there objection to the request of the such legislation as may be necessary to help the bondholders. gentleman from Texas? I wanted to obtain at least some assurance that we were There was no objection. getting somewhere toward providing that aid. A great many Mr. GRAY of Pennsylvania. Mr. Speaker, I ask unani of these bondholders are constituents of mine, and it is my mous consent to extend my own remarks in the REcoRD and duty to them to do everything I can to see that proper legis to include therein part of the opinion of the Court in the iation is enacted to aid them. famous case of Marbury against Madison. J To provide that aid we need corrective legislation and not The SPEAKER. Is there objection to the request of the needless investigations. For 3 years we have been investi gentleman from Pennsylvania? gating. If our committee has not developed the facts by this There was no objection. time, I doubt if it ever will. Judging from the results thus Mr. CITRON. Mr. Speaker, I ask unanimous consent to far obtained, these bondholders either will be dead or com revise and extend my remarks in the RECORD and to in pletely beyond any legislative aid. If we are friends of these clude therein a summary of certain excerpts from publica bondholders and if we really appreciate their predicament, tions of the Department of Labor. it is o·ur duty to give them aid when they need it-not 5 years The SPEAKER. Is there objection to the request of the after the reorganizations are completed. As a matter of gentleman from Connecticut? fact, it is virtually too late now to aJiord them proper as There was no objection. sistance. It will certainly be too late next year. The SPEAKER. Under the previous order of the House The last hearing that was held on any legislation suggested the gentleman from Dlinois [Mr. CHURCH] is recognized for by the chairman of the select committee was exactly a year 50 minutes. ago today-March 26, 1936-before the Judiciary Committee. Mr. CHURCH. Mr. Speaker, I ask unanimous consent to I do not believe the select committee chairman has done a revise and extend my remarks and to include therein ex single thing subsequently toward_urging any legislation for cerpts from a certain letter of six paragraphs, extracts the relief of the bondholders before · this body or any com from court proceedings and press comments thereon which mittee of the H_ouse. If anything, the activities of his com I shall discuss, including in particular a short extract of a mittee, acting under his direction and responsibility, have few paragraphs from the hearings of the House Judiciary served not only to delay legislation but virtually to preclude Subcommittee. it. The activities of his committee have really served to pre The SPEAKER. Is there objection to the request of the vent this House from arriving at a definite and acceptable gentleman from Illinois? legislative. program to meet the real-estate bondholders' There was no objection. situations. Mr. CHURCH. Mr. Speaker, I ask not to be interrupted The most that has been done by the chairman of the select until I have completed my statement. committee is · to secure the passage of resolutions extending TO CONTINUE SELECT COMMITI'EE WILL FURTHER RETARD LEGISLATION the investigation and to secure the passage of resolutions FOR BONDHOLDERS appropriating additional funds for continued investigations. Mr. Speaker, House Resolution 78 is a resolution to con · The responsibility for this situation is not that of the tinue the Select Committee to Investigate Real Estate Bond select committee as a whole." I am certain that the members holders' Reorganizations. That committee was appointed of that committee have been sincere in their efforts as they pursuant to House Resolution 412 of the Seventy-third pursued their work under the committee chairman. The Congress for the purpose of investigating real-estate organi responsibility for this situation rests with the chairman. He zations and "ordered to report to the Congress as soon .as has complete charge of the investigation, and he has, as I practicable the results of its study, together with its recom- . will shortly point out in some detail, allowed it to become mendations for necessary legislation." something other than a congreS{)ional investigation. This investigation was started because of the great num Mr. Speaker, because, as I said, of my interest in the ber of complaints received by Members of this body that bondholders whom we seek to aid, and because also of my bondholders' committees were serving special interests and desire to see corrective legislation enacted, I have carefully not the bondholders in general; that these committees, their gone through the hearings held before the Judiciary Com lawYers, and accountants were ch~rging exorbitant fees; mittee. Upon reading the testimony presented by the chair that the courts were not properly advised with respect to man of the select committee before the Judiciary Committee the plans of reorganizations, and as a result bondholders on March 6, 1936, with reference to H. R. 10634, I noted that were being defrauded; that 77B. of the Ba~ptcy Act the question arose with regard to attorneys employed with permitted certain abuses which could only be stopped by an the select committee intervening in court proceedings. That amendment of the act._ These ~ere the reasons for the ·is an important question to us, a:r;td it certainly was not the investigation. ·purpose of the select committee investigation as authorized All of us were in favor of such an investigation. The · by this House to have attorneys employed with our com- country was in the throes of a depression. Real-estate mittee use that status to inteJ:vene in court proceedings as prices had hit bottom and thousands of bond issues were representatives of certain bondholders and then petition the in default. Committees had been appointed and either had court for large fees for their services. prepared their plans of reorganization or were doing so. EXCERPTS FROM TESTIMONY OF MR. SABATH BEFORE THE JUDICIARY That was in 1934. Since then those reorganizations have COMMITTEE ON MARCH 6, 1936 either been completed or soon will be completed. And, so Mr. SABATH, when he appeared before the subcommittee far as the Congress is concerned, the only thing that we .of the House Judiciary Committee on March 6, 1936, flatly have done to aid these bondholders, at least during the past stated that no attorney representing the select committee 2 years, is to delay and retard relief legislatio!l for the bond in Chicago applied to the court for a fee of $25,000. I quote holders by the activities of our select comnnttee. from his testimony: Almost 2 years ago-August 22, 1935, page 14141, CoN Mr. SHELL. Might I have permission to ask Judge SABA.TH a GRESSIONAL RECORD, Seventy-fourth Congress, first session question? When the chairman of the ·select committee procured addi- Mr. SABATH. Yes. • 1937 CONGRESSIONAL RECORD-HOUSE 2785 Mr. SHELL. Didn't one of the lawyers that your committee ap :field men to submit it to the court, so that the court would f_now pointed in Chicago apply for a fee of $25,000 on behalf of your it and would obtain the evidence and the information which committee? came to us after weeks and months of investigation. · Mr. SABATH. No; he did not. I w111 tell you 1! you want to know • • • • • something about that. Mr. MICHENER. These attorneys, then, who intervened at the Mr. SHELL. I haven't examined the official record. suggestion of the committee, were not receiving any compensation? Mr. SABATH. All right, Mr. Shell. Mr. PoWERS. No. M;r. SHELL. You must know what it is. It states something like Mr. MicHENER. They did it just out of the goodness of their that. he.nrts? Mr. SABATH. The committee has a body of over forty-two-odd Mr. PoWERS. Yes. None of us ever received any pay or ask€d lawyers, without pay, to aid and cooperate with the commtttP.e. for any fee In court. Naturally, we could not ask them that they should divest them Mr. SUMNERS. Is it clear what the relation of these attorneys selves of all or such little business that they might have had, has been? because we couldn't pay them. Mr. CHANDLER. No. • • • • • • Mr. SABATH. None of these attorneys could be interested in any He applied to the appellate division, and in that appeal he filed of the reorganizations or In any of the matters where they could a claim for $25,000, as he stated that he believed-and he knew charge any fees. They agreed to aid the committee gratis, with In advance that It would not be allowed-that It would give him out charging any fees or without receiving any compensation. a chance to appeal that case and to reach the object that he