BOSTON PUBLIC LIBRARY
3 9999 06317 366 8
OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION
DIVISION OF REVIEW
THE PRISON LABOR PROBLEM UNDER NRA ADMINISTRATION
AND THE PRISON COMPACT
By
Vernon J. Clarke
WORK MATERIALS NO. 40
N.R.A. ORGANIZATION STUDIES SECTION
February, 1936
OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION
DIVISION OF REVIEW
THE PRISON LABOR PROBLEM UNDER NRA ADMINISTRATION
AND THE PRISON COMPACT
By
Vernon J. Clarke
N.R.A. ORGANIZATION STUDIES SECTION
February, 1936
9742
7 0 R E U 0 R E
This study of "The Prison Labor Problem under N.R.A. Administration
and the Prison Compact" was prepared "by Fr. Vernon J. Clarke of the NRA.
Organization Studies Section, Mr. " "illian "\ Bardsley in charge.
The study treats the experience of the National Recovery Administration
with the problem, as brought before it by proposed code -provisions, of the
competition of prison made goods ^ith the products of nrivate industry.
The detailed consideration given the subject is indicated by the Table of
Contents and by the Summary immediately following the Table of Contents,
which briefly sets forth the more important aspects of the N.R.A. exper-
ience, as found in succeeding chapters of the study. While this Summary
contains some of the author's conclusions, the author's evaluation of
the effect of NRA activities in dealing with the problem and his conclu-
sions will be found in Chapter IX.
The primary purpose of mimeographing the study is that of making
available to students of the subject and to administrative officials the
exoerience of NBA. Accordingly, the documentation is rather full and
detailed. It will'-, be observed that the opinions stated and the recom-
mendations made are exnressive of the point of vie1- of the author and are
not to be regarded as official utterances. Thefre opinions and recommenda-
tions are further material for examination and study.
At the back of this report vill be found a brief statement of the
studies undertaken by the Division of Review.
L. C. Marshall, Director
Division of Review
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TABLE OF CONTENTS
PAGE
SUMMARY VI
CHAPTER I . The Problem 1
I . Free Industry Viewpoint 1
II . Frison Executives Viewpont 2
III . Benefits to Frisoners 3
IV. Fublic Viewpoint 3
V. Relationship to N.R.A 4
CHAPTER 1 1 . The Compact 8
I. Origin 8
II. Objectives 12
III. Formulation 13
IV. Presidential Approval 16
CHAPTER III . The Prison Labor Authority 17
I . Conferences with Cotton Garment Code
Authori ty 17
II . Conferences with Twine and Cordage
Code Authority 20
III. Election of Formal Frison Labor Authority 23
IV. Efforts of Prison Labor Authority on
Allocation and Diversification 24
V. Prison Labor Authority Requirement of
Labels on all Frison Goods in Compe-
tition with Free Industry Goods
Requiring Labels 24
VI. Action of Frison Labor Authority Estab-
lishing Price Policy Under Article V,
Sections (a) and (b) and Article VII,
Section 2 (d) of the Compact 24
VII. Action of Frison Labor Authority on
Assessments 25
VIII. Prison Labor Authority Vote to Bring
Jails and Houses of Correction of
Minor Folitical Subdivisions Who
Become Signatory to Compact Under
Their Jurisdiction 26
IX. The Association of States Signatory
To the Compact Vote to Continue
The Prison Labor Authority After
The Supreme Court Decision in
Schechter Case 26
CHAPTER IV. Labels and Insignia 27
I. Application For Use of N.R.A. Labels
By the Frison Labor Authority 27
II . Legal Division Memorandum Stating The
Administration May Authorize the
Use of N.R.A. Labels on Prison Made
Goods 30
III. Memorandum of Acting Division Admin-
istrator To Administrative Officer
Recommending N.R.A. Labels be
Authorized for Use on Frison Made
Goods 31
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PAGE
IV. Memorandum of Folic;/ Advisers On
Question of Whether Goods Manu-
factured Under the Compact Should
Bear N.H.A. Late Is 31
V. Folicy Decision Ruling that Prison
Manufactured Products Under The
Compact May Bear An N.H.A. Label 33
VI. Administrative Order No. V-2 Setting
Forth Regulations Governing The
Use of N.H.A. Identification Symbols 33
VII. Administrative Order No. V-3 34
VIII. Budget and Audit Of Frison Labor Authority 35
CHAFTEH V. Compliance 42
I. Form Containing Instructions to Complainants 42
II. Authorization of Frison Labor Authority
To Hear and Adjust Complaints Under
Article VII, Section 2(h) of the Compact 43
III. Certificates of Compliance and Application
For N.H.A. Labels 43
IV. Code Authority Field Letter No. 5 45
V. Complaints 48
VI . Compliance Division Complaints 51
VII . Nature of Complaints 52
VIII. Industries Most Active in Entering Complaints
Against Prison Made Goods 52
IX. Other Industries Affected by Prison
Competition 52
CHAFTEH VI . Ulman Committee Report 53
I . 36-Hour Week for Cotton Garment Industry 53
II. Executive Order No. 118-135, October 12, 1934 54
III. Points Concerning Prison Labor Covered
By The Investigating Committee 54
IV. List of Fersons Appearing 3efore Ulman
Committee Representing Industry, Organized
Labor, Frison Administrators and N.H.A.
Officials 55
V. Committee Report-N.R.A. Release No. 9029-A 57
VI . Transcript of Hearing 61
VII. Findings of Ulman Committee 62
VIII . Recommendations of the Ulman Committee 62
IX. N.H.A. Public Release No . 9078 64
X. Definite Action of National Industrial
Recovery Board on Ulman Committee
Report, December 3, 1934 64
XI. Comments of Prison Labor Authority On
Ulman Committee Report 65
XII. Prison Labor Authority Froposal to Effect-
uate Recommendations of Ulman Committee 70
XIII. Action of N.I.R.3., May 27, 1935,
Accepting In Frinciple Frogram To
Replan and Reorganize Prison Industries 74
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PAGE
CHAPTER VII. Prison Industries Reorganization
Administration 76
I. Memorandum of May 18, 1935, From Acting
Division Administrator Collins To
L. C. Marshall Urging That Definite
Action Be Taken By National Indus-
trial Recovery Board to Further Prison
Frogram Recommended by Ulman Committee 76
II. Report of Organization Meeting Confer-
ence of Free Industries On Economic
Plan For Frison Made Goods 77
III. Memorandum of Acting Division Administrator
Collins To L. C. Marshall, Executive
Secretary of the National Industrial
Recovery Board, May 29, 1935, Outlining
Steps to be Taken in Connection With
National Industrial Recovery Board
Action in Frison Labor Field 81
IV. Proposed Executive Order Establishing
Prison Industries Reorganization
Administration 83
V. Memorandum of Acting Division Administrator
Collins to the Administrator of the
National Recovery Administration Urging
That He Present the Frison Labor
Frogram to The President 84
VI. Conference of N.P..A. Executives On Frison
Labor Question , July 1 , 1935 85
VII. Memorandum of Division Administrator
Collins to Frentiss Coonley, Director,
Division of Business Cooperation 87
VIII. Executive Order 7194 Establishing Prison
Industries Reorganization Administration 87
CHAPTER VIII. Administration of Prison Labor Compact 89
I. N.R.A. Personnel 89
II . Frison Labor Authority Personnel 89
III. Efforts of N.R.A. Officials to Coordinate
Objectives of the Compact with Frison
Labor Authority and Affected Code
Authorities 90
IV. Legal Aspects of the Compact 93
V. Interpretations 98
VI . Stays 100
VII. Frison Industries Statistics as Compiled
By N.R.A 101
VIII. Frotests Received By the N.R.A. Against
The Use of Frison Labor on Products
To Be Sold in the Opan Market 101
IX. Cooperation by Other Governmental Depart-
ments and National Associations with
N.R.A. in Administering the Compact 102
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FAGE
CHAFTER IX. Effect and Conclusions 103
I . Stabilization of Frice Structure 103
II. Encourage Uniform Frison Operations In
Manufacturing and Selling 103
III. Diversification Spreads Work Among Prisoners
and Expedites Later Rehabilitation 104
IV. Future Legislation 104
V. State Use System 104
VI. Legal Requirements in Disposing of Prison
Made Goods 105
AFFENDICES 107
Appendix A Instructions to Complainants Against
Unfair Prison Competition 107
Appendix B Industries Affecting Frison Production 110
Appendix C NRA Release No . 8314 114
Appendix D NRA Release No . 9029-A 119
Appendix E NRA Release No . 9029 142
Appendix F NRA Release No . 9078 145
Appendix G- Comments of the Prison Labor Authority
on the Report of the Ulman Committee 146
Appendix H A Flan Whereby the Federal Government
May Assist the Several States to
Abolish Unfair Competition in Frison
Industries 158
Appendix I Memorandum of July 23, 1935 from
Prentiss Coonley to L. C. Marshall 160
Appendix J Executive Order No. 7194 165
Appendix Y Memorandum of Peter Seitz Re: Frison
Compact 167
Appendix L Information Regarding Summer s-Ashurst
Act 175
Appendix M States Complying with Certain Parts of
Hawes-Cooper Act 178
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SUMMARY
While most free industries of the United States were operating under
Codes of Fair Coranetition approved under the National Industrial Recovery-
Act, the Compact of Fair Competition for the Prison Industries of the
United States of America offered the most satisfactory means of placing
■orison made goods on the open market on a fair conroetitive basis with goods
of free industries. For the first time in the history of this countr" free
industry witnessed the sale of prison made goods on the open market under
a voluntary agreement promulgated by the prison executives of the states.
The purpose of this agreement was to maintain standards and price policies
comparable to those of free industry.
After a study of free industry and the view points of prison execu-
tives and of benefits to the prisoners with respect to the subject of com-
petition between prison goods and free industry goods, it was found that
these groups were continually endeavoring to accomplish their objectives
by pronounding their theories and ideas to governors, legislatures and
prison executives.
The relationship of the -problem of orison goods versus free industry
goods developed r-hen an attempt was made by sponsors of the Codes for the
Cotton Garment Manufacturing Industry, the Retail Trade, the Twine and
Cordage Manufacturing Industry, the Farm Equipment Manufacturing Industry
and others, to insert restrictive clauses into their respective codes
which would do indirectly that which might not be accomplished directly,
the objective being to prohibit members of these industries from handling
or selling orison made oroducts.
The Prison Executives of the states and representatives of the
Bureau of Federal Prisons proposed a Code of Fair Conroetition to the
President embodying the general principles contained in the Prison Comoact,
but it was determined by the Legal Division that the Prison groups were
not entitled to a Code because they could not comply ™ith Section 7(a)
of the National Industrial Recovery Act.
Certain provisions were inserted in the Cotton Garment Industry and
the Retail Trade Codes which in effect prohibited members of that industry
or trade from dealing in nrison made goods unless such goods were manu-
factured under the terms of a prison compact and these provisions were
stayed until such time as a Compact could be formulated by the states
engaged in the production and sale of orison made goods on the open market.
The Compact as formulated by prison executives and sponsored by
the Association of States Signatory thereto secured the supoort of the
Administrator on December 9, 1933, and was aooroved by the President on
Aoril 19, 1934.
Conferences were held between the Prison Labor Authority and Code
Authorities of various industries esoecially the Cotton Garment and the
Twine and Cordage Code Authorities, with respect to agreements as to dif-
ferentials, mark-ups, charges for labor and overhead, and quantity dis-
counts on products produced within the prisons.
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Efforts were made by the Prison Labor Authority to prohibit the
expansion of prison industries whose -products entered the -public markets.
The Prison Labor Authority voted that assessments made by that
authority should conform to the assessments made under codes for correspond-
ing industries.
Mr. James V. Bennett, Secretary-Treasurer of the Association of
States Signatory to the Compact made formal application for the issuance
of an N.B.A. label for use on cotton garments manufactured under the terms
of the Compact.
On April 21, 1934, in response to !*r. Bennett's letter of application
for the use of labels the Legal Division clarified the question of the
Administrator's power to authorize the use of these labels on prison made
goods.
On April 27, 1934, the Administrative Officer of N.E.A. issued
Policy Decision No. 6, which ruled that products manufactured under the
provisions of the Compact may bear the NEA insignia and further specified
what the design of the label should be.
Administrative Order V-2 was then issued authorizing and empowering
the Prison Labor Authority to issue NEA labels. The Cotton Garment Code
Authority entered serious objections to the use of any HEA insignia on
Frison made goods and requested that a stay of Administrative Order be
issued pending a public hearing on this question. As a result of this
application for stay a oublic hearing was held on Administrative Order
V-2 which resulted in the issuance of Administrative Order V-3 June 12,
1934. Administrative Order V-3 modified Administrative Order V-2 and the
regulations approved by that order and it also denied the application for
a permanent stay of Administrative Order V-2 as applied for by the Cotton
Garment Code Authority.
The Compact being recognized as a voluntary agreement, the Assistant
to the Administrative Officer, in a letter of Anril 9, 1935, to the
Economic Advisor of the Prison Labor Authority gave his tentative approval
of the budget as submitted by that Authority in conformity with the re-
quirements of Executive Order 6859 and in compliance with Administrative
Order X-136.
In order that all Code Authorities and other interested in securing
compliance with the provisions of the Prison Labor Compact might be in-
structed as to the procedure to be followed in filing complaints, the NEA
sent out forms containing instructions to complainants and Code Authority
Field Letter No. 5, of May 26, 1934, for information and guidance.
Complaints concerning alleged violations of the Compact provisions
were in most cases settled by the Prison Labor Authority. When the
complaints were of such a nature that the Authority could not adjust them
satisfactorily to parties involved, they were referred to the Public
Agencies Division of the N.E.A. , where efforts were made to adjust them
in a fair and impartial manner. The case of the application of the
Huffine Shirt Company for prison labels, which labels were to be used on
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9742
products manufactured by inmates of the Kentucky State Penitentiary was
denied after a public, hearing held by the Prison Labor Authority on
the grounds that the proposed contract which the Huffine Shirt Company
was to enter into with the State of Kentucky was illegal because it lack-
ed any specific element of consideration.
On August 21, 1934, by Executive Order 6828, Amendment No. 7 to the
Code for the Cotton Garment Industry was approved. This Order imposed
a thirty-six hour work week and a proportionate increase in pay of em-
ployees, so as to maintain the same weekly wage rate as was -provided in
the approved Code for this Industry,
The Prison Labor Authority then advised all -orisons manufacturing
cotton garments that in accordance with Article II of the Compact, they
must not operate cotton garment industries in excess of thirty-six hours
per week. Apparently this did not satisfy the Cotton Garment Industry as
they continued to complain about the burden imposed upon them by prison
ind.ustries. This resulted in the appointment of the Kotchkiss Committee
to make investigations as to whether or not the Cotton Garment Industry
could operate under the thirty-six hour work week provision. This Com-
mittee recommended that the President appoint another Committee to mate
a definite study of the competition of products of the Cotton Garment
Industry with -oroducts of orison labor.