was And in addition to that, they could not be in any way interested after, which was to get a reconsideration or retrial of the original in any portion of that particular reorganization. That has been case. _ made clear. He had no authority to do that; and I have stated that this Mr. SUMNERS. Did these attorneys who appeared in these cases committee does not approve of such methods; that we have gone appear as representatives or as connected with the Sabath as far as we could. committee? - Mr. PoWERS. No. They intervened in cases on behalf of a single • • • • • bondholder. We don't wish to exceed our authority; and we have held down the lawyers and the investigators and examiners as much as we • • • • • • could. But, nevertheless, sometimes we get some of these at Mr. SABATH. We have lawyers in Boston and other places, Detroit. torneys who do desire to go after the people that they believe We have had five or six gentlemen who cooperated with us in are guilty of these fraudulent acts; and it is not so easy to suc Detroit without any compe:usation whatsoever. ceed in view of the conditions that exist; that I do not wish to Mr. McLAuGHLIN. How was the contract of employment or the mention now. I may bring them to your attention later on. agreement with the bondholders with the attorney made? Mr. SABATH. I! you will permit me, I have not been very much • • • in these offices. We have an office in Chicago, one in Detroit, one Mr. MICHENER. You say that you had 40 or 50 lawyers who in Philadelphia, one in New York, one in Boston, one in St. Louts. would go into the courts? one in San Francisco, one in-- Mr. SABATH. Yes. Mr. McLAUGHLIN. You understand my question? Mr. MicHENER. Did your committee go to the expense of appear Mr. SABATH. Yes, I do. What I mean is that I am not 1Ii there ing In lawsuits on behalf of bondholders? when these people come in. Mr. SABATH. I will tell you what we did do. The resolution that you passed last year gave the committee the right to submit • • • • • • • it to the court 1! we found any fraud or evasion of the law. Mr. MICHENER. You understand, Judge, that my position is this: Shortly after this committee had been created, realizing the tre I hope that we can work out a law here which can prevent a repeti mendous task and the small amount of money that was appro tion of these abuses. But you have said a little while ago that priated, I tried to obtain the cooperation of a number of associa you had 40 or 50 lawyers around the country who were appearing tions and others. But I learned within a short space of time in courts just gratis. that that would be impossible. I know something about lawyers; and the gratis lawyer in nine So I succeeded in obtaining many independent lawyers who cases out of ten sees over the hill; and when he follows up the felt that these abuses should be eliminated; and they have vol case he gets this information from your committee which makes unteered their services; and I have assigned them, or the com a case for him later on. mittee has assigned them, to some cases here and there that came in by the complainants or by these unfortunate bondholders This testimony by the chairman of the select committee where they have shown thnt fraud is being perpetrated and that appeared so contradictory and inconsistent that I was they are being wiped out or that their bonds have been obtained prompted to inquire further into the whole situation in con from them by fraud, and that the charges against the manage ment of the properties were unjustifiably high, and that their nection with the work of the select committee. At the re rights were being jeopardized. quest of the Judiciary Committee, the chairman of the select Mr. MicHENER. Then, as a matter of fact, your coz:unittee has committee filed with the Judiciary Committee the names and been sort of taking the position as attorney for the people? addresses of attorneys who were employed by our select Mr. SABATH. Yes, sir. Mr. MICHENER. And you have been going into court and prose committee and who, as the select committee chairman al cuting or defending suits--- leges, offered ·their services gratis. Gentlemen, from my Mr. SABATH. No. Just calling attention of the court to certain study of this matter I find that we need a new definition facts. Mr. MICHENER. With voluntary lawyers. of the term "gratis." In other words, some lawyer comes to you, and, as chairman of I am opposed to any extension of this investigation. the committee, you appoint him as your representative to go into First, because there certainly can be no further need for it; court and appear in behalf of certain litigants. · the need now is for legislation; and, secondly, the public is Of course, I have gone along with your committee, and I intend to continue doing so; but I am sure that the House never had" any tired of and disgusted with this investigation. such notion when they granted the money. Mr. SABA TH. Will the gentleman yield? Mr. SABATH. Not the litigants. Mr. CHURCH. I decline to yield to the gentleman at the Mr. MicHENER. I am sure that they didn't intend that you would · be general counsel for the people all over the country and furnish present time. If I have tiDle at the conclusion of my re counsel in lawsuits. marks, I will yield to the gentleman. Mr. SABATH. We have not taken any business away from lawyers. Mr. CULKIN. Mr. Speaker, a point of order. Is it pai:t Mr. MICHENER. It is not a question of business. I thought that your purpose was-and that is what we are trying to do here-to of the parliamentary procedure here that when a Member go out and investigate and get the facts and bring those facts who has the fioor mentions another Member in a deroga back to Congress; and on those facts we would predicate legis tory manner and criticizes him, the other gentleman has lation. not the right to interrogate him? Mr. SABATH. Yes. Mr. MicHENER. I thought that that was your function. The SPEAKER pro tempore (Mr. RANDOLPH). The gen Mr. SABATH. Yes. tleman having the fioor may not be interrupted unless he Mr. MICHENER. Not to be going about the country trying law yields. suits and designating some men who later might take a case into Mr. CULKIN. Is it not the unwritten law and parlia court and later on present a bill for a -fee of $25,000, if that is correct. Is that correct? mentary courtesy that the gentleman having the fioor should Mr. SABATH. That was one case, and the committee immediately yield? notified the judge that he had no right to do that as representing The SPEAKER pro tempore. It may be the unwritten the committee. Mr. MicHENER. I want to understand what they did. law, but the gentleman declines to yield. Mr. SABATH. They did appear as friends of the court; and I Mr. CHURCH. These hearings and the reports that come have letters here from many courts where they thanked the to me, and I speak only with reference to Chicago, indicate committee. that the select committee chairman is conducting this com We have call€d to the particular attention of the court when ever we did obtain a great deal of information which we thought mittee in such a way that it is no longer proceeding as a would help the court-.3 to pas3 on matters. I have stated to the fact-finding body, but proceeding by stump speeches and 2786 CONGRESSIONAL RECORD-HOUSE MARCH 25 wild harangues, fanning the flames of hatred among bond there is not a word of truth in anything they said. The firm holders, soliciting them to deposit bonds with the commit I am connected with and the committee of which I am tee~ and then farming them out to attorneys who present -chairman have not done a single act which was not honor wild and fantastic charges to the courts, which they cannot able, honest, upright, and aboveboard. and do not support with evidence and facts, and in the end The SPEAKER pro tempore. The gentleman from Illi petition the court for exorbitant fees. The reaction of the nois [Mr. CHURCH] has the floor and will proceed. public to these activities ha.s been so clearly stated in the Mr. CHURCH. Let me read to you part of an editorial newspapers that I am going to refer to-some·of these state on this situation which appeared in the Chicago Tribune mentS in reviewing the committee's work. on December 9, 1935, entitled: Mr. SABATH. Mr. · Speaker, a point of order. The gen THE PROFITS OF CONGRESSIONAL INVESTIGATION tleman is making derogatory remarks and is indulging in Congressman SABATH is chairman of a congressional committee insinuations against a committee of which I have the honor which has been investigating real-estate receiverships. it is a large subject and Mr. SABATH has strutted on every inch of it. of being chairman. I have not been informed