In accordance therewith, the President on October 12, 1934, appoint-
ed the Ulman Committee, conroosed of Judge Joseph N. Illman, as Chairman,
Prank Tannenbaum and W. Jett Lauck. I.'r. Lauck was a member of the
Hotchkiss Committee. The sum ar.d substance of the recommend-itions of the
Ulman Committee were that fifty million dollars be set aside for the pur-
pose of helping the states to replan and reorganize their prison in-
dustries, remove -orison made goods from the open market and bring to an
end the prison labor controversy which has burdened American industrial
and political life for over s. century. It was further recommended that
the Federal Emergency Relief Administration purchase and use such prison
made garments as were then being mde in prisons and immediately relieve
the open market of this competition. Several conferences were held with
the FERA officials and it was tentatively agreed that such a program
could be developed as far as that end of the program was concerned.
Nevertheless, the prison group answered the recommendations of
the Ulman Committee, urging, first, that adequate state use laws be
made compulsory before any relief or aid be granted to the respective
States and that a corporation be set up to make an adequate survey of
needs of the respective States before any permanent program be under-
taken and that in the meantime it be a condition precedent to the granting
of Federal aid that limitations be set for the sale of products on the open
market by prisons a.nd th^t a program be worked out through the F.E.R.A. ,
using unemployed labor and preventing idleness in the penitentiaries.
On Hay 27, 1935, the National Industrial Recovery Board adopted
a plan regarding the competition of prison made products with products
-Vlll-
of private industry. This plan is set forth in Chapter VI, Section XIII,
Pages .... ' and ?.!.-' .
Executive Order 7194, Appendix "Q,", established the Prison Industries
Reorganization Administration. The governing "body of this Agency consisted
of a board of five appointed by the President to hold office at his plea-
sure. The stablishraent of the Prison Industries Reorganization Board ter-
minated official action of the National Recovery Administration with re-
spect to the Prison Labor problem and thereafter the Prison Industries
Reorganization Administration was na.de responsible for carrying forward the
constructive attack on the problem originated under the National Recovery
Administration.
A minor problem which NRA officials encountered in seeking to obtain
compliance with the terms of the Prison Compact was that of arriving at
satisfactory voluntary agreements between prison manufacturers and free
industry manufacturers with respect to establishing charges for labor and
overhead in an effort to arrive at prices for which prison goods could be
sold and conform to the provisons of Article V of the Compact. Continual
effort: was made by NRA officials to arrive at fair decisions with respect
to various questions presented.
The Prison Labor Authority was unable to accomplish a great deal with
respect to diversification of Prison Industries as provided for under
Article VII, Section 2 (f) (l) of the Compact. However, it was able to
reduce the production of prison made products in some instances.
During the formulative period of the Compact in the Pall of 1933,
those who assisted in drafting the Compact provisions rind those who signed
it as officials of their respective states did not considerthe formal legal
aspects of this working agreement. The purely legal phases of the instru-
ment were not given very serious consideration as it was recognized that
each institution was regulated by the statutes of its respective state and
the Compact was entered into voluntarily with the spirit of cooperation in
an endeavor to effectuate the policies of Title I of the national Industrial
Recovery Act.
The Compact was implemented by a clause in the Retail Code which pro-
hibited the sale on the open market of prison-made goods not made under its
terms. The Compact lacked legal validity as set forth in a memorandum of
December 1, 1934, by the Legal Division. The contentions of this memorandum
are largely substantiated by Appendix "H" and NRA Legal Research Bulletin
No. 864.
On December 28, 1934, an interpretation was rendered to the effect
that free labor employed by contractors operating in state prisons were sub-
ject to the jurisdiction of the Prison Labor Authority insofar as working
conditions were concerned. However, this free labor was to conform to
the wages, hours and general labor provisions of the corresponding free
industry code. Again on April 11, 1935, another important interpretation
was rendered concerning certain prison contractors who were engaged in the
manufacturing of cotton garments. The question involved the jurisdiction
of the Cotton Garment Code Authority and the Prison Labor Authority.
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A decision was rendered that such contractors should be under the juris-
diction of the Prison Labor Authority.
The Prison Compact did curte.il to some degree the burdening of the
public market with prison goods and the efforts mode by the prisons to
comply with their Compact diminished the dumping of prison goods on the
market at lower than fair current prices.
As a result of conferences and agreements between the Prison Labor
Authority and free industry code authorities uniform sales policies with
respect to quantity discounts and percentage of markup worked out fairly
successfully. It was found that diversification of industry in penal
institutions spread work among the inmates and offered training in the
performance of varied tasks which were beneficial to them when they again
join the ranks of free society.
The writer believes that Federal legislation should be enacted which
would encourage the States to e'ter into a Prison Compact to which the
States may subscribe through approval by their respective legislatures.
The objectives and purposes of the Compact would be (a) to maintain fair
competition between products of private domestic industry and those of
prison industry; (b) to assure a diversification of the output of prison
industries in fair proportion to the production of affected free indus-
tries; (c) to relieve unemployment within the penal institutions of the
States by providing work for the inmates of a rehabilitative a^d chara-
cter-building nature and les?en the dangers inherent in idleness.
In theory the exclusive State-use system of regulating prison in-
dustries sounds simple, but in enforcement and practical application it
has many defects. TJhere the exclusive State-Use System is in effect free
industry is deprived of its proportionate share of business from govern-
mental institutions. On the other hand the State-Use System does eli-
minate prison made goods from the free industry market. Furthermore it
may be contended that the State-Use System, especially where tied up
with a program of diversification of products, is more readily adaptable
by the larger states. If the exclusive State-Use System is ever put into
effect on a broad scale, the prisons must be guaranteed the exclusive
market by the States and their political subdivisions, for all prison
products.
The Prison Industry problem is essential1 y a state affair. However,
the Federal Government can be of assistance through advising and aiding
the States in formulating a diversified prison program, but it should not
attempt to force any program upon the States which they do not wish to
voluntarily accept.
The legal aspects regarding the disposition of prison made goods
varies in different States. Many States have enacted regulatory statutes
for the purpose of identifying and controlling the shipment of such goods
within their borders. Congress likewise has enacted such legislation as
the Sumner- As hurst Bill, the Hawes-Cooper Act, which have important bear-
ing on this question.
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CHAPTER I
THE PROBLEM
This report is an effort to review the experiences of industry,
prison executives and the National Recovery Administration in
developing and administering a workable program for the disposition of
the products of penal, reformatory or correctional institutions
manufactured, produced or mined in competition with similar products of
free industry. For more th?-n a century recognized authorities have "been
confronted with this problem and many proposals have be?n made — some
through legislative measures, both national and state, and others
through voluntary agreements. None of these appear to have accomplished
the desired end — to the extent that all parties interested are
satisfied. However, during the period that most of the free industries
of the United States were conducting their affairs under codes of
fair competition approved under Section 3 (a) of the National In-
dustrial Recovery Act, it is recognized that the Compact of Fair
Competition for the Prison Industries of America offered the most
satisfactory means of placing prison-made goods on a fair competitive
"basis with goods of free industry.
I. FREE INDUSTRY VIEWPOINT.
Under the Compact of Fair Competition for the Prison Industries
of the United States of America (hereafter referred to as the Compact),
free industry for the first time in the history of this country
witnessed the sale of prison-made goods in the open market under an
agreement, (voluntarily entered inta) by the States, which sought to
maintain standards and price policies comparable with those of com-
peting free industries. It was the contention of such industries as
the Cotton Garment Manufacturing Industry, the Twine and Cordage
Industry, the Furniture Manufacturing Industry and others less ef-
fected that they could not. operate successfully under the codes of
fair competition and meet the prices of prison-made goods in the
competitive markets. There are two outstanding arguments against the
sale of prison-made products on the open marketo
First, the use of inmates in manufacturing, producing or mining
products which later go to the public markets deprives free labor of
that work. After a careful analysis of this phase of the prison-labor
problem there remains little doubt as to the justification of labor's
contention. It tends to hold the wage scale to a low figure, and it
decreases the employment of free labor. The American Federation of
Labor ! . . has on vprious occasions stated that it favors the
employment of convicts, but it has always fought the sale of prison-
made goods in the open market.
Second, the influence of priT.on-made goods on the price structure
for any given competitive commodity sold on the open market should be
considered. Because many prisons do not find it necessary to include
all overhead on direct labor costs in quoting their prices, industry
9742
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has always held that the comoetition of -orisons in the -oroduction and
sale of commercial products is unfair and that -orison products are made
and sold a'" very much lower prices than are comparable products of
free indus ;rya
It is farther recognized "by uer.01 .'gical authorities, as well as
those of frts industry-, that vhe abuse, shich have developed under
■orison concrarvb systeaa has been a dfii):'! haudica-o to free industry
Loth from the &tr.nd"ooiu'c of the -orocuctr-; F3.r.v..faGtured under these
systems selling <.vfc ridiculously 'Jew orice-j and the demoralizing effect
it has unon fr.ee industries ' manufacturing standardsc Organized
industry, as a rule, endorses and a-ouro-res the emoloyment of orisoners, hut
they want them em-oloyec! at occupations which will result in the largest
uossibie s-nread of enrol oy^i •*:•?':; giving due consideration to disciplinary
and humanitarian treatment with a background of ,-orotection for the
-oroducts of free la'Oor fur the -ouhllc market. Generally, industry
favors some form of ''state uoe" as a solution to this oroblem.
II. PRISON ■EXECUTIVES VIMp'qiST
Practically all orison executives agree that urisoners must work
at some useful occun&tio'u Th- old system of working inmates of an
institution at some task 7.'hich is uc . Ih-x: v useful or necessary, is
ranidly bTccming a thing of the paato The morals of -orisoners cannot
he maintained ty merely assigning them to a job \rhich in the end will
not "benefit either the prisoner or tho state. Consequently the -orison
official of today designs work for his charges wnich will helo them
morally and -ohysically and in many instances train them for useful and
gainful employment uton their releasee
A correct theory for the treatment of prisoners requires that
they have a regular amount of work to do each day. It is the oroduct
of this work or labor when sold on the market that raises the issue of
competition of uiison goods versus free industry goods. Prison
executives usually ooerate their institutions under "budgets and ao-
-orooriations aouroved hy elected representatives of the neoole who,
in turn, are comoelled to mainbain these institutions through taxation.
Naturally these executives are continually striving to eliminate any
unnecessary exoense and to discipline their inmates through croductive
work which will "bring in some financial return.
Due to the ever increasing demand to hold down the raiblic tax
"burden, both orison officials and legislatures have a-oorc^ed the oro-
duction and sale of various commodities as a means of Droviding
revenue to -partially defray operating expenses . These exoenses
generally include suo-olies, overhead and maintenance. Most authorities
who have made adequate study of the- administration of orisons agree
that whenever it is oossible to reduce the "burden for the taxoayer hy
employing -orisoners at oroductive labor, -Droviding such enroloyement
is on a basis that is equitable to all interests concerned, such
reductions are readily recognized as good -orison administration.
n74?.
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III. BENEFITS TO PRISONERS. •■ .
The nature of the work prisoners should be engaged in varies accor-
ding to types of crime the inmates are being punished for, conditions
under which they must work, to what,, extent the products of their labor
affect outside industry and what reaction the work has uoon them
mentally end physically. These factors must all be given consideration
by the -orison executives when planning for the proper administration
of a penal institution. In addition, careful consideration should be
given" to the rehabilitative features of the work. Criminals are sent
to -prisons for -ounishment for the crimes they have committed against
society. It is society's duty to see that they are provided with
curative -punishment.
It is also society's responsibility to see that the -prisoner is
■provided with -punishment which will mean work. If this work can be
so arranged that while the prisoner is being punished, he can he
gf forded the opportunity to improve his mental, physical and re-
habilitative' Qualities, he will be a much better citizen when
released from the institution. It is with these objectives in mind
that many nrison officials supply work for their inmates so that they
will be prepared to meet the normal requirements of good citizenship.
IV. PUBLIC VIEWPOINT
The general -public believes that -prisoners should be -provided
work. The Handbook of American Prisons &nd Reformatories, 1933,
prepared by the Osborne Association, Inc., suggests that orison work
should meet the following conditions, "(a) Have a definite vocational
value to the individual; (b) be productive to the State; (c) conroete
as little as possible with outside labor and free capital." These
conditions seem to stand out clearly as a basis upon which prisoners can
work and meet -public approval.
Early in 1933 an editorial appeared in the Saturday Evening Post
dealing with this problem. It is believed the following quotation
from the editorial reflects the viewpoint of a majority of the public
with regard to prison labor and the competition of prison-made goods.
"Most important perhaps of all, the prisoners must
not be idle and if there is not enough ingenuity to
solve this particular problem, then we might as well
give up in despair any attempt to handle the crime
situation. Of all crimes against society none quite
equals that of keeping prison inmates idle and un-
occupied."
At the present time there are many groups, each representing a
different viewpoint continually propounding their pet theories upon
governors, legislatures and prison executives. But, up to the present
time, they have made little headway largely because of the different
9742
_A_
reactions on the part of the people from geographical, industrial and
agricultural standpoints, This is recognised: "by tne different
products manufactured and offered for sale on the public market hy
various szc.be inr/ti .jufciono,, For example, Maryland and Tennessee,
two industrial g'ucr^es, are engaged is iaanut'ac. taring cotton garments
which later enter the -colic E'arket< tii . ota and the Lakotas
manufacture binder twiie and place 5:t un „he open market, because they
are in the grain producing region r-i :,he coxmtry "here this oroduot
is used ty fa; mars of Lh'&se states in the harvesting of their own
cro-cs* This all goes Sy';show biiat the pe-ople of the various states
approach the probleai from diifsrent- angles j The following quotation
from the bullet i rig ''Prison Industries1'' commonly referred to as
Domestic Commerce Series 'No, 27. published by the U. S. De-oartment of
Commerce indicates that the -orison industries -problem is largely one
for the states to handle:
•'The orison industry problem is essentially a State
affair. Since , near './y all the! -orisons are Ltate instil
tutionst suppyrted, where necessary 3 by appropriations
made by their legislatures, and '^ince the punishment
of crime is -mostly the responsibility of the several
■States,'. 'the method's of ca -g, 'of discipline^ and of re-
.habiix option of-'Tjriscriers'miiai; necessarily be in each
State a State problem, linkel closely with its legal
code and its organization for the administration of
justice 0 TMb is particularly true because of the
great difference's in laws' in the several States, dif-
ferences in the methods of dealing with criminals, in
the use of the parole, in the 'ek ten I of segregation of
the various k: nds of •e-onv'.ctsj and ev:-n in the legal
and public attitude toward the' problems of prison ad-
ministration-:!