that the His shining armor has gleamed as brightly as the spotlight. gentleman would take the floor today and make these wild, His naked sword has cut terrible swaths of air as he swung it unjustifiable, untrue remarks and insinuations. In view of now this way and now that. Congressman SABATH, in shcrt, has that fact and in view of the further fact that he refuses to been acting the role of crusader. rescuing a demoiselle named bondholder from wicked ogres. Among the wickedest is one yield for a question, I feel the gentleman should be held known as excessive fees. Mr. SABAl'H is the sworn enemy of down to the rules of the House and not be permitted to vio that ogre. gentleman at the end of my statement. A few weeks ago Judge Barnes, of the Federal district court tn Chicago, thought he smelled something a trifle dead. The smell The SPEAKER pro tempore. The Chair requests the gen arose from a real-estate reorganization which was proceeding in tleman to proceed in order. his court. The judge decided to have a look around. He was Mr. CHURCH. I may say I shall be glad to yield to the not frightened by the Congressman's sword nor discouraged by my the stoutness of his armor. With a weapon no more powerful gentleman at the end of statement. than a can opener the judge cut little holes here and there ln SABATH COMMITTEE STIRS HATRED OF BONDHOLDERS BY STUMP SPEECHES the crusader's plating with the double purpose of relieving the gas pressure and seeing what was underneath. The Detroit value. How many other fees may have been received it I$ not For the benefit of such bondholders 1t 1s desirable to place the known. question of probable recovery into hands of an attorney with view of presentation to proper courts. • • • • • • • To date, we understand, you have been led to believe that this The moral is that the powers which congressional investigators investment is a total loss to you. have been permitted to wield cannot safely be entrusted to anyone. If you desire to share in any benefits which may develop, we The possiblllty of abuse is too great. Congress might well inves ask you to sign enclosed authority so that an accredited attorney tigate this subject. It oughtn't to be an expensive inqu~ry be can be assigned to start proceedings. It 1s intended that this cause most of the witnesses will be found right in Washmgton. matter wlll cost you nothing unless recovery of some sort is As a starter the investigators might find out from Mr. SABATH, obtained for you; in that case the attorney, and necessary ac~ount under oath, how -many real-estate receiverships his firm has han ants, handling the matter will expect to be paid on a contmgent dled since his inquiry began and what fees were paid. • • • basis. These are questions of the highest public importance. The If you have transferred your bonds to someone else, please give American people ought not be kept permanently in the dark. us their name and address. Should you not desi.re to concur in the above plan of procedure, I do not know whether the firm of Sabath, Perlman, Good please advise us. Otherwise, please sign the enclosed paper and man & Rein was entitled to its fee. The judge decided they return it immediately. were not and disallowed it. The select committee chairman Respectfully yours, . on December 9, 1935, in a public statement said that they ADoLPH J. SABATH, Chatrman, By J . L. TuPY, · were. Chicago Office, Room 703, The point I am trying to make is that the people of Chi United States Courthouse, Chicago, nl. cago have had enough of this investigation. The spreading Mr. LUCAS. Mr. Speaker, I make the point of order that of such affairs across the pages of the newspapers does not the gentleman is reading from a statement that some other · have a wholesome effect. individual has prepared, which is contrary to the rules of Mr. THOMPSON of Illinois. Mr. Speaker, I make the the House. point of order there is not a quorum present. The SPEAKER pro tempore. Does· the gentleman from The SPEAKER pro tempore. The Chair will count. Illinois [Mr. LucAs] object to the gentleman reading the Mr. THOMPSON of Dlinois. Mr. Speaker, I withdraw the paper? point of order. Mr. LUCAS. I do. ·Mr. CHURCH. Take, for instance, the editorial in the Mr. MARTIN of Massachusetts. Mr. Speaker, it is the Chicago Daily News of the same date, which reads as custom which has prevailed in the House for many years follows: to permit a Member to read a statement if he wishes. LET NOT THY LEFT HAND KNOW Mr. LUCAS. Mr. Speaker, I make the point of order, and Federal Judge John P. Barnes has refused to allow payment of a fee of $6,400 to the law firm of Representative ADoLPH SABATH I insist on it. If the gentleman has personal knowledge of Sabath, Perlman, Goodman & Rei.n-in a receivership case in the facts or if he is reading his own prepared remarks, I am volving the Northwest Building Corporation. willing to permit him to proceed without interruption. Without undertaking to pass upon the merits of this judicial Mr. CHURCH. The gentleman was not here when I order one may be permitted to speculate as to whether or not the ~urt took judicial cognizance of the vigorous grilling of other started my statement. These are facts. They are my gentlemen involved in receivership proceedings by Representative statements and I am making them as my own. This is SABATH in his capacity as chairman of the congressional com simply a letter I am quoting. mittee 'which has been investigating receivership and bankruptcy proceedings. In that role Representative SABATH has been relent Mr. LUCAS. Mr. Speaker, I insist on the point of order. less, both in prediction and in promise. Bad men must have The SPEAKER pro tempore. The gentleman may not trembled in their boots when he declared over a year ago: "If it is read a quotation without the consent of the House. humanly possible, we will get at the brains of the racketeering. Mr. CHURCH. · But I have received the consent of the I can promise that nothing will call us otr the inquiry, despite underground reports to the contrary. We will summon everybody House to do ·so. before us, lawyers, bankers, and receivers included." Mr. MARTIN of Massachusetts. Mr. Speaker, a parlia Cynics and other low, persons may be inclined to find incon mentary inquiry. sistency between that utterance by Mr. SABATH and the summary The SPEAKER pro tempore. The gentleman will state it. action of the judge in depriving Mr. SABATH's firm of a fee in a receivership case. But what do such persons know of the canons Mr. MARTIN of Massachusetts. Did not the gentleman and ethics of politics? Is it not one of the axioms of politics secure such permission before he started? that no statesman must be held to responsiblllty for what his Mr. CHURCH. Mr. Speaker, I have had the unanimous law partners do? In rendering public service, the American poli tician must take for his guide the admonition of the Good Book, consent of the House to present all of these matters. which says: "When thou doest alms, let not thy left hand know Mr. O'CONNOR of New York. Mr. Speaker-- what thy right hand doeth." Mr. CHURCH. Mr. Speaker, I do not want this taken out But that is not the only and far from the greatest com of my time. plaint against the committee in Chicago. The SPEAKER pro tempore. This will not be taken out of the gentleman's time. SOLICITATIONS OF BONDS, FEES OF COMMITTEE LAWYERS, FEE SPLITTING Mr. CHURCH. If the gentlemen had been here when this All of us who are to the slightest extent acquainted with started, they would have heard the unanimous consent reorganization procedure and the practices and problems granted to me. If the Speaker will read the unanimous involved know that the greatest curse to the speedy and eco- consent, I will appreciate it. . nomical adoption and completion of a plan of reorganiza Mr. LUCAS. I insist on my point of order without any tion is the so-called shyster lawyer who manages to get a further argument on the matter. bondholder for a client and then proceeds to harass the Mr. MARTIN of Massachusetts. Let us hear what per bondholders' committee by filing motions and bills contain mission was granted before the gentleman started reading. ing fantastic charges for the sole purpose of forcing the Mr. CHURCH. Not out of my time. Mr. Speaker, I will committee, in order to protect the interests of its depositing be glad to have that read for the benefit of the two gentle bondholders, to settle with him-in other words, to buy men who were not here when it was granted. him off. The SPEAKER. The Chair has been informed of the That this practice is freely indulged in is, of course, known parliamentary situation which arose during the temporary to the select committee. All that the shyster lawyer wants absence of the Chair. The question was raised as to what is a client. His problem is to find one. I am told that cer was included in the request of the gentleman who now occu tain of the activities of our select committee chairman has pies the floor with reference to the extension of his remarks. led directly to this practice. I hold before me a photostatic The Chair has been furnished with a transcript of the notes copy of a letter sent out under the name of the chairman of upon that request and it reads as follows: our committee, which to me seems incredible. It reads as · Mr. Speaker, I ask unanimous consent to revise and extend my follows: remarks and to include therein excerpts from a certain letter of DEAR Sm: During the investigation being made by this congres six paragraphs,- extracts from court proceedings and press com sional committee it has arrived at an assumption that the original ments thereon which· I shall discuss, including in particular a owners and holders of bonds on the above-named property may short extract of a few paragraphs from the hearings of the House have a valid claim for recovery. Judiciary Subcommittee. 2788 CONGRESSIONAL RECORD-HOUSE. MARCH 25, Mr. O'CONNOR of New York. Mr. Speaker-- The SPEAKER. The gentleman will suspend for a mo .. The SPEAKER. For what purpose does the gentleman ment. from New York rise? Mr. O'CONNOR of New York. That the gentleman is still Mr. O'CONNOR of New York. To speak in an attempt to violating the rules of the House by reading. sustain the point of order that the unanimous-consent re The SPEAKER. What is it the gentleman is now reading? quest which was granted does not entitle the gentleman to Mr. CHURCH. Mr. Speaker, I have just completed the read letters or writings other than his own from the floor sixth paragraph I had unanimous consent to read. without obtaining permission of the House. The SPEAKER. What is it the gentleman is now reading? Mr. MARTIN of Massachusetts. Mr. Speaker-- Mr. CHURCH. I am now going to make a statement, and The SPEAKER. Does the gentleman from Massachusetts I shall do my best to proceed in order. desire to be heard upon the point of order? The SPEAKER. The gentleman will proceed in order. Mr. MARTIN of Massachusetts. I understand that if the Mr. CHURCH. This is my statement. point of order were sustained the gentleman would have, Mr. SABATH. By whom is it signed there and under.. under that grant, the right to extend these remarks in the signed? What was the second name, please? RECORD. The SPEAKER. Does the gentleman yield? Mr. CHURCH. Mr. Speaker, may I just state that the Mr. CHURCH. I do not yield. I have tried to make that letter has been read? plain. The SPEAKER. The Chair is of the opinion the gentle The SPEAKER. The gentleman declines to yield. man would probably have a right to extend his own remarks, Mr. CHURCH. That is a direct solicitation under the but he would not have a right to read them now without the name of a committee of this House for the deposit of bonds: special permission of the House. And who are they to be deposited with? The committee? Mr. CHURCH. The letter has been read, Mr. Speaker. No. They are to be deposited with an attorney who will act . The SPEAKER. What is the point of order the gentle for a contingent fee, the amount of which is not stated. man from New York makes? What I want to know is this: Did the committee authorize Mr. CHURCH. The six paragraphs have been read. the sending out of such letters as this? How many such Mr. O'CONNOR of New York. The gentleman from Illi letters were sent out? How many bonds were deposited nois [Mr. LucAs] made the point of order the rules of the pursuant to these letters? . Who were the attorneys that House had been violated. The proper procedure, of course, were appointed? What did they do? What fees did they would be to strike from the RECORD what has already been charge, and did our select committee in any way supervise done. or keep track of the actions of these attorneys? Mr. MARTIN of Massachusetts. If the gentleman will Ladies and gentlemen, these questions must be answered yield, the gentleman from ·nunois [Mr. CHURcH] already not by abusing some individual, bondholders' committee, or has the right to print those in the RECORD. You cannot trustee but specifically, and the facts clearly and concisely recall his having read them, because they have already been set forth. read. I demand full disclosure of the facts, my colleagues, be Mr. O'CONNOR of New York. The gentleman from Dli cause certain factual information which I have in my posses nois [Mr. LucAs] made a point of order against the gentle sion does not square with statements made on the floor of man's reading these matters. They were not his own com this body by the chairman of the committee. position. What has been done has been done, of course, but The last time the continuance of this committee came the gentleman should be cautioned to obey the rules of the before us the chairman painted for us a picture, in urging House and not proceed further without getting the permis the adoption of his resolution continuing the committee, of sion of the House. attorneys and others donating their time to the committee The SPEAKER. The Chair states on the point of order in order that the Congress might be advised of the facts and raised that rule XXX of the Rules of the House of Repre the ends of justice served. Let me recount just one of the sentatives provides: activities of one of the committee's attorneys whose breast, When the reading of a paper other than one upon which the according to the chairman, was overflowing with the milk House is called to give a final vote is demanded, and the same is of human kindness for the poor bondholders. His name is objected to by any Member, it shall be determined without debate Newell Mecartney. He intervened in a proceeding before by a vote of the House. Judge Wilkerson, case no. 57189, in the District Court of the It seems the gentleman now occupying the floor had ob United States for the Northern District of Dlinois, Eastern tained unanimous consent to read certain extracts from Division, as attorney and representative of our committee. these letters which he says have already been read. That you may have the facts just as he presented them to The gentleman will kindly proceed in order, within the the court in his sworn petition, and that you may judge of limitations of the unanimous-consent request which has just the charitable and magnanimous motives of the lawyers been read by the Chair. whom the chairman claims have been donating their time Mr. LUCAS. Mr. Speaker, I make a point of order. to the committee, I want to read the pertinent provisions of The SPEAKER. The gentleman will state it. the petition which he filed on January 17, 1936. I wonder, Mr. LUCAS. As I understand, the gentleman from Illi in view of the facts which I am about to present to you, if nois [Mr. CHuRcH], who now has the :floor, was given unani these lawyers were pressed into service by the chairman on mouse consent to include certain excerpts. If I understand the theory that they would be amply repaid for their services the gentleman's procedure up to this time, he has not in to the co.ID.rilittee through legal fees which they should ex cluded excerpts, but he has included the entire writings of pect to receive from the representation of bondholders the author of these particular letters or newspaper state referred to them by the chairman. It reads: ments from which he has been quoting. I may be in error In the District Court of the United States for the Northern Di~ on that, but certainly when I made the point of order he . trict of Illinois, Eastern Division. In the matter of the petition read the entire document, and not any excerpts from the of Edith F. Reincke, for the reorganization under section 77B same. I still insist on the point of order that the gentleman of the Federal Bankruptcy Act of trust 17400 created under declaration of trusts of Chicago Title & Trust Co. under date of is not proceeding in order and is violating the rules of the October 1, 1926. No. 57189. House. The SPEAKER. The gentleman will proceed in order. PETITION OF NEWELL MECARTNEY FOR FEES Your petitioner, Newell Mecartney, respectfully shows unto this Mr. CHURCH. "Respectfully yours, 'ADOLPH J. SABATH, . honorable court: chairman." 1. That in April 1935 your petitioner was called to the office Mr. O'CONNOR of New York. Mr. Speaker I make the of the Select Committee to Investigate Real Estate Bondholders' point of order-- Reorganizations and was informed by parties in charge of the said otnce that your petitioner's services were requested by the Govern Mr. CHURCH. "By J. L. Tupy, Chicago office, room 703. ment as a duty to the public and that such activities and duties United States Courthouse, Chicago, Til." :would probably terminate by the middle of May 1935. 