V. RELATIONSHIP TO N. R. A.
Shortly after the -or. s sage of the National Industrial Recovery
Act the N.R.A. began to receive Preliminary drafts of proposed codes of
fair competition as drawn uo and sponsored by industrial trade
associations ar.d groups uf respective indua :-y members. It then
developed that an attempt was being made ~oy the Cotton Garment
Manufacturing Industry , the Retail -Trade Group, the Twine and Cordage
Manufacturing Industry, the Farm Fqu'ioment Manufacturing Industry and
the Furniture Mamifacturing Industry to do indirectly that which might
not be accomplished directly through the insertion of restrictive
clauses in their codes. Their objective was to prohibit members of
these industries from handling ur selling prison-made goods. For
illustration, the preliminary draft of the Cotton Garment Code as
proposed by that industry, contained the following clause known as
Article VIII:
9742
"No -oerson engaged in the Cotton Garment In-
dustry shall, after November 1, 1937, manufacture
or cause to be manufactured, or acquire, sell, or
distribute in any manner whatsoever, any garment
or pert thereof -oroduced in ^hole or in -cart in
any publicly maintained -oenal or reformatory in-
stitution, and no -oerson engaged in the Cotton Gar-
ment Industry shall, after December 1, 1933, pur-
chase from any such institution any textiles or
materials or other sup-olies. The Cotton Garment
Code Authority shall from time to time make such
recommendations with respect to convict-made goods
or orison competition as may be deemed necessary
or helpful in aiding the effectuation of the policy
of the title of the National Industrial Recovery
Act and the provisions of this Code."
Prison executives of the United States were familiar with the
attempts being made by these industries to nlace such restrictive
clauses in their codes, and therefore held a merting in New York
City on July 13, 1933 and adapted the following resolutions:
"WHEREAS, the employment of nrison^rs is absolute-
ly essential to the development of a sane -orison -oro-
grara fdr the protection of society and the rehabilita-
tion of the prisoners, and
"WHEREAS, the burden of taxes now resting on the
peo-ole will be considerably relieved by the nro-oer
em-oloyment of -orisoners, and
"WHEREAS, in the formulation of the industrial codes
-oroper provision for the employment of -orisoners should
be adequately considered,
"BE 'IT THEREFORE RESOLVED, that the National Recov-
ery Administration be furnished with a copy of the fol-
lowing' -orinciioles, and be urged to have the same in-
corporated in the various industrial codes.
"1. Each industry within the prison shall have the
same hours of labor and working conditions made appli-
cable to that industry by its -oarticular code.
"2. All goods, wares and merchandise manufactured,
■oroduced or mined by nrisoners shall have charged into
the cost of -oroduction the same labor burden as a-onlies
to the same industry in the section in which the insti-
tution is located.
"3. Each organized industry operating under a code
shall make adequate -orovision fox- suirolying employment
op-Dortunities to the men and woman in prison in fair
pro-oortion to the number of workers enroloyed in that
industry,
974<
-6-
"4. Goods, wares and merchandise manufactured, mined
or produced by prisoners in compliance with' the code of
its particular industry shall ha/e the same access to mar-
ket as similar goods, ware1., or riierchandise manufactured,
mined or produced- by free labor. '■
As a result cf thic meeting, l)r„ Louis IT. Robinson, one of the
nation?s outstanding penologist--' and professor at Swarthmore College,
Swarthmore. if.rn:v'i\,a:r..i, s»ao recommended i^'an adviser to represent the
prisons in War.hi_.yuun oa all ma liters relating to the problems of
prison labor v.hich were being considered in the formulation of codes. (*)
These recommendations resulted in the selection of Dr. Robinson
to represent the -orisons in this capacity-:
The Precedent received a vigorous protest from the Governor of
Alabama, which, in turr.- v,..r; referred 'o .'\ Sanford • Bates, Director
of the Bureau of Federal Priscn.3; v~'^o presented the matter to General
Johnson at the President's request in an effort to work out some
compromise of this difficult problem. (**)
•••: According to a memorandum of August 8, 1933 from Mr. John M.
Keating, Legal Advisor- to Blackweil Smith. Assistant General Counsel,
-.the • Governor's letter to the President on July C, 1933, stated quite
unequivocally that he contemplated Cjurt action if any atterrrot was
made to absolutely outlaw -orison labor and thereby take this property
right from Alabama. With this threat before the Administration, it can
readily be seen how the problem of orison-made goods in comoetition with
free industry goods became an appropriate question for N.R.A, to solve.
■Especially was this true when those industries most greatly affected
by the coirroetition of -orison-made goods were striving to eliminate so
far as possible the sale of pri son-made goods oh the public market.
On the other hand, -orisons within the states maintained and operated
under statutes and regulations prescribed by their respective legis-
latures were looked upon as being in an entirely different category
from private Industrial establishments.. In a memorandum of August 8,
1933, from Mr, John M. Keating to Mr. Blackwell Smith, the following was
stated:
*
"It is qiite ap-oarent from cursory perusal of the file
and of HeleR.A. that the states which use prison l^bor to
manufacture competitive merchandise cannot comply with the
N.I.R.A. The particular reason for this is Section 7(a) of
N.IcRoA. which reauires the right of employees to organize
and bargain collectively and requires minimum pay and maxi-
mum hours of labor. Further, than this the definition of the
word 'person' in Section 7(d) probably do^s not include a
sovereign state." '
(*) Letter of F. R. Cass, General Secretary, American Prison Assn., and
Osborne Assn., to FranVlin D. Roosevelt, July 14, 1933. NRA Legal Div-
ision Files.
(**) Pa"-e 75 - Transcript of Hearing of Ulman Committee, Nov. 16, 1934.
9742
-7-
It was then left for the states to voluntarily agree wi<*>n some form
of a Compact which would encourage them to o-oerate their institutions
and sell their nroducts in a manner comoarable to those nroducts sold
by free codified industries on a oasis of fair competition. Thus a
backer nunc' was established for the handling o~f the prison labor ^rob-
lem in the N.R.A.
9742
CHAPTER II
THS COiiPACT
origii:
The Compact originated in a decidedly different manner than
did the codes of fair competition.
The officials in charge of prison affairs in the various
states enterel into the Compact as a result of vigorous effort on
the part of certain industrial and labor groups to eliminate the
sale of prison-made goods in the open market. — The principal oppo-
nents "being manufacturers of cotton ga'ments, twine and cordage,
furniture, fan machinery and the representatives of various labor
interests. Although the first meeting of the prison executives,
of which the II. R. A. has record, was helc. on July 13, 1933, in res-
ponse to a call oy the Board of Directors of the American Prison
Association and the Osborne Association in Hew York City, (*) there
was a previous meeting in hay 1935, of a few of the prison executives
of States engaged in industrial production and representatives of
the Bureau of Federal Prisons.
At this meeting initial steps '•'ere taken by those, present ■ to 'arouse in-
terest in all of the States whose prisons manufactured goods for the
onen market and to inform them that the Cotton Garment Industry, in
anticipation of the passage of the Is.I.R.A. , was planning to pro-
hibit the placing of prison made products on the open market through
the- use of code provisions. It was due to the intense interest de-
veloped at this iJay meeting in hew York City that a second meeting
was called on July 13, 193", inviting prison representatives of all
the states to attend.
CLn August 2nd and 3rd, 1933, the Public Hearing on the Cotton
Garment Code was held in Washington and at that time the draft of
the code contained a clause (Article VIII) (**) which prohibited
the use of prison labor or the sale of products made in whole or in
part in a. prison in the Cotton Garment Industry. The code for the
Retail Trade which was also being considered at this time, like\7ise
contained a prohibition of the sale of prison-made products by re-
tail stores. Therefore, it became necessary for the prison offi-
cials to prepare and submit some form of an agreement which would
assure that prison-made products would be sold upon the open market
in fair competition with the products of free industry.
(*) Page 8, ante.
See also Statement of Howard B. Gill, Economic
Adviser of the Prison Labor Authority.
(**) Page 8, ante.
\
5742
-9-
On September 8th and 9th, 1933, there was held in Washington
another meeting of a group of prison executives which represented
5.° states and the Bureau of federal Prisons. At this neeting, it
Has decided to r.ahe application to the President of the United
States for a code of fair competition for the Prison Industries
under Section 3 (a) of the national Industrial Recovery Act. As^a
result thereof the first draft of the proposed code was submitted
to the 17. R. A. (*) After this proposed Prison Industries Code had
"been submitted to the 17.R.A. it was referred to ilr. John Keating
who indicated that it was an impossibility to consider a code of
fair competition for the Prison Industries under the IT. I. 2. A. be-
cause all codes had to include Section 7 (a) of the Act and compli-
ance with such a provision on the part of the states would be out
of the question. This opinion is likewise supported by a letter
from I.r. Sanford Bates, Director of the Eureau of Federal Prisons
to General Johnson on September 20th which, in part states as
follows:
"I am inclined to agree that strictly speaking the
statement of principles ennnot be considered a statu-
tory code. The important thing, of course, is to
bring about uniform and fair treatment in the prison
labor situation the country over and it seems to me
this cannot be done unless the question of prison la-
bor is entirely kept out of the various codes. Refer-
ence could then be made in each code to the agreement
among prison people which could be given your sanction
and so far as circumstances will permit be made bind-
ing upon the members of each industry and the states
themselves. n
However, Mr. Bates did indicate that it would be possible to
work out an agreement among the prison officials and executives of
the States, which could be given 1T.R.A. sanction end made binding
uoon the respective States which voluntarily signed the agreement.
On September 28th, Ilr. heating submitted a letter to i!r.Bates(**)
setting forth the legal objections to the proposed code for the pri-
son industries. This letter further indicates that possiblj'- a vol-
untary agreement between the states under Section 4 (a) could be
worked out. The following quotation from this letter sets forth
(*) Application for a Prison Industries Code found in
N.R.A. Prison Labor files (former Public Agencies
Division files.)
(**) Letter found in 1T.R.A. Legal Division Files.
974-2
-10-
lir. Keating' s views:
"It would appear to the writer that the code in its
present fom cannot "be considered a code under Section
3, Title I of the national Industrial Recovery Act, as
apparently attempted, for the reasons that Section 7 (a)
and 10 (b) of 'T.I.H.A. are not included. As you "ill
note by reading Title I of 1T.I.R.A. it is mandatory that
every code approved by the President under Title I in-
corporate these provisions of IT. 1. 3. A.
"It would appear to the writer that it is impractical
to consider a code which would incorporate these sec-
tions, particularly Section 7 (a) which deals with col-
lective bargaining. It is probably impractical to con-
sider collective bargaining with prisoners. It is fur-
ther probably impractical to ask the governors of sove-
reign states to subscribe to a code which the President
has the right to modify under Section 10 (b).
"The writer considered tailing action under Section 4 (a)
of the Act covering voluntary agreements, but it will be
noted that this section provides as follows:
•The President is authorized to enter into agreements
with, and to approve voluntary agreements between and
among persons engaged in a trade or industry, labor
organization, and t rade or industrial organizations,
associations or group s relating to any trade or industry. ■
"The tern person is, defined in Section 7 (b) of the Act
as 'any individual, partner, association, trust or corpor-
ation. ' It would appear doubtful whether the President
is authorized b3r this section to enter into an agreement
between states.
"However, it would appear to the writer that the action
contemplated under this agreement could be accomplished
"'oy a Compact between states as it is contemplated in
Section 10 of Article I of the Constitution."
On September 30th, Lir. Bates advised L'r. Keating that for the pre-
sent he recommended that any clauses regulating prison labor be omitted
from codes on condition and with the understanding that a Compact agree-
ment be worked out between the various states which would effectively
solve the question. He further advised that if this was not deemed
feasible, Lir. Keating could have the g.H.A. postpone for six months
the date when the clauses affecting prison labor became effective pend-
ing the drafting and submission of a Compact agreeable to the President
(*) Letter found in U.K. A. Legal Division Piles.
5742
-11-
and in the event no satisfactory agreement was reached that the clauses
would then be reinstated. (*)
Between October 1st and October 17th, when the prison-made goods
provisions were inserted into the then pending Retail Code consider-
able informal discussion took place between the prison officials repre-
sented by Lir. Bates and his assistant, Mr. J. V. Bennett, together with
Mr. Keating of the 17.R.A. and Lir. Raymond Walsh, counsel for the Cotton
Garment manufacturers and the Twine and Cordage Institute. The result
was the insertion in the Retail Code of the prison-labor provision which
was proposed by General Johnson, and later this provision was included
in the Cotton Garment Manufacturing Code.
The national Recovery Administration, in a memorandum of
October 25, 1935, issued the following statement of policy:
"Prison-hade Goods. A code may include a provi-
sion forbidding transaction in Prison-made goods
at rjrices lower than the lowest reasonable cost
or price in private commerce." (**)
As a result of this statement of policy , Lir. Keating, informed
lir. Blackrell Smith, of the following:
S3
who in 'turn has given assurance to the governors of the
48 states that the provision regarding prison labor in
all codes would be based on the fundamental principle
of the Prison Labor Provision in the Retail Code." (***)
Thus, it became necessary for the prison executives of the var-
ious states to develop a voluntary Compact with the definite objective
of materially assisting in effectuating the policies outlined in
Title I of the national Industrial Recovery Act.
(?) 1T.R.A." Legal Division Riles, "prison Labor General 1933"
(**) Confidential Policy Memorandum of II. R. A.
dated October 25,. 1933.
(***) Memorandum from Mr, Keating to Blaclrwell Smith
of October 30, 1933-
Prison Labor General Files.
9742
-12-
II. OBJECTIVES
In most respects the principles laid down by the prison executives
in the resolution -oassed at the 'meeting in lew York City on July 13,
1933, (*) covered the obj actives they had in mind when they later agreed
to bind themselves together under the :.:ompact. However, when the
Compact reached it", final stages of development, Ganersl Johnson sub-
mitted a letter of transmittal to the President under date of April 18,
1934, which, in part, sets forth the following concise and detailed
objectives of the Compact:
"This has-been the result of a long and continuous
effort by this Administration to establish end maintain
fair competition between products of private domestic
indiistry and those of prison industry.
"The Compact, (*) covers products mined, manufactured,
produced ^or distributed by orison labor in the states
signatory to the Compact, It limits the hours of labor
in prison industries to nob mere than those prescribed
in the applicable code, adopted irnder the laws of the
United States governing each particular industry, and
provides further that in no caso shal? any inmate be
required or permitted to work more than forty hours in
any one week. The hours of operation of productive
machinery are limited to not more than is prescribed
in the Code of the competing private domestic industry.
It prohioits the employment of persons under sixteen
years of age in any prison industry and of persons
under eighteen years of age at operations or occupa-
tions which are hazardous in nature or dangerous to
health.
"The Compact further provides that prison products
when sold by the prison or through a contractor, shall
be sold at prices not lower than the fair current prices
prevailing in the market in which the product is custom-
arily sold. It provides th?t where contracts for the
labor of prisoners are me.de they must insure a return
from the contractor of an amount equal in value to the
cost per unit of product for labor and overhead necess-
arily paid in competing domestic industry on the com-
parable product. •■ ■
"A Prison Compact Authority is established in the Compact,
consisting of nine individuals, six of whom shall be elected
annually by representatives of the states signatory to the
Compact, and three to be appointed by you to represent
labor, industry and consumers, respectively.
"This Authority will administer the Compact, make rules and re-
gulations, establish a uniform cost finding system and determine
the prices below which prison products shall not be contracted
for. The Authority may require reports and statistics necessary
(*) Pages 9 and 10 ante.
(**) The Compact, See Vol. 9 Page 731 Printed Code.
9742
-13-
to effectuate the policies of the Compact from the states signatory
to the Compact. To do away with one of the serious abuses resulting
from -orison labor, the Authority is vested with power to require
diversification of the output of orison industries in fair propor-
tion to the industries affected and is given definite power to
Prohibit. the. expansion of any existing prison industry which bears
a disproportionate share of competition. The Authority is
authorized to hear and adjust complaints arising under the Compact.
•"The decisions of the Prison Compact Authority are subject to
appeal from the Authority to you or to the person to whom you
delegate your functions vested under the Compact."
In addition to the above, it was the intention of the sponsors
to have as many states as possible, along with the Federal Department
of Justice and the District of Columbia, a-prove the Compact regardless
of whether or not such states' prison industries operated on a state-
use system. It is to be remembered that the Compact does not apply to
state-use products and public worhs. This exemption is set forth in
Article VI of the Compact and reads as follows:
"The restrictions in this compact shall not apply to goods,
wares, or merchandise manufactured, produced or mined by any
penal or correctional institution which are solely for the
use of tax-supported institutions, agencies, departments, or
activities of any state or its political subdivision, nor
•shall the^ apply to the constraction of public worhs or ways
financed 'wholly from funds -of the state or its political
subdivision. "
In addition to Article IX, Section 3 of the Retail Code as ap proved
October. 21, 1933, setting forth certain provisions relative to the sale
of prison-made goods, the Cotton Garment Code as approved November 17,
1933, carried under Article VIII a similar provision relative to the
handling of prison-made goods by members of that industry. Both of these
provisions were stayed for a reasonable length of time pending the
formulation of a Compact between the states engaged in the production
and sale of prison-made goods in the open market.. The Executive Order
approving the Cotton Garment Code likewise prohibits the members of
that industry from enforcing certain prohibitive clauses against prison-
made products pending the approval of the Compact. With these pro-
visions in the Retail Trade and Cotton Garment Manufacturing Codes, it
is apparent that the objectives sought through the adoption of the
Compact were not sponsored entirely by the prison groups. Here it is
readily understandable that free competing industries, through their
codes, were able to force the greater portion of the prison industries
under some form of a Compact which would have to meet the approval of
both prison executives and free industry. Thus, the N.R.A. was the
agency through which both groups worked to pl^ce their objectives re-
garding prison industries into a workable- agreement.
III. FORMULATION.
-14-
After the opinion by the Legal Division (*) that a Code »f Fair
Competition for the Prison Industries of .America could not be approved
under the National Industrial Be cove ry Act, it- then became -the --— --
responsibility of the prison officials and the N. R, A. to formulate
a plan which the states could agree ;',o'',o, whereby they could. dis; ose.of
their prison products on a basis comparable to those of free industry,
assuring free industry that it could aj far as possible place its
goods on the open market in a fair competitive manner. Inasmuch as Mr,
Keating' s opinion sets forth the fact that under Section 4 (a) of the
Act the states could enter into a voluntary agreement, subscribing to
the objectives referred tn above, the prison executives appointed a
Committee consisting of Mro John J. Kannan of Wisconsin, Chairman, Mr*
Harold E. Dornell of "Maryla"a6, Mr. C. L, Stebbins of Michigan and Mr.
James V, Bennett of the U». 5, Department of Justice to formulate a
Compact* The Coramittae, after conferences with the representatives of
the affected free Industries and the. legal Division, the Industrial,
Labor and Consumers Advisory Boards of the N.R.A., submitted a draft
of the Compact to General Johnson, on December 8. 1933. Accompanying this
draft of the Compact, was a latter indicating that this proposal had
been submitted to irepresentatives of the American Federation of Labor
and to the Secretary of Labor, and it was the understanding of the
sponsoring Committee that the draft as submitted was acceptable to them
as well as to the Advisory Boards. Shis letter further requested that
if the proposed Compact was satisfactory to General Johns oh the committee
desired to obtain the approval of a substantial majority of the states
prior to January 1, 1934. (**)
On December 9, 1933, General Johnson wrote a letter to the Prison
Industries Code Committee c/o John J. Ilannan, Chairman, as fnllows:(***)
"I have the Compact «f ..Fair Competition for the prison Industries"
submitted with your letter of December 8.
"I have carefully examined it and I have submitted it t* the Labor
Advisory, Industrial Advisory and Consumers Advisory Boards of this
Administration,
"The Compact as drafted is hereby approved by me- -and you are advised
that the Compact satisfies me under the terms of the Prison Labor
Provisions in the Retail Code and the*. Cbt^ottj-ficjanelit codec. When and
so long as any penal institution subscribed to, complies with and
makes effective this compact, the restrictive provisions of the Retail
Code and the Cotton Garment Code shall not apply to products of said
institutions.
(*) Pages 14, 15 aid 16 ante.
(**) Refer to N. R. A. Legal Division files and Prison labor General files.
(***) II. R, A, Release No, 2217
,
9742
-15-
"You may "be further asured that Prison Labor Provisions hereafter
approved in codes of fair competition under the I\Tational Recovery
Administration, shall be consistent with the provisions of the
Retail Code and the Cotton Garment Code and this Compact."
Another letter under date of December 9; 193.3,' submitted by Raymond
A. Walsh to Mr. John Keating of"* the Legal Division, includes a statement
to the effect that generally speaking the Compact was satisfactory and
that he had no fundamental objections to it. (*)
Copies of the revised Compact were then submitted to the various
prison executives of the states for their approval accompanied by an
explanatory statement signed by the Prison Labor Committee. (**) The
explanatory statement called attention to the. changes that had beer-
made in the revised Compact as compared with those originally submitted
in the Prison Industries Code.
Following General Johnson's letter to Col. John J. Hannan, Chairman,
of the Compact Committee, explained that the Compact as drafted met his
approval, the Code Committee issued a call- to the various state prison
executives requesting that they meet on January 18, 1934, for the purpose
of organizing the Association of States Signatory to the Compact of
Pair Competition for Prison Industries of the United States of America.
On January 13, 1934, there were assembled in Washington, thirty-one
prison officials representing 23 states and the Department of Justice
in a meeting which resulted in the organization of States Signatory to
the Prison Labor Compact. ( ***) After the Association was duly organized
a suitable constitution' and set of by-laws was adopted for the purpose
•f conducting the affairs of the signers of Compact of Fair Competition.
(****) The Associations of states Signatory to the prison Labor ^Compact
from then on acted in a similar capacity in respect to prison industries
as" trade associations did with respect to free industry.
After the Association was duly organized and its constitution and
by-laws adopted, six members of- the Prison Labor Authority, were elected,
representing states signatory. The members elected were as follows:
Colonel John J. Hannan of Wisconsin, H. E. Donnell of Maryland, Dr. Walter
N. Thayner of !Tew York, William P. Peagin of Alabama, S. 3. Hunter of
Missouri, C. L. Stebbins of Michigan. It is to be remembered that these
men were elected as a more or less temporary Prison Labor Authority pending
the final and formal approval of the Prison Labor Compact by the President.
— - . — i— rf2s» 1! — __ __ . _ ,
(*) IT. R. A. Legal Division Files, Prison Labor General.
(**) Prison Labor Minute Files, 1934.
(***) priSon Labor Meeting Files, Deputy's Files, 1934.
(****) prison Labor By-Laws Files, Public Agencies Division, Prison
Labor Files.
9742
-16-
On January 19, 1934, in Washington, D. C. , the elected members of the
Prison Labor Authority assembeled and selected the Following as their
officers: Col. John J. Hannan, Chairman of the State Board of Control
of Wisconsin, Chairman; H. E. Donnell, Superintendent of Prisons for the
State of Maryland, Vice- Chairman; Janes V. Bennett, Secretary-Treasurer,
Mr. Bennett., of the Department of Justice wns Assistant to Mr. Sanford
Bates, Superintendent of the Federal Bureau of Prisons.
During the interim from December 9, 1933, to April 18, 1934,
the Prison groups through their temporarily elected Compact Authority
were able to secure the signatures of the governors or prison executives
of 28 states to this Compact and on April 18, 1934, General Johnson
the Administrator, forwarded the Compact, accompanied by a letter of
transmittal, to the President.
IV PRESIDENTIAL- APPROVAL.
The President, by Executive Order, gave his approval to the Compact
on April 19, 1934. This Executive Order also appointed the following
men: Thomas A. Rickert, Samuel A. Lewison and Thorsten Sellin, as members
of the Prison Labor Authority to represent labor, -industry and consumers,
respectively. The Executive Order is attached to the Compact. (*)
o
Thus, this , Compact, signed by the various states as a voluntary
agreement, became effective upon approval by the President.
(*) The Compact, See Vol IX, Page 7.31, Printed Code.
9742
-17-
. . . CHAPTER III
THE PRISON LABOR AUTHORITY
I. CONFERENCES WITH COTTON GARMENT CODE AUTHORITY.
On January 19, 1934, in Washington, ' D. C, a joint conference
was held "by the Prison Labor Authority with representatives of the
Cotton Garment Cede Authority. The nuroose of this conference was
to determine insofar as possible, the manufacturing costs of work-
shirts and workpants in the free industry plants operating under the
provisions of the Cotton Garment Code so that the prisons might he
ahle to put into effect similar charges for the manufacture of like
products. (*)
The information submitted by the representatives of the Cotton
Garment Code Authority indicated that the cost per dozen for No. 2
chambray workshirts in a factory manufacturing four hundred thousand
dozen or more per year, all employees working on a 40 hour week basis
at a minimum salary of $13.00 a week, varied from Si. 64 to Si. 82 per
dozen, and that costs for manufacturing in the South where the southern
differential in wage scales applied, would be approximately eight
cents per dozen less'. On No. 4 union special workpants, the Cotton
Garment representatives contended that the manufacturing costs varied
from $1.63 to $2. 95-? per dozen. The lower figure was submitted by a
prison contractor operating in the Maryland* State Penitentiary.
The conference then adjourned until January 20, 1934, when an
extended discussion took place as to whether the -orisons should be
allowed a differential because of the sales resistance to -orison made
goods. There was also considerable discussion as to the factors which
should be considered in setting sales prices of -orison made goods. It
finally seemed to be the concensus of opinion that the Prison Labor
Authority would have to determine first, the following ouestions: the
labor cost per unit which each state should collect; second, where the
state w?' s in the State- Account-System what -orice the state should charge
to the jobber, distributor or retailer. During the course of the dis-
cussion Mr. Hunter of the Cotton Garment Code Authority made the state-
ment that - "One of the shirt conroanies w-: s currently manufacturing
shirts in the Alabama Prison for which they were paying only seventy
cents per dozen. Obviously this was too low a price and that both
parties to this contract should be requested immediately to make some
revision. "
As a result of this condition the Chairman of the Prison Labor
Authority appointed Messrs. Donnell, of Maryland; Feagin, of Alabama,
Hunter of Missouri; and Stebbins of Michigan, to discuss and work out
the problems which then existed.
The Prison Labor Authority and the Cotton Garment Code Authority
met again in Washington, D. C. on February 20, 1934, for the purpose
(*) Minutes of, Prison Labor Authority Meeting, January 19, 1934.
9742
-18-
of determining, ss set forth in Subsection. (d) of Article VIII of the
Convoact, the prices, charges gjjd ampjunts to be established for work-
shirts, workpants and dress shirts, At. tliis- mee.tingO.ir. Arthur Schwab,
who had previously been engaged to make an investigation of the cost
of -producing the above-mentioned articles , submitted figures from a
number of manufacturers on standard grades of workshirts. This re-
sulted in an agreement wherein the Got ton Garment Code Authority
acquiesced in a diff eren'viri for prison made shirts in favor >of -orisons
to the exteny of 10$ or a-oprcximat^ If $0>12fs cents per dozen. -.(*)
Likewise agreements were reached between the Prison Labor Authority
and reprsseirtaii:; v.rs of the Cotton Gariiieiit Code Authority on. mark-ups
as follows; 5-j to manufacturer" ., lC* to jobbers and 20": to retailers.
On workparts it was agreed to give a differential1 of' 10 cents per
dozen, The following schedule was tentatively approved as the amounts
to be charged by bo-'-h prisons and the free Industry manufacturers for
labor and overhead on workshirOo and dress shirts and workpants. •■(**)
Work Shirts • 'Dress Shirts Work Pants
Direct labor' charge ' .'01.10 41.75 01.87
Total Overhead, charge $' .40 •' $1.00; ■■ & .73
This agreement in a general' way appeared to meet the' .'approval of
both the Prison Lab or ' Autre i ity find the col, ton -garment manufacturer. ..
However, it will ' e ob'serVrd later in" this report that the Cotton
Garment Code Authority could not control the prices that the various
members of that industry charged, due I .rgely- to the fluctuation in.
the price of raw materials. The prieens then resorted to the method of
using the lowest prices ouoted in the market by free indrs try manufac-
turers as the basis for their sales- This action vas taken by the
Prison Labor Authority from time to time'as information !was received
by them that free industry -prices had been xoweredv
On February S3, 1934j'Mr. Howard E', Wahrenbroek, Assistant Counsel,
Legal Division, IT. 3. A. ,' submitted a memorandum for the Legal Division
Prison Labor General Pile verifying a telephone conversation v/Mch he
had with Mr. , Bennett of the Prison Labor Authority wherein iti is stated
that he, Mr. Wahrenbroek, "suggested the dubious legality of some of
the tilings that may have been done by representatives of industry
relative to prices iri recent' 'meetings of the Prison Labor Compact
Authority with rearesen- atives of Industry and requested Mr. "Bennett to
withhold general dissemination of ins true tiohs relative to prices for
the present-" Thib memorandum clearly sets forth the doubts of the
Legal Auviser as to the legality 'of an?/ agreements relative to overhead,
labor costs, discounts and differentials .which might have been entered
into at joint meetings of 'industry representatives with the Prison Labor
Compact Authority.