1937 ·coNGRESSIONAL RECORD-HOUSE 2789 2. That your petitioner agreerney Walter B. Fackler, legislative branch of the United States Government a committee,_ a principal figure in the inquiry, after Alexander Bisno, of the real which Mr. Mecartney represents in this proceeding, and in . estate firm of Bisno & Bisno, introduced him to Fackler, who recognition of the public interest and the concern of the court that turned over seven cases to him. proceedings for the reorganization of business enterprises affecting VISITED M'KEOWN'S OFFICB thousands of investors shall be free from fraud, the master has considered the charges preferred by Mr. Mecartney as fully as Attorney Walter Drift, 228 North LaSalle Street, said that 1n if he represented a party in interest. (Special master's report, _ 1934 he visited the Washington pfilce of former Congressman Tom p . 15.) McKeown, one of the authors of the 77B legislation, now active in. Chicago in fl.ling petitions under the law. He said that there • • • • • • he met a man named CUnningham, who told him: The charge of a conspiracy is so improbable as to be fantastic, "We're going to divide the country inoo zones, and certain and is utterly unsupported by the facts. (Special master's re lawyers will handle the 77B cases in each zone." port, p. 17.) . .- . . . . . From these accounts it not only appears that the deposit Every opportunity has been given to the friend of the court to of bonds bas been solicited by either the select committee substantiate his charges. In the judgment of the master, he has failed to do so. To prolong further the inquiry would be an un chairman or those supposedly representing the committee, warranted imposition upon all the parties concerned, whose in but these depositing bondholders have been directed to at terest lies in the prompt adoption of an equitable plan of liquida torneys who represent them for fees. Furthermore, the ac tion. (Special master's report, p. 56.) tivities of these attorneys have not been helpful to the But let it be said to the everlasting credit of our courts courts. As an example of what I mean, let me quote what that that fee was not approved. the Chicago Daily News and the Chicago Tribune bad to say And now as to the humorous side. In such cases as this regarding the activities of William J. Powers, another one we certainly need something humorous. What was this at- of the attorneys for our committee. On December 3, 1935, 2790 CONGRESSIONAL RECORD-HOUSE MARCH 25 there appeared in the Chicago Daily News the following Sabath committee, but when you are in this court you w111 act as story: any other spectator." CONGltESS INVESTIGATOR SEIZED FOR CONTEMPT TAKES OFFENSE AT LETTERS J. L. Tupy, chief investigator of the Sabath congressional com· Taking the occasion to bring up another grievance against the mittee which has been investigating fees and other matters re investigator, Judge Barnes shook his finger at Tupy and de lating to reorganization of buildings with bonds in default, was manded, "Why did you repeatedly write me letters?" arrested this afternoon in the courtroom of Federal Judge John ''I wrote them only with the intention of helping the court", P. Barnes on charges of contempt. the crestfallen Tupy replied. He was taken into custody by Deputy Marshal John Dippold Between enforced digressions Judge Barnes elicited from Powers after he had interrupted Judge Barnes in the questioning of a denial that it had occurred to him that his remarks to Blewitt Attorney William P. Powers, an attorney for the Sabath com about approval of the lease might be interpreted as threats mittee. Judge Barnes ordered Tupy taken out of the _courtroom. against the court. He declared, however, that 1:f they were threats, he assumed full responsibility. POWERS REFUSES TO ANSWER The judge revealed that when he first heard about Powers' con Powers himself refused to answer many of the questions put versation with Blewitt, he ordered an investigation. Judge Barnes to him by the court and by Alexander Wolf, counsel for the lessee took the matter under advisement. of the Garfield Arms Hotel, on the ground that the information he possessed was the confidential property of the Sabath com Who is this Tupy, the chief investigator for the committee mittee. in Chicago, the man who does most of the testifying before The hotel property 1s undergoing reorganization under the the commi~tee? I have checked up on him, and this is what 77B act. While Powers was testifying regarding conversations he had I have to report: · with Quentin H. Blewitt, trustee of the property, Tupy entered This same Tupy was a member of a so-called bondholders' the courtroom and sat in the empty jury box. He rose to his feet, protective committee which asked for a $45,000 fee out of . and was told to sit down. When he did not do so he was ordered into custody. $150,000 issue. BROUGHT BACK TO . COURT Tupy, I am informed, without holding a single bond and Later Tupy was brought back into the courtroom still 1n not representing any bondholder, formed a protective com custody. mittee for · the bondholders of the Chicago Park Cemetery "You persisted in interrupting after I had warned you to desist", Co. I also understand, following the appointment of the Judge Barnes told him, "and in so doing you are in contempt of this court. I have prepared an order to that effect." select committee chairman's law firm as attorneys for the The investigator, obviously agitated, said that he had not in· company in place of its former attorney, an agreement was tended to interfere with the proceedings. entered into whereby this bondholders, committee formed by "I have no intention to interfere with the activities of the Mr. Tupy was to receive $45,000 for their services out of an Sabath committee", continued the judge, "but when you come into this court you must act like any other spectator. And one issue of only $150,000. A clever fellow, this Mr. Tupy. Sure, other thing: Why have you been writing me letters?" ·he has the interests of the bondholders next to his heart, Tupy explained that he was seeking or giving information. where the fee is to be $45,000, almost one-third of the issue. "Don't write me any more letters", said Judge Barnes. Be then tore up the contempt order. It would seem to me that the select committee chairman would do well to investigate the activities of his chief inves And on December 4, 1935, the Chicago Tribune reported: tigator, Mr. Tupy, especially his activity as a member of BARNES REBUKES SABATH AID AS COURT MEDDLER-DENOUNCES INTER bondholders' protective committees. FERENCE, BUT ACCEPTS APOLOGY For those of you who want to read the detailed story con Federal Judge John P. Barnes voiced his vehement opposition cerning Tupy, here is a resume of the facts as they appear yesterday to interference with court procedure "by any individual, any committee, or any bureaucracy." His outburst came after he in the court records: had cited J. F. Tupy for contempt of court. Tupy is the chief Chicago Park Cemetery Co.: On August 16, 1932, the investigator of Representative A. J. SABATH's (D., Chicago) con Straus National Bank & Trust Co., as successor trustee, by its . gressional committee which is inqutrlng into receiverships. Later, however, Judge Barnes accepted Tupy's apologies and rescinded the attorneys Frish & Frish, filed a sUit in the superior court citation. of Cook County, no. 563546, to foreclose a lien against the . The alleged contempt grew out of Tupy's interruptions while Chicago Park Cemetery Co., under deed of trust amounting Judge Barnes was questioning Willi.am J. Powers, an attorney for to $150,000, dated January 5, · 1929 (doc. no. 10251366). the Sabath committee, who represents some of the bondholders for the Garfield Arms Apartment Hotel. Everett M. Swain was the attorney for the Chicago Park BACKGROUND OF THE INCIDENT Cemetery Co. Judgment by confession was taken against The hotel now is undergoing reorganization under section 77B the cemetery company. Mr: Swain moved to set aside the . of the amended Bankruptcy Act. Two ·weeks ago Judge Barnes judgment, and while these proceedings were pending, died . appointed Quentin H. Blewitt, 140 South Dearborn Street, as Gov On January 24, 1933, Sabath, Perlman, Goodman & Rein ernment trustee for the building. Yesterday Blewitt testified that Powers telephoned him on No were substituted as attorneys for the Chicago Park Ceme vember 27 to inquire about a lease for the building, but was told tery