' ., ., h-ri-i ~ - .
(*) See Minutes of Meeting of Prison Labor Authority, January 20, 1S34.
(**) See Minutes of Meeting of Prison Labor Authority, January 20, 1934.
9742
-19-
On April 13, 1934, another joint meeting of the Prison Labor
Authority and representatives cf the Cotton Garment Code Authority wa.s
held in Washington. The principal nt tters discussed at this meeting
involved the question gf the fair charge for contract prison labor
and was held to be "equal in value to the cost -per unit of production
for labor and overhead necessarily paid in competing domestic private
industry on comparable production. " This charge was to be determined
with respect to work shirts and dress shirts.
Due to a tentative agreement entered into at a meeting on
February 20, 1934, wherein the charge for labor and overhead in the
manufacturing of dress shirts wes decided to be '"52.75 per dozen, it
was contended by Mr. Feagin and Mr. Stewart of Alabama that the
Alabama Prison shirt factory had been forced to close down. This
matter was brought to the attention of the Prison Labor Authority
at the April 13, 1934, meeting at which was discussed at some length
conflicting figures as to labor costs and overhead submitted by two
industrial engineers, one representing the Cotton Garment Code
Authority and one introduced by a prison manufacturer. The result was
an agreement that the charge for direct labor in the manufacturing of
dress shirts should be $1.50 per dozen and the overhead charge be
$0. 94 per dozen making a tot' 1 of $2.44 per dozen.
It was at this meeting that the Cotton Garment Code Authority
entered a complaint against the State of Tennessee for contracting
and manufacturing for their account an order consisting of many
thousand dozens of workshirts at a direct labor charge of SO. 71 per
dozen.
In a memorandum from Mr. Sidney Prince, Jr., Legal Adviser, IT. P. A.,
to Mr. Linton M. Collins, Deputy Administrator and Acting Division
Administrator of Division 8, on April 16, 1934, it was stated that:
"Mr. Palph TIunter and Mr. Walsh, Counsel for the Cotton
Garment Code Authority at this point expressed great
skepticism concerning the effectiveness of the Compact.
They called it a scrap of paper and stated that they
thought that the conference should adjourn and that
they should seek the im::iedia.te restoration of the in-
hibitive clauses of the Retail Code which would prevent
the sale of any prison made goods by any retailer." (*)
Upon the advice of Mr. Prince, the Cotton Garment Code Authority
was requested to enter a complaint against the State of Tennessee to be
lodged with the Prison Labor Authority pursuant to Article VII,
Section 2, subsection (g) of the Compact, After the Prison Labor
Authority had taken action upon this matter so that it could be re-
viewed by the delegate of the President, acting under the authority
of Article VII, Section 2 of the Compact, both groups appeared satis-
fied and a break was averted. (**)
(*) Memorandum 6f April 16, 1S34, from Sidney Prince, Jr., to
Linton M. Collins, Acting Division Administrator, Prison Labor
Minutes File.
(**) Memorandum of April 16, 1934, from Sidney Prince, Jr., to
Linton M, Collins, Acting Division Administrator, Prison Labor
9742 '' itt^es File.
30-
At a meeting of the Prison Labor Authority on April 14, 1934, it was
decided to send Mr. Chapman of Missouri to the State of Tennessee to
discuss the matter with the authorities there and attempt to have
them conform to the labor and overhead charges as agreed upon in the
meeting of February 20, 1934.
Another joint conference of the Prison Labor Authority and the
Cotton Garment Code Authority was held on August 30, 1934, in
Washington, D. C.., at which time a Committee of four was appointed
(two representatives of the Prison Labor Authority- and t^o of .the
Cotton Garment Code Authority) to work out further differences between
the two authorities regarding the sale. of cotton garments. At this
conference the .Cotton Garment Code Authority entered nrotest against
the State of Delaware. Florida. Indiana and West Virginia, relative
to their activities in disposing of -orison made goods without the use
of the Prison Compact label* The records of the Prison Labor
Authority shuw that the authority had taken action prior to this
conference and that. orders for label? had been received from the
States of LV" aware, Florida a.nd Indiana to be used in accordance with
the rules and regulations as laid dowr by the F,~l.A. and the Prison
Labor Authority, however, it is to be noted that Florida did not
become signatory to the Ijompact until Only ?5, 1934.
Adjustment of the complaint against the State of West Virginia
was made by the Frison Labar Authority and the prison officials of
that state as a result of chis protest.
It was at this conference that the Prison Labor Authority notified
the Cotton Garment Code Authority; that it had temporarily abandoned
the provisions for overhead which that Authority had agreed to earlier
in the : year as a .basis for determining the cost per unit of production.
This action was taken because cf the prevailing prices on comparable
garments offered in competing areas by priva-oe manufacturers operating
under the Cotton Garment Code, which va.ried to such an extent that no
uniform basing price could be adhered L'-. rv'ic Cotton Garment Code
did not contain provisions fixing the prices of its products when sold
in the market, ^rever, the Prison Labor ^u'^hcrity agreed to consider
a sliding scale of overhead and labor charges to be used in contract
prisons, based upon the agreements entered into with the Cotton Garment
Code Authority in February, 1934. (*)
It was at this conference that the Prison .Labor Authority urged
the Cotton Garment Oode Authority to use its good offices in an effort
to eliminate advertisements against prison made goods manufactured
under the terms of the Compact.
II. CONFERENCES WIT!- TWINE AIT) CORDAGE CODE AUTHORITY
On January 20, 1934, the Prison Labor Authority met with repre-
sentatives of the Cordage and Twine Industry in an effort to agree upon
(*) Minutes of Prison Labor Authority, August 31, 1934..
Prison Labor Minutes File.
9742
-21-
the fair market price for "binder twine, but inasmuch as the International
Harvester Company was not representee1 at this meeting and as it was
one of the major nrivate industries manufacturing and marketing twine
in competition with -orison twine, it was deemed advisable that the two
groups meet in Chicago on February 6, 1934, at the Hotel Stevens where
all interested parties could be aeard and obtain more complete data
with res-pect to the manufacture and sale of binder twine. This proposal
was agreed to by both factions and a sub-cemmittee of the Prison Labor
Authority known as the Binder Twine Committee was appointed to repre-
sent the Prison Labor Authority at this meeting. The arincipal thing
accomplished at the meeting of February 6, 1934, was that the prisons
tentatively agreed to reduce their production of binder t^ine in 1934
to approximately 39,000,000 pounds as comp-red to 59,0^0,000 pounds
produced in 1933. An effort was made to get together on price differ-
entials and quantity discounts based upon current prices; however,
inasmuch as in the State of Minnesota the Price of binder twine sold
by the state penitentiary is determined by a State Statute passed by
the legislature, it was impossible to ente~ into any permanent agreement
with respect to discounts and differentials. The following is the
suggestion which wrs offered at the close of the meeting and was to
be considered as a basis for the year 1934:
"l/8^ for 10,000 pounds and less than a carload
l/4<# for carload lot
3/4^ any amount to jobbers who purchased from
200,000 - 250,000 pounds a nnually
1$ for 300,000 rounds to above
l-l/4^ for 1,000,0^0 pounds and over
The differentials which it was fglt that could be
allowed to the prisons were • s follo-'s:
Missouri, Michigan, and Cklnhoma; l/°? a pound,
and the same discounts as the International.
Minnesota: A differential of l/4^ a pound, with a
discount of:
I /'St on 3,000 pounds
l/4^ on 10,000 pounds
\jn4 on 20,000 pounds and over.
Wisconsin: l/2c* a pound differential, with the s;me
discounts as Minnesota; other than that Wisconsin
should have the right to give for tne amounts in
excess of 20,000 pounds, the same discounts as are
provided in the International schedule of discounts." (*)
(*) Minutes of Binder Twine Meeting of February 6, 1935, Prison Labor
Minutes, Deputy's files.
9742
_32-
The Binder Twine Committee of the Prison Labor Authority met
again on March 22, 1935, at Chicago, with representatives of six
major Binder Twine free industry manufacturers and officials of the
states which manufacture hinder twine in their prisons, in an effort
to agree upon prices and discounts for which this product should he
sold during the year 1935. At this meeting the -orison officials
insisted that they he allowed to sell prison made twine at a differ-
ential of 1/2 cent per pound less than free industry, regardless of
the sale nrioe. However, ■ they did agree to follow the same oasis of
quantity discounts usinj the retail >rice cf ?■% cents per pound "based
upon manuka civring costa. Free industry twine manufacturers would not
agree to such a large differential. They indirectly agreed to grant
the prisons l/4 of • a. cent per oound differential which the prisons
were reluctant to accept. The reasons given by the prisons for not
accepting this' small differential was the unfavorable advertising
which some of the free industry people were carrying on in an attempt
to discourage the sale of prison made hinder twine*
On April 30, 1935, at Madison, Wisconsin, the Prison Binder Twine
Group met again and determined-' the differential for prison made twine
to be 1/2 cents per pound. The result was that free industry could
do nothing about it as each twine producing state could fall back on
their sovereign rights and sell their products at prices comparable to
those of free industry. This was verified by the adoption of a price
policy by the Prison Labor Authority at their meeting of May 10, 1935,
in Washington. This policy was as follows:
"That the base price which shall bo used by the Prison
Labor Authority as the prevailing low price for binder
twine for 19-^5, shall be the lowest net price offered
by representative Private firms after deducting all dis-
counts. That tne 1935 differential on binder t'-dne for
prisons shall ' not exceed- 1/2 cent -or pound."
At a joint meeting between the Binder Twine Committee of the
Prison Labor Autnority a rid the Binder' Twine Committee of the Twine and
Cordage Code Authority in Chicago on March 22, 1935) considerable dis-
cussion was held on the subject of the proposed legislation than before
the Minnesota State Legislature with respect to the sale of binder twine
manufactured in that state. This legislation proposed to set a price
on binder twine to be sold by tne Minnesota State Prison to the
retailer and farmers of that state. Although those present at the
conference realized that it w.- s impossible for the 1T.R.A. to stop this
legislation, the concensus of opinion was that all sales of binder
t^ine manufactured in the Minnesota nrison and sold outside the state
by the State Prison should be sold in accordance with the :prices filed
by the affected Code Authority and the Prison Labor Authority.
Mr. McMullen, Superintendent of Prison Industry of Minnesota, although
not in a position to sneak officially, indicated that the Prison Board
would be willing to conform 'to such an agreement.
At this same Conference it was agreed that the 3inder Twine Com-
mittee of the Prison Labor Authority would recommend the establishment
of an open price filing system with the Prison Labor Authority for all
9742
-23-
states engaged in the manufacturing of tinder twine and the placing of
the s=me on the ot»en market. These filed price.s were to be ooen to
examination by members of the Twine and Cordage Manufacturing Industry,
providing they likewise left their records of the prices filed by them
with the Twine and Cordage Code Authority open to examination by the
various members of arisen industries. This resulted in each affected
Authority being able to obtain the most recent information regarding
prices and in turn resulted in a better understanding regarding market
conditions affecting the sale of binder twine.
The remaining important matters discussed at this meeting on
March 22, 1935, was that of soliciting cooperation between the Binder
Twine Committee of the Twine and Cordage Code Authority and the Binder
Twine Committee of the Prison Labor Authority in carrying out a
program of requesting an embargo for at least a one year period on
the importation of foreign twine or foreign materials used in the
manufacture of binder t^'ine. Those present agreed to give their
support and endorsement to a petition which had previously been filed
by free industry Bander Twine manufacturers with N.R.A. requesting
that this embargo be granted under Section 3 (e) of the National
Industrial Recovery Act. (*)
III. ELECTION OF FORMAL PRISON LABOR AUTHORITY
At a meeting of Prison Labor Authority on May 1, 1934, in Washing-
ton, D. C. the following "ere formally elected officers of the
Authority:
Sam Lewisohn, New York, Presidential Appointee, Chairman
Col. J. J. Hannon, Wisconsin, Representative of Binder
Twine States, First Vice Chairman.
H. E. Donnell, Maryland, Representing the Cotton Garment
Manufacturing States, Second Vice Chairman.
James V; Bennett, Federal Bureau of Prisons, Secretary-
Treasurer. (**)
The other representatives of the States Signatory to the Compact who
had previously been elected to the Prison Labor Authority were re-
tained on the Authority with Mr. Thorsten Sellin and Mr. Thomas Rickert,
the President's representatives of consumer and labor respectively.
On December 10, 1934. in Washington, B. C, the Association of
States Signatory to the Compact re-elected the same six members to
represent the States Signatory to the Compact and these same officers
were selected to carry on for the ensuing year.
(*) Memorandum of March 22, 1935 to Linton M. Collins from
V. J. Clarke, Prison Labor Minutes File.
(**) Minutes of Prison Labor Authority Meeting, May 1, 1934,
Prison Labor Minutes File.
9742
-24-
IV. EFFORTS OF PRISON LABOR AUTHORITY ON ALLOCATION AND DIVERSIFICATION.
From the time the Prison Labor Authority was properly established
continuous efforts were made by that Authority through its Secretary
and Treasurer, Mr. James V. 3ennett, its Economic Adviser,
Mr. Howard B. Gill, and the National Recovery Administration, to
encourage the allocation and diversification of nrison made products
and to prohibit the expansion of prison industries whose products
entered the public market in proportions unfair to competing private
industry. Under Article VII, Section 2 (f) of the Compact, it was not
only an objective of the National Recovery Administration but also
of those signatory to the Compact to see that prison good9 did not
bear a disproportionate share of competition in the public market.
Moreover, in January, 1934, the Hawes-Cooper Act went into effect, (*)
and presumably resulted in some curtailment of prison production of
goods to be sold on the open market.
V. PRISON LABOR AUTHORITY REQUIREMENT OF LABELS ON ALL PRISON GOODS
IN COMPETITION WITH FREE INDUSTRY GOODS REQUIRING LABELS.
At the meeting of the Prison Labor Authority on October 16, 1934,
it was voted that:
"In all industry reauiring the N.~.A. label attached to
products, the Compact label shall be attached to a similar
product made in prison industries, and any failure to
attach the Compact label to such products will be regarded
as a violation of the Compact. In case of such violation
the Secretary is instructed to notify the Commissioner of
Correction, Board of Control or other public agency having
charge of the prison industries, and if that. does not prove
effective to report the matter to tie N.R.A., with the re-
quest that the President take the matter up directly with
the Governor of the State involved." (**)
Thus a policy was established regarding the use of N.R.A. Compact
labels by action of the Prison Labor Authority.
VI. ACTION OF PRISON LABOR AUTHORITY ESTABLISHING PRICE POLICY UNDER
. ARTICLE V,- SECTIONS (a) and (b) AND ARTICLE VII, SECTION 2 (d),
OF THE COMPACT.
At the meeting of the Prison Labor Authority in Washington, D. C,
on October 16, 1934, the Economic Adviser presented the following
recommendations as a price policy:
(*) Hawes-Cooper Act, 45 Stat, at large 1084, 48 U.D.C.A. 65.
(**) Minutes of Prison Labor Authority Meeting dated October 10, 1934,
Prison Labor Minutes File.
9742
•25-
"As provided under the Comorct, .article V, Sections A and 3,
any prison industry shall be authorize bemporarily to meet
the urices of representative firms in competing areas on
comparable products, provided notice and evidence of such
prices is filed with the Prison Labor .authority bv such
prison industries pending investigation and report h<r the
Code Authority As provided in Article VII, Section 2 (d)
of the Compact, notice of such authorizations shall he sent
to the Code Authority affected with the reouest for a report
as to whether the representative firms cited are operating
properMr unaer the code; if so, the authorizations shall be-
come permanent pending a change in urices, but if the firms
cited are not operating properly under the Code and the Code
Authority takes ste-os to rectify the situation, the Prison
Labor Authority shall notifjr the prison industries to conform
to a fair current or Ice to be 6.er,srmined. In applving this
polic]- to -orison industries oat ^;-J,ing under the contract
system, the contractor shell be ^eaairded ae ti*e manufacturer
and the cost of products received by him from the -orison in-
cluding cost of manufacturing overhead, material, and labor
in addition to the cost of prison labor shall eoual the
minimum urice allowable to the manufacturer. "
"On motion made by Mr. Steooins of Michigan anc seconded
lij Mr. Hannan of "Wisconsin, it was TTOted. that the orice policy
as recommended is hereb-- auaroved; and the Secretary and the
Economic Advisor are hereby instructed to check carefully any
contracts for the looor of 'prisoners opera-tin^- under this
policv to be sure that suca contract s, insure a. return from
tne contractor to the State or its politics! sub-division
and/or the prisoner of an amount ea.'l in value to the cost
per unit of prod.uot ^or labor and overhead necessarily oaid
in competing domestic priv te industry on the comparable uro-
duct, as provided in Section 7 of t le Compact". (*)
VII. ACTIOS OP PFJSOH LIBOR AUTHORITY OS ASSESS! EFTS.
At the meeting of tne Prison Labor n.athorit:r on May 10, 1935, in
Washington, the following resolution was voted regarding assessments:
"That no assessments on cotton garments sold by prisons
previous to May 1, 1S34, shall be made on account of the
Prison Labor Authority; that all prison-made cotton garments
sold, after Hay 1, 1934, shall be subject to the regular as-
sessment, and. that any assessments collected, on products
sold before May 1, 1934, snail oe refunded."
It was further voted, that the assessments mace r-r the Prison -^abor
Authority should conform to the assessments made under private codes in
the correspond in.' industr--. Thus trie Prison Labor Authority attempted
to maintain its assessment upon prison industry products at the same
rate which corresponding free industry code authorities assessed their
respective industries.
(*) Minutes of Meeting of Prison Labor Authority, October 16, 1934,
Prison Labor Minutes Tile.
9742
-26-
VIII. PRISON LABOR AUTHORITY VOTE TO BRING JAILS AND HOUSES OR CORRECTION
OF MINOR POLITICAL SUBDIVISIONS '7110 3ECAME SIGNATORY TO COiPACT
UNDER THEIR JURISDICTION.
On Hay 10, 1935, the Prison Labor Authority voted:
"That jails and houses of Correction who sign the. Compact
of Pair Competition for the Prison Industries of the United
States of. America, shall he accepted as coming under the
jurisdiction of the Prison Labor Authority."
This action was taken by the Authority with full knowledge that it
might involve some difficult"' in determining the legal status of action
of this type. However, as the Compact of Fair Competition was regarded
rs a voluntary agreement by the States Signatory thereto, the above
action was taken with the understanding that if any House of Correction
or Penal Institution of a minor political subdivision wished to become
signatory to the Compact it could do so on a purely voluntary basis. As
the Supreme Court decision affecting the N.R.A. r'as rendered on Hay 27,
1935, no effort v?as made to encourage tiie "Jails and Houses of Correction"
supported by minor political subdivisions of a state to become signatory
to the Prison Compact.
IX. THE ASSOCIATION OR STATES SIGNATORY TO. THE COiPACT VI TS TO CONTINUE
THE .PRISON LABOR AUTHORITY AFTER SUPREME COURT DECISION 111 SCHECHTER
CASS.
At a meeting of the Association of States Signatory to the Compact
held in Rashington, on June 24, 1935, the following action was taken
with reference to the continuance of the Prison Labor Authority:
"On motion ms.de by Dr. McClintic and seconded by Mr.
Hunter, it was voted that the Association of States Signatory
authorize the Prison Labor Authority to continue to function
as an Agency created by order of the President at the request
of the Association of States Signatory to carry out the provi-
sions of the Compact of Fair Competition for the Prison In-
dustries of the United States of America; that a_rrr amendments
to the Compact made necessary by the Act of June 15, 1935, ex-
tending and amending the National Recovery Act approved June
IS, 1933, shall be submitted to the next meeting of the Author-
ity by a Committee consisting of Thorsten Sellin, E. L. Pardue,
John J. Hannan; and that the Secretary and the Economic Advisor
are authorized to cooperate with the NRA and, especially with
the Division of Business Cooperation and with trade associations
or other industrial and commercial groups to effectuate the pro-
visions of the Compact.
"On motion made bv Mr. Pardue and seconded by Mr. Norton,
it was voted that the resolution just passed shoxilc. be sub-
mitted to all of the States Signator1' with the request that if
they were not represented at the meeting of June 24th, they
indicate their vote."
9742
-27-
CHAPT5R IY
LATHIS A1TD IHSIGHIA
I. APPLICATION FOE US3 OF U.K. A. LAB3LS 3Y TEE PHI SOU LABOH
AUTHORITY,
In a letter on April 17, 1934, to General Johnson, from
James V. Bennett, .Secretary-Treasurer of the Association of States
Signatory to the Compacts a formal application was made for the
issuance of a N„H.A. label for use on cotton garments manufactured
under the terms of the Prison Industries Compact. This letter
(a) and a draft of proposed riles !.b), governing the issuance
of such labels, are in substance quoted as follows:
"(a) It' is respectfully requested that you app-
rove the issuance for a period of not more than
three months of an EPA identification symbol for
use in cotton garments manufactured' under the
terms of the Prison Industries Compact of Pair
Competition, approved by you on December 9, 1933.
Illustration of several proposed types of symbols
is enclosed. We prefer type Ho. 3. There is also
enclosed a tentative draft of a rule governing
the issuance of these labels.
"We request this authority pending a decision
by you on the propriety of requiring the Cotton
Garment Code Authority to permit use of their
labels on gaiments manufactured under the terms
of the Prison Industries Compact of F-air Compe-
tition, or pending your approval of the issuance
of a rule by the Prison Labor Authority requiring
all manufacturers operating under the terms of
the Prison labor Co;.T^act to pla ce an II. P. A. label
upon their products.
"Since the labeling provisions of the Cotton
Garment Code become effective as of fey 1, 1934,
and as the Retail Code prohibits any retailer
from purchasing or selling any such merchandise
not bearing a label it is obvious that goods
made under our compact cannot be handled by
retailers after that date despj to the fact that
another provision of the Petail Code would "oer-
mit their sale, unless the situation is remedied
immediately.
"We request this dispensation because of
the emex'gent nature of existing situations. As
soon as the representatives of the President, are
appointed to the Prison Labor Authority we will
9742
-28-
perfcct and file with you an appeal for the use
of the label of the Cotton Garment Code Authority
or request your approval of a rule of our Asso-
ciation requiring the use of a label on goods
made under the terms of our compact.
"Some solution of this question is essential
or the prison labor Compact will be discarded and
former conditions of uncontrolled competition by
state institutional industries will follow."
"(b) Pursuant to a motion adopted at a meeting
of the Prison labor Authority, held in the City
of Washington on April 13, 1934, and by virtue of
the authority vested in the Prison labor Authority
by subsection (g) of Section 2, Article VII, of ..
the Ppison Labor Compact of Fair Competition,
approved by the National Recovery Administration
on December 9, 1933, and
"Pursuant to the requirements of Section 2
and 3 of Article IX of the Code of Fair Competi-
tion for the Retail Code, the following rules
and regulation's effective as of May 1, 1934, are
hereby promulgated for the guidance of all
concerned:
11 (l) All goods, wares or merchandise made
in state institutions or subdivisions thereof,
adhering to the Prison Labor Compact of Fair
Competition shall bear an N.R.A. Identification Symbol
whenever similar goods made by industries adhering to
codes of Fair Competition are required to bear an
N.R.A. label. Zlach symbol shg.ll bear a serial
registration number especially assigned to each
state or political subdivision thereof by the Prison
Labor Authority in such manner and form as they may
determine, with the approval of the Administrator,
and which shall be attached to the product sold,
shipped or distributed by any signatory to the
Compact. Any and all signatories to the Compact
may apply to the Compact Authority for a permit
to use such II. R. A. symbol, which permit shall be
granted only when the application for use thereof
shall be accompanied by a certificate of compli-
ance with the Compact signed by the applicant
therefor in such manner and form as shall be deter-
mined by the Prison Labor Authority by and with
the approval of the Administrator, and which permit
to use the symbol shall continue in fcrce if and so
long as the one to whom the permit is issued shall
comply with the Compact and the regulations set up
9742
and approved by the Administrator.
"(2) The Prison Labor Authority, subject to
approval "by the Administrator, shall establish rules
and regulations and appropriate machinery; (a) for
the issuance of said identification symbols; (b)
for the inspection, examination, and supervision
of the practices of states using such symbols; (c)
for the purpose of ascertaining the right of said^
signatory to their continued use; (d) for protecting
purchasers in relying on said symbols; and (e). for
the purpose of insuring to each state and to' in-
dividual private employers that the integrity of
the symbolism will be maintained by virtue of
compliance with the practices contained in the
prison industries compact of fair competition.
"(3) The charge made by the Prison Labor Com-
pact Authority for such identification symbols shall
at all tines be subject to supervision and orders of
the Administrator and shall "be not more than an amount
necessary to cover their actual reasonable cost,
including printing, distribution, and administration
and supervision of the use thereof as hereinbefore
set forth.
"(4) Whenever satisfactory arrangements can
be made with any code authority having power to use
and distribute II. P. A. labels to the members of their
industry, the Prison Labor Compact Authority may
procuro such labels and issue them to such signa-
tories of the Prison Labor Compact Authority as
comply with their orders, rules and regulations." (*)
Prior to the receipt of this letter by the N.R.A., the
Prison Labor Authority and the Cotton Garment Code Authority held
informal conferences regarding the use of the Cotton Garment Code
Authority label on prison-made cotton garments. It was the opinion
of Mr. Sydney P. Prince, Jr., Assistant Counsel of H.R.A.. that the
Prison Labor Authority would be unsuccessful in its attempt to
use the same label as adopted by private industry. At a joint
conference of these two groups on April 13, 1934, the Cotton Gar-
ment Code Authority unalterably opposed the use of its label on
prison-made cotton garments. At this conference, the Cotton Gar-
ment Code Authority stated that it would not object to the use by
prison labor industries of a distinctive label, providing the
label clearly identified the issuing authority. However, Mr.
(*) Prison Labor - Insignia and Labels Pile of Former Public
Agencies Division of iJ.R.A.
9742
Sidney Hillman, M,©"iber of the Labor Advisory Board, expressed
his opposition to the use of any goods made by prison labor. (*)
It became necessary for the prison industries operating
under the Compact to use labels on prison-made products manu-
factured for sale in the public market. This requirement was
necessary because of Article IX, Section 2 of the Retail Code
which read as follows:
"N.R.A. Label: — No retailer shall purchase
sell, or exchange any merchandise manufactured
under a Code of Fair Competition which requires
such merchandise to bear a N.R.A. label, unless
said merchandise bears such label. Any retailer
rightfully possessing the insignia of the N.R.A.
who has in stool: or purchases such merchandise
which lias been manufactured before the effective
date of the Code of Fair Cormetition requiring
such merchandise to bear a N.R.A. label may
attach thereto the II. R. A. insignia."
However, in a memorandum dated April 24, 1934, from
Assistant Counsel Sydney E. Prince, Jr., to Acting Division
Administrator, Linton l.i. Collins, Division 8, the following
conclusion was reached:
"That so far as the product completely made
by a state or its institx\tions is concerned no
label is necessary under the Retail Code. Goods
made by a private manufacturer using prison labor,
however, may not be sold under the Retail Trade
Code if they do not bear either the label of
the Code covering their manufacture or a sub-
stitute for such label."
Therefore, it became necessary for the Prison Labor
Authority to have a label so that prison contractors using
prison labor in the manufacture of cotton garments might
secure an outlet for their products through the regular chan-
nels of trade and eventually be sold under the Retail Code.
II. LFGAL DIVISI01I MEMORANDUM STATING TIE ADMINISTRATOR MAY
AUTHORIZE THS-US3 OF N.R.A. LABELS ON PRISON MADE GOODS.
Under date of April 21, 1934, the Legal Division through a
(*) Memorandum, April 14, 1934, from Sydney R. Prince, Jr.,
Assistant Counsel, to Mr. C. G. Rap heal, Insignia and
labels, Prison Labor Files.
9742
-31-
memorandum to Acting Division Administrator, Linton M. Collins,
clarifies the question of the Administrator's power to authorize
the use of N.R.A. labels on prison-made goods. The part of the
memorandum which covers this point is as follows:
"Ue are of the opinion that the question of
the Administrator's power to authorize the use of
N.R.A. insignia, namely, the Blue Eagle, upon
prison-made products, is now settled. Adminis-
trative Order Ho. X-9, relating to 'sheltered
work-shops', provides as follows:
"Any sheltered work-shop who signs
and complies with such a pledge, shall
while so complying, be entitled to use
any appropriate insignia of the National
Recovery Administration."