Co. in place of Mr. Swain. I understand the suit is that a lease already had been negotiated and was substantially still pending, and no further orders have been issued. On ready for Judge Barnes' 0. K. According to mewitt, Powers there- May 31, 1933, the cemetery company entered into an . upon mentioned police complaints about obJectionable women in front of the hotel and said that .. the court should Jmow this agreement with Francis Karel, Tupy, and Charles Citnik as before a lease is approved." · a committee for the protection of the holders of bonds under TELI.S OF AGITATION the said deed of trust in the amount of $150,000. This "Powers told me that this wouldn't look good in the newspapers", agreement was recorded on October 7, 1933, as document no. Blewitt testified. "He said he would take it up with his com 11267333, in book 30783, at page 298. This agreement re mittee. He told me that four or five men ln Chicago were con trolling receivership leases, and that bondholders were so worked cites that 70 percent of the bondholders deposited their up about the matter that even the judges are being watched." bonds with the committee and that the cemetery company At this point Judge Barnes took a hand in the questioning. was to set aside all the unsold lots in the Elmwood section He called Powers to the stand and asked several questions con of the cemetery, and that these lots were to be sold by the cerning the investigation of the Sabath committee. Powers, plainly in a quandary, pleaded that he had no authority to dis· committee. The proceeds under the agreement were to be close any of the committee's findings. applied as follows: (1) To the payment of a commission of Tupy, in a chair in the jury box, rose to his feet. not to exceed 30 percent of the sale price to the committee; "I'm an investigator for that committee, Judge", he said. ''Maybe I can help out." (2) to pay a sum not to exceed $3,000 to the Straus National Bank & Trust Co. and its attorneys for fees and expenses of ORDERED TO SIT DOWN "Do you authorize this witness to answer my questions?" the the foreclosure suit. Thus, under this agreement, the bond .. judge asked. Tupy shook his head. holders' committee formed by Mr. Tupy is to receive $45.000 "Then sit down", the Judge commanded. for their services, out of a $150,000 issue. Later Tupy again interrupted. At Judge Barnes' instruction The Gables Apartment: Tupy, as owner of this apart... Bailiff John Dippold escorted Tupy from the courtroom. In about 20 minutes the judge summoned Tupy into court ment building, bonded it far in excess of its value, either again, accepted his apology that he was just trying to help the defrauded a bank into making him loans or executed a court, and tore up a contempt citation that had meanwhile been fraudulent trust deed, and then by refusing to release his prepared. "I will use all my powers", the judge told Tupy, "to prevent right of redemption, which he tried to sell, kept the bond interference in this court. I don't wish to interfere with the holders from reorganizing and, in the meantime, remained 1937 CONGRESSIONAL RECORD-HOUSE 2791 in the building, holding two apartments for which he refused ·negotiations. were pending to purchase the equity of redemption held by him and his assignees and to create a trusteeship with to pay rent to the receiver. certificates of beneficial interest in which his assignees would par For those of you who want to read the facts in detail as ticipate by reason of his participation in the reorganization. The they are revealed in the petitions and pleadings in the cases case was scheduled to come on for hearing December 21, but a of Peterzelka against Novak, in the Cook County Circuit continuance was effected. He has been living in the building since that time (Nov. 7, 1933), occupying two apartments, without pay Court, case no. B-280896, and Cicero Trust & Savings Bank ing any rent. et al. against Joseph L. Tupy et al., in the Superior Court Thus it appears (1) that Tupy mortgaged this property far in of Cook County, case no. 527679, I submit the following excess of its actual cost and of its worth (which sold for between $80,000 and $90,000); (2) in order to obtain loans, he misled the resume: Novak & Steiskal State Bank to believe that he was the holder of The Gables Apartment: This property 1s located at the north the beneficial interest in the property, when he was not; (3) that west corner of Thirty-first and Desplaines Streets in the village of because C>f some claimed relationship with the holder of the bene Riverside. It was improved in the winter of 1925-26 with an ficial interest, he laid claim to the equity of redemption, and as the apartment building containing 37 apartments and 4 stores. At bondholders' protective committee was unable to obtain the deposit this time Harold E. White was the owner of record. On December of su:tficient bonds to enable them to bid at a foreclosure sale the 5, 1925, White executed a deed of trust for $165,000 on this prop fair value of the property, succeeded in preventing reorganization erty (Doc. 9143309) to obtain a construction loan underwritten for a number of years; (4) that if he was the holder of the equity by Greenebaum Sons Bank & Trust Co., and on February 26, 1926, of redemption, and if he were the type of person he claims to be, a similar deed for $36,000 (Doc. 9190528). The building cost ap and in view of his mouthing as investigator for the select com proximately $160,000 and the value of the lot was about $29,000. mittee, he would have transferred his equity of redemption to tht On August 15, 1927, title being in the Cicero Trust & Savings Bank, bondholders' protective committee, but instead of doing that ht that bank conveyed the premises to John L. Novak, as trustee, by has been scurrying around trying to find someone to whom hi deed of trust (Doc. 9766150). On the same day Novak and J. L. might sell his equity of redemption. Tupy entered into a trust agreement known as trust no. 100, under the terms of which Tupy became the sole beneficiary (this agree Shortly after the select committee was appointed, we in ment appears as an exhibit in tlte case of Peterzelka v. Novak, no. Chicago began to hear a great deal about the Chicago Title B-280896 in the Circuit Court, Cook County). Upon acquiring & Trust Co. and other outstanding people and institutions in the property, Tupy executed mortgages on this property amounting to $208,800 (which amount was far in excess of the value of the Chicago. We were told and newspapers carried stories to premises and the cost of construction). The property subse the effect that .they were controlling bondholders' commit quently sold for between $80,000 and $90,000. In executing these tees, that certain things had transpired in the bondholders' mortgages Mr. Tupy either defrauded the Novak & Steiskal State committees that would not bear the light of day. Stump Bank or executed a fraudulent trust deed. This fraud was worked in the following manner: speeches were made by the select committee chairman at On September 10, 1929, Tupy, following the execution of the the hearings in Chicago accusing these persons and institu mortgages on the property, assigned his beneficial interest in the tions of all sorts of abuses and violations of their various premises under trust no. 100 to Frank L. Peterzelka. (See Peter trusts. zelka v. Novak.) On September 15, 1930, Tupy obtained frOm the Novak & Steiskal State Bank, according to the answer and cross I hold no brief for these persons and institutions. If they complaint of Wllllam L. O'Connell, receiver of the bank, $7,800, have done wrong . I want them properly punished. · and on September 30, 1930, $500, for which he executed his notes. But the strange thing to me is this: I have made inquiry The answer and cross complaint further shows that Tupy 1s in debted to the bank in the amount of $196.95, which money he and I have never heard of an indictment being returned received from the bank on a worthless check. Furthermore, the against a single person in Chicago either as a result of this bill shows that at the time these loans were made by Tupy at the committee's work or otherwise. I have never heard of a Novak & Steiskal state Bank Tupy agreed to transfer the bene fl.cial interest in trust no. 100 to the bank as collateral security. change in the personnel of a committee or of a trustee. Nor A notation to this effect appears on the bank's records. Thus the have I heard of any change being made in the methods fraud was committed by Tupy by holding out to the bank that he employed in reorganization work or procedure. was the holder of the beneficial interest in trust no. 100 when But there