"The question of the Administrator's power
to allow the use of the N.R.A. insignia upon pro-
ducts not manufactured under a Code is settled
in this Order. The use of the N.R.A. insignia
by sheltered work-shops is conditional upon their
compliance with certain conditions designed to
promote fair competition. The prisons operating
under the Prison Labor Compact also agreed to
conditions which tend to promote fair competition."
III. MEMORANDUM OF ACTING DIVISION ADMINISTRATOR TO ADMINISTRATIVE
OFFICER RECOMMENDING N.R.A. LABELS 33 AUTHORIZED FOR USE ON
PRISON MADS GOODS.
The memorandum of the Acting Division Administrator to the
Administrative Officer of April 23, 1934, in part reads as
follows:
"Accordingly I recommend that a label which
may be described as follows should be authorized:
'The Blue Eagle with the letters
N.R.A. without the word 'member' with
the words 'We Do Our Part'; followed by
the words 'P.L. Registration No. '."
IV. MEMORANDUM OF POLICY ADVISERS ON QUESTION OF WHETHER GOODS
MANUFACTURED UNDER THE COMPACT SHOULD BEAR N.R.A. LABELS.
On April 26, 1934, the Policy Advisers met to discuss the ques-
tion of "whether goods manufactured under the Prison Labor Compact
should bear a label." The following was the opinion of the group:
9742
-32
"(l) All agreed that orison ^oods should hear
a lahel.
"(,'5) All concurred that the lahels should he
distinctive.
"(3) The question then arose as to how distinctive _
these lahels -should he. The advisor/ group
then divided in the following manner on
whether or not the letters "P.L.C. License
Number" should he on the lahel:
Mr. Barkin (Labor)
Mr. Bishop (Research and Planning)
definitely were for putting "P.L.C. License
Humher" on the label.
Mr. Humley (industrial)
Mr. Young (Trade Association)
Mr. Georfae (Compliance)
were for leaving off the "P.L.C." and merely-
putting on the License number.
■ Mr. Mahoney (Legal)
Dr. Homan (Counsel)
favored including "P.L.C." on the label, but
ste.ted that if the Prison Labor Compact Code
Authority would not accept the "P.L.C." they
be given an emblem of just a license number
for the trial period, pending the hearing to
determine exactly what lahel the tooods
should bear. "
George S. Brady, Deputy Assistant Administrator for Policy
also favored marking the label with the initials "P.L.C." to
distinguish the Ooods of prison labor, but stated that in view of
the background of the situation he thought it inadvisable at this
time to impose this restriction upon the adherents to the Compact.
After consultation with Mr. Harriman, Divisional Administrator, he
found that Mr. Harriman agreed with him on this point. It was,
therefore, agreed that the recommendation should go forward to per-
mit the use of the insignia without a "P.L.C." designation, and
that it be suggested to the Administrator of the Prison Compact
that this matter be reviewed again if it were later shown that
prison-made goods had any unfair advantages over free labor goods in
the open market. (*)
(*) Memorandum of Meeting of Policy Advisors -.Legal Division, Prison
Labor - Labels and Insignia Pile.
9742
-33-
V. POLICY DECISION RULING THAT PRISOil MANUFACTURED PRODUCTS UNDER
THE COMPACT MAY BEAR Ail N.R.A. LABEL. ■ ■
Under date of A"oril 27, 1934, Policy Decision 6 was signed
by Administrative Officer, G. A. Lynch, by direction of the Adminis-
trator, after recommended atnroval by George S. 3rady, Deputy
Assistant Administrator for Policy. This Policy Decision reads as
follows:
"It is ruled that products manufactured
under the Compact of Fair Competition for the
Prison Industries may bear N.R.A. Insignia,
but not the word 'member'. The insignia or
label must be distinctive and must not bear
the Code insignia. It must bear the number
of the license under which it is issued." (*)
VI. ADMINISTRATIVE ORDFR 1T0 V-2 SETTING FORTE REGULATIONS GOVERNING
THE USD OF H.R.A. IDENTIFICATION SYMBOLS. -
On May 3, 1934, Administrative Order Ho. V-2 $*) was signed
by the Administrator for Industrial Recovery. This Order author-
ized and empowered the Prison Labor Authority to issue an N.R.A.
Identification Symbol using the Blue Eagle. This Order approved
certain regulations, particularly describin0 the N.R.A. Identifi-
cation Symbol and governing the use of the Symbol by prisons comply-
ing with the Compact of Fair Competition of the Prison Industries
of the United States of America.
As a result of this action the National Recovery Administration
received letters and telegrams of proteat. The most important being
a telegram from R. L. Paddock, Executive Director of the Cotton Gar-
ment Code Authority on May 12, 1934. This telegram reads as follows:
"Cotton Garment Code Authority strongly urges
you hold up -action on prison labels Stop We are
largest users of HRA labels Stop This matter handled
without so much as notice to interested -Code Author-
ities Stop 77e believe open Public Hearing should
be held permitting views of affected 'industries
consideration which up to now has been denied." £*9
(*) Policy Decision 6 and N.R.A. Release No. 6069.
(**) Administrative Order No. V-2, Vol. IX, Page 731, Printed
Code.
(***) Labels - Insignia, Prison Labor, Legal Division Files.
9742
-34-
A3 a result of this objection and an application to stay
Administrative Order No, V-2, filed by the Cotton Garment Code
Authority, the Administration decided to hold a Public Hearing on
the question of whether the Prison Labor Authority should be entitled
to use N.R.A. Insignia, including the Blue nagle and whether a stay
of Administrative Order No. V-2, as applied for by the Cctton Gar-
ment Code Authority, should be granted or denied. (*)
National Recovery Administration Notice of Hearing No. 643
of May 15, 1934, was then issued in oraer that a public hearing
on the application for the stay of Administrative Order No. V-2,
could be" held on May 28, 1934, in Washington, D. C. (**)
Pursuant to this notice the Public Hearing was held, at which
time representatives of free industry (including the Cotton Garment
interests) and the prison people presented their arguments publicly
concerning the use of N.R.A. labels by the prisons on prison made
goods. The position taken by all of the interested. parties, in-
cluding labor, was discussed and a complete copy of these arguments
may be found in the transcript cf the public hearing. (***)
VII. ADMINISTRATIVE 0RD3R NO. V-3.
After the Public Hearing was held pursuant to N.R.A. Notice
of Hearing No. 643, the Acting Division Administrator in charge of
the Compact received reports from the Labor, Consumers and Industrial
Advisory Boards, as well as from the Research and Planning and Legal
Divisions of N.R.A. All of these reports favored the granting of an
N.R.A. Insignia on prison goods made under the provisions of the
Compact, ?dth the exception of the one from the Labor Advisory Board.
This Board went on record as being opposed to the use of the N.R.A.
label on any goods manufactured by orison labor, unless such goods
were definitely marked "Prison-Made". (****)
After careful consideration by the Acting Deputy Administrator
of the Testimony and evidence entered in the record at the Public
Hearing (Transcript of Hearing on Administrative Order No. V-2) and
the reports of the N.R.A. Advisory Boards, the Administrator for
Industrial Recovery approved Administrative Order No. V-3 modifying
Administrative Order No. V-2, and the regulations approved by that
Order, but denied the stay of the Order as requested oy the Cotton
Garment Code Authority. The modification of the regulations of
Administrative Order No. V-2, as approved in Administrative Order
(*) Hearings Pile, Prison Labor, Former Public Agencies Division,
N.R.A.
(**) N.R.A. Release No. 308, May 16, 1934.
(***) Transcript of Hearing on Administrative Order No. V-2, Prison
Labor Filfcs, Division 8, N.R.A.
(****) Administrative Order No. V-3, Reports of Advisory Boards,
Orders File on Prison Labor, Division 8, N.R.A.
9742
-35-
lTo . V-3, ordered:
"1j That the fourth paragraph of the regula-
tions heretofore approved on May 3, 1934,
in Administrative Order No. V-2 is struck
out and the following paragraph is substi-
tuted therefor:
"(4) The 1T.R.A. Identification
Symbol authorized by these regu-
lations shall be the N.R.A. Insig-
nia heretofore issued to employers
under the President's Reemployment
Agreement, except that the word
•member' which appears under the
letters 1T.R.A. , shall be omitted.
Below the words lie Do Our Part ■
there shall be placed letters
and words in legible print 'Com-
.pact1, Indent. Ho.1 - .■"'
•&. xxib above described Insigr
all labels hereafter issued but in no way
affect those heretofore issued prior to
this date.
"3. The Application for Stay filed by the Cotton
Garment Code Authority is hereby denied." (*)
VIII. BUDG3T AiTD AUDIT OP PRISON LABOR AUTHORITY.
After the Prison Labor Authority was duly organized on May 1,
1934, the Association of States Signatory to the Compact loaned
this Authority $500 with which to start operation and defray
current expenses until such time as the Authority could collect
money from the sale of labels and assessments. This loan was
repaid to the Association on May 30, 1935. (**) A proposed annual
budget for the year May 1, 1934, to April 30, 1935, amounting to
$25,000 was voted by the Prison Labor Authority at its meeting
of October 16, 1934. (***) At this meeting the Prison Labor
(*) Administrative Order Ho. V-3, Code Record Section, N.R.A.
and Orders filed Prison Labor Compact File.
(**) Piles of the Prison Labor Authority.
(***) Page 11 of Prison Labor Authority Budget and Minutes of
the Prison Labor Authority Meeting Of October 16, 1934.
Prison Labor Budget File.
9742
■ 36-
Authority approved the following plan of assessments and accounting
for the proper conduct of its "business:
"The following rules and regulations shall govern
the assessment of all contributions to the
Prison Labor Authority to defray the attached
"budget for the Period May 1, 1934 until
April 30, 1035.
"1. Each penal institution or prison industry
in a State Signatory to the Compact or which
otherwise signified its intention to comply
with the terms of the Compact as required,
shall "be subject to an assessment ' to defray
the expenses of maintaining the Prison Labor
Authority.
"2. Such assessment or contribution shall be
voluntary.
"3. Payments shall be made quarterly on June 15,
October 15, January 15, and April 15. The first
payment shall be based on the amount of all pro-
ducts sold or other units used as a basis for
assessment during the period January 1 to Septem-
ber 30, 1934, and shall be payable at once. Thereafter
assessments shall be due and payable on the following
dates: January 15, 1935 and April 15, 1935.
"4. Payments shall be made to the Secretary of the
PIA who shall be bonded for the faithful perfor-
mance of his duties. The Secretary shall keep or
cause to be kept a separate bank account of all
funds received by the PIA. He shall maintain an
adequate book-keeping system of all receipts,
including assessments levied, collected and 'un-
collected and expenditures, including accounts
payable and other commitments, together with
proper vouchers therefor. Ke shall be authorized
to enter deposits for and draw checks against
the PIA on the presentation of vouchers, such
bills to be approved and checks to be signed
jointly by a vice-chairman and the secretary to
the PIA.
"5. A quarterly audit shall be made by an
accredited accountant and his report presented
at each quarterly meeting of the PLA in
December, March, June and September, and filed
with the NPA as required.
9742
-37-
"6. Assessments shall be made "by industries, and the
rate of assessment shall he as nearly as practicable the
same as that approved by or submitted to the NBA for the
corresponding private 'industries. All assessme-nts shall
be levied against prison products sold and delivered on the
open market. A minimum assessment of $25 shall be made on
any industry; but if any member of the industry subject to
this assessment justly complains that this is an undue burden,
the PLA will adjust the matter, subject to the disapproval,
if any, of the N.R.A. "
"The following shall be established as the rates of assess-
ment in the industries named:
*Binder Twine - $.0001 per lb.
Brooms - $.015 per doz. for household and domestic brooms.
$.005 per doz. for toy and whisk brooms.
Brick - $.06 per l.i for common brick.
$.10 per U for face brick.
Canned Products - $.001 per case.
Coal - $.005 per ton.
Clay Products - l/2$ on total sales.
Cotton Garments - $1.00 per M for underwear; $1.5C per M
for work shirts;
$2.00 per IvI for work pants, overalls,
coats, and other garments.
* Cotton Textiles - $.015 per active spindle annually.
Crushed Stone, Sand and Grave - $.05 per 1*1 tons.
* Farm. ."Equipment - l/lOjS on total sales. Binders $.10
each, mowers $.035, dump rakes $.02
side delivery rakes $.04, hay loaders
$.04, cultivators $.035.
Furniture - l/2$ on total sales.
Hosiery - 1/10$ on total sales.
Hollow-ware - l/lCp on total sales.
Ice - $.006 per ton.
Leather Goods - l/Sfb on total sales
Rock TTool - l/2^ en total sales.
Saddlery - 3/20$ on total sales.
Shoes - 3/100^ on total sales.
-38-
"As "bases for assessment for other code authorities in which, .
similar industries are carried oh in prisons'are submitted' or "ap-
proved "by the NRA, such rates shall also apply to corresponding pri-
son industries."
" * No official rate approved by or submitted to KRA, but rate
adopted after consultation with prison industry involved." (*)
The following is the amount of income estimated -under the budget
from May 1, 1934 to April 30, 1935.
"Estimated Income - Hay 1 1934 -.April 30, 1935.
Sales of Cotton Garments and Underwear Labels . . . $15,000.
4313 i.-I work pants <u $2 per II.
1720 M work shirts @ $1.50 per M.
3797 H Underwear @ $1.00 per M. '
Assessment on Sale of Binder Twine
35,000,000 lbs ki $.0001 per lb 3,500.
Assessment on Sale of Farm Equipment
$1,175,000 v* $.001. ' 1,175.
Assessment on Sale of Cotton Textiles
22,144 spindles fc» $.015 per active spindle. . . . 325
Assessment on Other Industries
Basis of contribution same as in 'Private Industry 5.000.
TOTAL ESTIMATED INCOME. $25,000."
During the time the Prison Labor Authority was actively functioning
under the National Recovery Administration, that Authority filed with the
KM audit reports containing balance sheets and income and expense statements
covering the following periods:
1. June 1, 1934 to August 31, 1934
2. June 1, 1934 to November 30, 1934.
3. May 1, 1934 to February 28, 1935.
and an annual audit report for the fiscal year which ended April 30, 1935.
The first three of these audit reports were made "oy Mr. F. D. LaVallee, an
employee of the Bureau of Federal Prisons, while a fourth and annual audit
report was made by the firm of Councilor & Buchanan, certified Public
Accountants of Washington, D. C, and New York.
The following is a statement of the cash receipts and disbursements
of the Prison Labor Authority for the fiscal year ending April 30, 1935.
(*) Appendix to Prison Labor Budget as proposed at October 16, 1934
Meeting of Prison Labor Authority.
9742
-39-
"PRISON LABOR AUTHORITY
T.'ASHIHG-TOU. D. 0.