is one thing that I have heard, and what a he obtained the loans on September 30, whereas he had already assigned that beneficial interest on September 10, 1929, to Frank A. revelation that is. I have here before me a photostatic copy Peterzelka. On September 1: 1933, Peterzelka demanded, as trus of part of the transcript of record in a. proceeding, and tee in said trust no. 100, that the premises be conveyed to him in what do you think it shows? It shows that the law firm accordance with the assignment from Tupy on September 10, 1929, of Sabath, Perlman, Goodman & Rein represents the Chi and on November 16, 1933, commenced suit in the CircUit Court of Cook County to enforce a conveyance (case no. B-280896). cago Title & Trust Co. in some 75 different reorganizations. Subsequently, on January 8, 1934, Mr. O'Connell, receiver for the That is one of the very institutions our select committee Novak & Steiskal State Blink, filed a petition to intervene, attempt chairman so roundly condemned when his committee first ing to prevent the enforcement of the assignment of the beneficial interest from Tupy to Peterzelka. Unless he 1s successful the met in Chicago. I have the evidence here and present it creditors and depositors of this bank, which is now insolvent, will for the record. lose the full amount o! their loans to Tupy, which are now in The following true copies of parts of bondholders reor excess of $9,584.88. In the meantime the mortgages executed by ganization court proceedings show that the law firm of Tupy on this property had gone into default, and back taxes in excess of $2,689.95 and special assessments of $597.87 remained Sabath, Perlman, Goodman & Rein, of which our select unpaid. Suit was brought to foreclose the first mortgage on committee chairman is the senior member, represented the November 22, 1930, and on December 23, 1930, a receiver was Chicago Title & Trust Co. for foreclosing bondholders, appointed by the superior court in case no. 527679, Cicero Trust & Savings Bank et aZ. v. Joseph L. Tupy. The receiver immediately charging the round sum of $2,000 for their fees in one case. · took possession and commenced to collect the rents and maintain and on October 21, 1935, the same firm of Sabath, Perlman, the property. Two things are of interest in this matter: (1) When Goodman & Rein was then representing the Chicago the receiver attempted to collect the rent from a Francis Karel, Title & Trust Co. in from 50 to 75 cases. Karel claimed a lease of apartment 206, dated May 18, 1928, on which he claimed to have paid $4,500 in advance to Tupy for said Before Special Master Charles A. McDonald, October 19, 1935, at lease from June 1, 1928, to May 31, 1933; (2) on November 7, 1932, 11 a. m. In the matter of 1748-1766 East Seventy-first Street the receiver filed a sworn petition in the foreclosure suit, in which Building Corporation, debtor. No. 59128. he stated that during his absence in September, Tupy and his Court reconvened in the above-entitled cause, at the hour of family moved into apartments 307 and 308 of the building with 11 o'clock a. m., October 19, 1935, pursuant to adjournment here out his knowledge and consent, refused to pay rent, and refused tofore taken. to move from said apartments. Upon the filing of this bill the Present: Mr. David Snyder, representing petitioning creditors; . court ordered Tupy to vacate in 5 days, and if he did not do so a Messrs. Sabath. Perlman, Goodman & Rein, by Mr. Morton C. writ of assistance should issue. Tupy refused to move. On No Chesler, representing the Chicago Title & Trust Co.; Messrs. Nash, vember 14, the day on which the receiver was to apply for a Writ Ahern, McDermott, McNally & Kiley, by Mr. Kennelly, representing of assistance, Tupy appeared in court and agreed to vacate the Joseph P. Lavin, trustee; Mr. Robert L. Huttner, representing the premises at any time they were needed or required by the receiver. debtor. On December 4, 1933, the receiver again filed a petition asking for Mr. CHESLER. I will ask to be sworn. the removal of Tupy, and Tupy was again ordered to vacate within Morton C. Chesler, produced as a witness on behalf of the Chi 10 days. On the 14th Tupy filed an unsworn answer, in which cago Title & Trust Co., being first duly sworn, testified in narra he stated that he was interested in the equity of redemption of tive form, as follows: the property; that he was in possession of the apartments. He Narrative by Mr. Chesler: denied that he entered without the knowledge, consent, or author My name is Morton C. Chesler. I reside at 6753 Oglesby Avenue ity of the receiver, and said that, as he did not interfere with and am associated with the firm of Sabath, Perlman, Goodman & the operation of the apartment and as there were other apartments Rein, attorneys for the Chicago Title & Trust Co., as trustee, under vacant, he did not increase the expense of operating the apartment trust deed recorded as document no. 9622078, and which is the trust and should be permitted to remain. Furthermore, he stated that deed conveying the property described in the debtor's petition for LXXXI--177 2792 CONGRESSIONAL RECORD-HOUSE MARCH ·25 reorganization filed herein tn J'une of 1934, upon the demand of Q. You had nothing to do with the preparing of any papers, of a holder of bonds in excess of $10,000. course?-A. I don't think we prepared them; we examined all of We were employed by the Chicago Title & Trust Co. as trustee them before they were filed, in order to see that they were accurate under that document to institute foreclosure proceedings in the as to the statements of fact. State court. Default having been made in the said interest pay Mr. HUTTNER. That is all. ments and said principal payment covenant to be paid by the The MAsTER. Just one question. mortgagor. In that conneqtion it was necessary to file the usual Q. Have you any idea in how many cases the firm of Sabath, pleadings in the State court and with the trustee and the super Perlman, Goodman & Rein represent the Chicago Title & Trust vision of the obligations that may arise to the trustee under the Co.?-A. I would say somewhere between 50 or 75 cases. I wouldn't plan. know more accurately than that. • • • • • • • • • • • • • In and about the foreclosure proceedings and the proceedings had before the district court and before this master, the firm of No wonder the Chicago Tribune, in its editorial, referred Sabath, Perlman, Goodman & Rein has rendered services aggregat to "the profits of congressional investigation." ing and including the estimate of 15 hours for services to be ren Continue this investigation? -This committe~? Of course, dered, the total hours 117~. its chairman wants it continued. Why would he not? I am admitted to the practice in the State of Illinois and to the practice of the Federal court of this district, and I have an What I should like to know is, When was the firm of Sabath, opinion as to the fair, usual, reasonable, and customary charge Perlman, Goodman & Rein employed to represent this com for the services rendered and to be rendered by Sabath, Perlman, . pany? In how many cases does his law firm represent either ·Goodman & Rein as attorneys for the trustee, and in my opinion & Trust that charge would be the sum of $2,000 . . -directly or indirectly the Chicago Title Co.? When • • • • did they get those cases? What fees have they received? The MAsTER. What is the amount of hours? Speaking of fees, let me read just one statement of the Mr. CHESLER. Approximately 117~. master with respect to the fees requested by the law firm of Mrs. DoDGE. Do you think, Mr. Chesler, it was necessary to start the select committee chairman in the case which I have just that foreclosure suit so early after the maturity of those bonds? They matured May 1, 1934, and the foreclosure was started in referred to. He said: June? The MAsTER. Mr. Sabath is very much interested in keeping down Answer. June 14. these expenses. Mrs. DoDGE. Now, I know we were asked to sign an extension, Mr. CHESLER. Yes. just the number of years I cannot recall, I think it was 4, and The MAsTER. And you are asking here more than the maximum a reduction on the interest which we signed, and I understood that is being allowed. quite a number of others signed. I have always felt and still feel 'toot that foreclosure was started rather hastily and perhaps I I should like to know about the fees which were requested expected just a little bit too much from your firm because Congress in these other cases. That ought to be interesting infor man SABATH is very interested in these foreclosed bondholders and mation. so forth, and I felt it was not quite the thing for his office to start · But that is not all. I have heard that lawyers representing foreclosure so hastily. In fact, I expected a little partiality. Mr. CHESLER. I object to any statement of Mrs. Dodge; it is per bondholders' committees, lawyers representing receivers for haps made with sincere feeling. closed banks, and lawyers representing trustees in foreClosure Mrs. DODGE. And kindly. proceedings have been summarily dismissed since the present Mr. CHESLER. It is no part of the cause. Our client is the Chi chairman of this committee was designated and his law firm cago Title & Trust Co., trustee, and we act solely under their discretion. I am sure that our firm would pot be a party to the appointed. fomenting of litigation. For example, I am told that the firm of Glenn, Schwartz, The MAsTER. Mr. SABATH is very much interested in keeping Reid & Browning was ousted as attorneys for the receiver down these expenses. Mr. CHESLER. Yes. of the Hyde Park-Kenwood National Bank and the firm of The MAsTER. And you are asking here more than the maximum Sabath, Perlman, Goodman & Rein appointed; that the same that is being allowed. thing happened with respect to the Ridgeway State Bank; . Mr. CHESLER. I am asking for an allowance based solely on the work pei:formed, the actual services and the amount involved and -that the firm of Sabath, Perlman. Goodman & Rein now rep the responsibility. involved. .resents a number of the committees reorganizing the H. 0...... ·Stone properties,· another concern that was loudly condemned ·Before Special Master Charles A. McDonald, October 21, 1935, at by the chairman when his committee first met in Chicago; 1:15 p: m. In the matter of 1748--1766 East Seventy-first Street that the firm of Sabath, Perlman, Goodman & Rein now . Building Corporation,-debtor. No. 59128 - · represents a number of the committees for issues underwrit Court recon~ened in the above-entitled cause at the hour of 1:15 p. m., October 21, 1935, pursuant to adjournment heretofore ten by the Cody Trust Co. and also the Leight Holzer Co., taken. which we have read so much about in the hearings of the Present: Mr. David Snyder, representing petitioning creditors; select committee. Mr. Robert L. Huttner, representing the debtor; Mr. A. Edmund These are things that should be investigated by our Rules Peterson, representing the Chicago Title & Trust Co. The MAsTER. You may proceed. Committee. If they are true we ought to know about them. Mr. PETERSoN. I will ask to be sworn. And if they are, this investigating committee certainly (Witness duly sworn.) . should not be continued. A. Edmund Peterson, produced as a witness on behalf of the '\Vhat I said in the beginning I now repeat, viz, no one is Chicago Title & Trust Co., being first duly sworn, testified in · narrative form as follows: more anxious to aid these bondholders than I am; no one Narrative by Mr. Peterson: is more jealous of their rights and interests. I want to help My name is A. Edmund Peterson. I am employed by the Chi them and in my opinion the only way that we can help them cago Title & Trust Co., the trustee under the trust deed recorded in the recorder's office of Cook County, Ill., as document no. is by corrective legislation; legislation that plugs the loop 9622078, which trust deed was executed April 15, 1927, by Patrick holes in section 77B; legislation that becomes efiective W. Barrett and wife, securing an issue of bonds in the principal before the bondholder, whom we are trying to aid, has lost amount of $150.000. everything. The nature of my employment with the Chicago Title & Trust Co. is such that I am generally in charge of matters pertaining to There is no use legislating to cure a dead man, and it is trust deeds of the character of the trust deed involved. in this just as futile to legislate for the purpose of aiding a bond case, wherein the Chicago Title & Trust Co. is acting as trustee. holder after everything that he had has been swept away. I state that pursuant to the terms of the trust deed above referred to, the Chicago Title & Trust Co. is claiming a fee for Continue this investigation, continue this committee, and services rendered by it as such trustee. The nature of these delay legislative action until the next session of Congress services being briefiy as follows: and you will do the bondholder no good. By then, it will be • • • • • • • too late. 'Q. Now, when the proceedings in the State court were instituted you received a demand from one of the bondholders, isn't that I say to my colleague from illinois, chairman of the com right, who represented a certain amount of bonds?-A. Yes. mittee, make your report; give us your recommendations; · Q. And you retained that law firm who represented that bond do not deprive these bondholders of even the slightest bit holder?-A. We retained Mr. Sabath's firm. of aid by pressing for the continuance of this investigation. Q. On what basis did you figure this?-A. On the time we spent and the responsibility involved and the amount involved in the For 3 years you have been investigating. What we want issue. now are the facts and your recommendations-not more in Q. You haven't testified as to what time you spent?-A. I have vestigating. taken it into consideration. Q. Can you give us any idea of the time you spent?-A. No; I Ladies and gentlemen of the House, I have been able to couldn't tell you ofihand. present only some of the high spots in the history of this 1937 CONGRESSIONAL RECORD-HOUSE- 2793 select committee in Chicago. I am sure you will feel, as we Mi. LUCAS. Mr. Speaker, will the gentleman yield? do in Chicago, that the committee has outlived its useful Mr. CHURCH. When I finish my statement, please. ness. We are not only tired of these endless investigations, Mr. MARTIN of Massachusetts. I demand the gentleman but we are disgusted with them. That is the sentiment of be protected in his rights. the bondholders who have heard nothing but a great deal of The SPEAKER. The gentleman has declined to yield. talk about their need for assistance and have seen nothing Mr. HOOK. Mr. Speaker, I make the point of no quorum. tangible done. The SPEAKER. The gentleman from Michigan makes This House should require the select committee to make the point there is no quorum present. The Chair will count. its final report so that we can immediately consider what [After counting.] One hundred and ten Members are pres corrective legislation, if any, is needed. We should begin ent, not a quorum. to take concrete steps to help the bondholders and not just Mr. RAYBURN. Mr. Speaker, I move that the House do toy with their interests. now adjourn. The select commitee should be well informed on the prob Mr. SABA'I1I. Mr. Speaker, will the gentleman yield? lems and should be able to propose appropriate remedial Mr. RAYBURN. No business can be conducted in the legislation. In that particular, the committee is more in absence of a quorum. formed as to what can and should be done than any of us Mr. SABATH. I should like to answer these despicable here. Nevertheless, unless something is done very soon by statements. way of obtaining remedial legislation for the bondholders, I The SPEAKER. The gentleman from Texa.s moves the propose to introduce a bill on my own initiative and press for House do now adjourn. ~ its early enactment. Mr. CHURCH. I will yield to the gentleman. I want to As I view the situation in connection with bondholders' be fair. reorganizations we have,· among other things, two difficul The SPEAKER. No business of any character can be ties that have arisen, whether they be in the State courts transacted during the absence of a quorum. It raises a con or under 77B of the Bankruptcy Act. One is the failure stitutional question. A quorum is not present. The gentle of so-caHed protective committees to keep the bondholders man from Texas has moved that the House do now adjourn, themselves advised as to the work being done as it pro which is not a debatable motion. gresses, their problems and reasons why a particular plan The question was taken; and the Speaker announced that of reorganization was adopted. the ayes had it. · - What has been happening is simply this: A committee Mr. FISH. Mr. Speaker, I ask for the yeas and nays. representing bondholders is established and after 2 or 3 The SPEAKER . . The gentleman from New York demands years it produces its reorganization plan. The bondholders the yeas and nays. · themselves know nothing about what has transpired during The yeas and nays were refused. the 2 or 3 years. They do not have any idea as to why So the motion to adjourn was a~eed to. such and such a reorganization was adopted. Naturally ADJOURNMENT they are skeptical and wonder where money represented in Accordingly