CASH RECEIPTS AIT3 DISBURSEMENTS
FOR THE FISCAL YEAR EiIDED APRIL 30, 1955.
RECEIPTS:
From Sales on Labels
$7,013.97
Advance Payments on Sales
of
Labels
146.37
Assessment of Members:
Binder Twine
$3,800.99
Cotton Yardage
251,50
Sundry Garments
774.68
Brick
6.91
Brooms
*
168.31
Farm Implements and Machinery
530.91
Foundry
•
170.00
Furniture
106.80
Harness
153.55
Hosiery
170.00
Coal
340.00
Shoes
37.09
Quarry
.34
6.521.08
Total Receiots
$13,681.42
DISBURSEMENTS:
Salaries:
Chief Executive Officer
Stenographic and Clerical
Travel
Rent
Telephone and Telegraph
Statir ery and Supplies
Post?.;:
Printing and Mineographing
Auditing
Furniture and Fixtures
Miscellaneous
Labels - Printing cost
Labels - Shipping Cost
Total Disbursements
BALANCE - APRIL 30. 1935:
On Deposit in Bank
■Petty Cash Fund
$5,250.00
1,586.51
$6,836.61
1,133.16
420.00
356.75
174.36
128.52
166.65
90; 00
40.66
28.48
1,612.39
63.32
$11,050.90
$2,627.90
2.62
$2.630.52
This same accounting firm made another audit report of the Prison
Labor Authority's activities for the period May 1, 1935. Below is their
statement of receipts and disbursements for this period which is the last
received by the ERA.
9742
-40-
"PRISON LABOR AUTHORITY
WASHINGTON, D. C.
STATEMENT OF INCOME AND EXPENSE
FOR THE PERIOD MAY 1,
1935 TO JUNE
! 15,
1935"
INCOME:
Sales on Labels
$685.00
Less Cost of Sales - Printing
244.00
(Jross Profit on Labels
$:
441 . 00
Assessments Received: •
On Sales on Sundery -Garments
$953.98
On Sales of Harness
442.60
On Sales of Whips
55.54
On Sales of Metal Wire Goods
10.00
Total Assessments Received
$1,
,462.22
Total Income
$1,903.22
EXPENSE:
Salaries:
Chief Executive Office
$750.00
Stenographic and Clerical
335.00
1,
,085.00
Office:
Rent
$ 56.25
Telephone and Telegraph
84.87
Stationery and Supplies
33.92
Postage
4.96
Printing and aineographing
27.20
Miscellaneous
1.60
$
208.80
General:
Travel - Members of Code Authority$205.69
Travel - Chief Executive Officer 173.79
Postage and Labels 5.43 384.91
Total Expense $1,678.71
NET INCOME $ 224.51 ( *)
(*) Audit Rerjorts of Prison Labor Authority, Prison Labor Budget Pile.
9742
-41-
The Supreme Court decision of May 27, 1935 affecting N.R.A., had a
far reaching effect on the activities conducted under the Prison Labor
Compact. The Prison Labor Authority ceased the issuance of labels and
the collection of assessments from the state prisons and the result was
that the Prison Labor Authority had no means of financing itself except
through voluntary contributions from the States. In view of the fact that
the competing Code Authorities could not enforce their codes it then became
unnecessary for the Prison Labor Authority to attempt to enforce the Compact.
On November 6, 1934, Mr. Saul Nelson of the Research and Planning
Division of NBA submitted a memorandum to Acting Division Administrator,
Linton Collins, stating as follows: * ' "
"A proposed budget and basis of contribution has been submitted
by the Authority for the Prison Labor Compact in the sum of twenty- '
five thousand ($25,000.00) dollars for the fiscal year between May 1,
1934 and April 30, 1935.
"Assessments under the provisions of this budget are to be purely
voluntary, consequently this budget will not be submitted for formal
approval by the Administration and this memorandum is purely advisory
in nature.
"An analysis of this budget indicates that it has been very care-
fully prepared and conforms meticulously with all the various require-
ments of this Division, with reference to the approval of mandatory
budgets. The totals seem reasonable, the items seem adequately explain-
ed and the basis of contribution appears to be equitable.
"In view of the voluntary nature of contributions under this bud-
get, no further comment will be offered by this examiner." (*)
Although the Compact was continually recognized as a voluntary agreement
between the States Signatory thereto and the National Recovery Administration,
Mr. Hiram S. Brown, Assistant to the Administrative Officer, submitted a letter
to Mr. Howard B. Gill, Economic Adviser of the Prison Labor Authority on
April 9, 1935, advising him of tentative .approval of the budget previously
submitted by the Prison Labor Authority. This action was taken to conform
with the requirements of Executive Order No. 6859 and in compliance with Ad-
ministrative Order No. X-136. (**)
( *) Prison Labor Budget File, Former Public Agencies Division.
(**) See Vol. XXI -Page 633 Printed Code.
9742
-42-
CHAPTER V
CQTJPLIAPCE
I. FORM COlITAiri'.TC- IUSTBUC'TIOITS TO COLiPIAIPAlTTS .
Shortly after the approval of Administrative Order Ho. V-2, the
Legal Division of H.R.A. prepared instructions to complainants against
unfair prison competition. (*) "These instructions were sent out 'Dp the
II. R. A. to all Code Authorities. They were also furnished to anyone
interested in effecting compliance of State Prisons signatory to the
Compact. One of the provisions of the Compact j Article VII, Section
2(g), gave the Prison Labor Authority as created under Article VII,
Section 3 of the Compact, the power "to hear .and adjust complaints
arising under this Compact made "by effected parties: provided, however,
that at the time any'isuch complaint is made the complainant must agree
to submit such facts and figures as may "be necessary to the deter-
mination of the issued involved."
The letter of instructions further states:
"Any complainant who is covered by a Code, should for-
ward to his Code Authority his complaint. Accompanying his
complaint he should forward the facts and figures which sus-
tain his complaint and which are necessary to the determin-
ation of the, issues, or in the alternative he should indicate
his willingness to appear before the Prison Labor Authority
and present such facts and figures. The Code Authority should
forward this complaint, together with any other complaints of
the same nature, to the Prison Labor Authority, c/o J. V.
Bennett, Tower Suilding, Washington, E. C. The Code Authority
should then request that the complainant be granted a hearing
before the Prison Labor Authority, The Code Authority may send
such representative o.r representatives as it wishes to this
hearing. (One copy of each complaint and of the supporting
papers should be enclosed.)
"It is also provided in the Compact that it shall be a
power and duty of the Prison Labor Authority:-
"To determine, after conferring with the Code
Authority of the Industry affected and upon request of
any person or. firm affected, the prices, charges and
amounts provided for in Article V, Sections A and B
hereof, such determination to be subject to appeal
to the President of the United States."
Article VII, part of Section 2(d)
"The representative or representatives sent by the Code
Authority to the hearing should be authorized by the Code Author-
ity to express its view of the matter at the hearing.
(*) Appendix Po. A
974;
-43-
"In the Compact it is made the duty of the Prison Labor
Authority to determine the fair current price which is to prevail
in a given market when complaint is made*
"The subscribing States have also agreed that prison
Labor will not Do contracted to provide manufacturers for
small return which would affect competing outside labor.
This part of the agreement is contained in Article V, Section
(b). If there is any complaint alleging the non-observance
of this latter provision, the complainant should follow the
same '"rocedure in submitting his complaint.
"The various Code Authorities have 'been informed of
their rights to co-operate in this matter. They also have a
co-iy of these instructions and we feel sure that any well-
founded complaint will receive careful consideration from
the appropriate code authority."
II. AUTHORIZATION 0~ PRISON LABOR AUTHORITY TO NEAR AND ADJUST
COMPLAINTS UTCTR ANTICLE VII, SECTION 2 (h) 0" ' TNT; COMPACT.
The Compact made it a duty of the Prison L Dor Authority "to
hear and adjust complaints arising under this Compact made by Prison
Administrators or Prison -leads, and call J;o the attention of the
President any unfair trade practices designed to discriminate against
prison-made goods or hamper objectives sought in the preamble of this
Compact ."
III. CERTIFICATE 07 COMPLIANCE AID APPLICATION "OR NRA LABELS.
Following the ;r ; rival by the Administrator of Administrative
Order No. V-2 , a Certificate of Cgm; liance and Application for NRA
labels was prepared by the Legal '. ivision, and printed for distribution
to the State prisons w.iich wore eligible to sign such Certific, te of
Compliance. It will be noted that on the reverse side of this Certifi-
cate was printed instructions covering the use of labels on prison made
goods. The Certificate provided -as follows :;.
Certificate of
COMPLIANCE A11I APPLICATION NOR
N.N.A. LABELS
Under the Compact of Fair Competition for
Prison Industries.
"The undersigned lias read and understands the terms and
conditions of the Compact of Fair Competition for Prison In-
dustries, adopted and approved by the President on April 19,
1934, and the instructions adopted by the Prison Labor Author'
ity pursuant thereto appearing on the back hereof."
9742
-44-
"The undersigned hereby certifies that he is comply-
ing with ail the provisions of the Compact and with all the
Regulations duly adopted- thereunder pursuant to the Compact,
and nereby applies to the Prison Labor Authority for labels
adopted by and issued by such authority by virtue of an order
issued by the Administrator for Industrial Recovery, May 3,
1934.
"The undersigned further represents that if and when labels
are issued to him, he will use such labels only on articles
manufactured in compliance with the provisions of the Compact
and only s: long as he continues to comply with all of the
provisions of the Compact and any amendment thereto or any
rules adopted thereunder for all the products which he manu-
factures or sells.
"The undersigned further rcprs&ent.s that all labels if
and when issued to him shall be attached or sewn securely so
that the full face of the insignia, shall be readily visible
for inspection."
ITame of Officer Authorized to Sign
Title
Approved by:
Warden, Superintendent or State Officer Responsible
Date •■' "
The instructions jn the reverse side of the Certificate
are as follows:
INSTRUCTIONS
Governing the Use of Labels on Prison Hade Goods
"1. ill goods, wares or merchandise made in whole or
in part, in the penal or corn etional institutions of any state
which is adhering to the Compact of Pnir Competition for the
Prison Industries of the United States of America, or made in
such institutions of any political division of such states,
will bear an N.R.A. Identification Symbol when offered for sale
in the open nar'-ct.
"2. The right to use the N.R.A. Identification Symbol '
or Label is granted to any prison industry only on compliance
9742
-45-
with the provisions of the Compact and tho Regulations issued- ■
thereunder; and may be withdrawn for violating the'1 compact or
the regulations governing their use.
"3, Permission to use labels on prison made products
is granted to the Warden or Superintendent or o;;her responsible
official of any prison, jail, house of correction, reformatory,
or other correctional institution on application to the Psison
Labor Authority.
"4. Such amplications are to be made in writing on a
form known as "Certificate of Compliance" and signed by the
manager or the contractor or sub-contractor who operates such
-orison industry and approved by the Warden, Superintendent,
or other responsible official of the prison or correctional
institution under whose authority the prison industry is con-
ducted.
"5. Orders for labels are to be made on forms approved
by the prison Labor Authority and accompanied by a check or
money-order in full payment of the scheduled charge for the
labels.
"6. Labels will be i'ssued only in such amounts as may
be determined by the Prison Labor Authority, not exceeding
two months' supply. The Authority, however, will issue, labels
in excess of such amounts at special periods to meet seasonal
or unusual demands. Any unused labels may bo promptly returned
for credo. t to the Authority,
"7. The Prison Labor Authority will cause to be made
such investigation of the o] orations of applicants and their
records as may be necessary to insure compliance with the
terms of the Compact."
IV. CODE AUTHORITY FIELD LETTER 110. 5.
The Ih'.tional Recovery Administration on hay 26, 1934, issued
a Field Letter to all Code Authorities titled "Rights of Code
Authority to Co-o' .orate in Correcting Unfair Prison Competition."
This letter was issued by direction of the Administrator and
signed" by 0. A. Lynch, the Administrative Officer of N.R.A. In
addition to general information concerning the compact, it also
explained the "Handling by Code Authorities of the Complaints
Against Unfair Prison Competition Arranging Basis of Competition."
Another portion of the letter referred to "Securing Observance of
the Compact" •
The body of the letter read as follows:
"A Copy of the agreement between twenty-nine states
known as the Prison Labor Compact has been forwarded
to all code authorities. The National Recovery Admin-
istration is charged with certain duties with respect
to this Compact and the several code authorities have
9742
-46-
ccrtain valuable rights of cooperation under thjjg Compact*
"Accompanying this you' will find a copy of 'Instructions
to Complainants' Against Unfair Prison Competition1 . A
more detailed explanation of the nature and purposes of
this Compact will "be found in the accompanying instructions.
"Briefly it may be stated here that the Compact is intended
t3 pror/iote fair competition on the oart of the prison in-
dustries. The Compact was aoproved "by the President in an
order dated April 19, 1934, The report of the Admir.istrator
for Industrial Recovery to the President on this Compact
gives a valuable resume of its nature and purposes.
"In this Compact it is agreed by the Subscribing states
that prison products sold by them will not be sold below
the fair current price prevailing in the market in which
the product is customarily sold. It is also agreed, that
the prison contracting the labor of their prisoners will
charge the manufacturer , per unit of the product, for the
labor and overhead supplied, the amount necessarily paid
by competing private industry. See Article V, Sections (A)
and (B).
"It is made the duty of the Prison Labor Authority, which
was created under Article VII, Section 1, to hear and ad-
just the complaints of affected' -oarties. Article VII, Section
2 (g).
"It is the duty of the' Prison Labor Authjrity, to determine
after complaint is made, the fair prevailing market price
with which prison products are to comply and also the fair
charges for contract prison labor. Under this same article,
the prison labor aiithority is required to confer with the
code authority of the industry affected before making these
determinations. Article VII, cection 2 (d).
Handling by Code Authorities of the
Complaints Against Unfair Prison
Competition Arranging Basis
of Competition
"As you will note in the accompanying "Instructions to
Complainants Against Unfair Prison Competition" all com-
plainants are directed to send their complaints to their
code authority. The code authority after making such
study of the complaint and collecting such information as
they deem necessary about the complaint ahonld forward it
to the. Prison Labor Authority care of Mr. J. V, Bo --.::« 1 1 »
Tower Building, Washington, D. C. For the convenience of
everyone, the code authority should attempt to forward at
the same time any other complaints from members of their
industry concerning unfair prison corm/n tit\o$ If the com-
plainant does not intend to appear personally or by re-
presentative before the ^rison labor authority, he should
9742
submit in writing facts ard'figuros showing the tinfalrr
competition with which he is faced. A copy of the com-
plaint and any supporting papers should be forwarded at
the same time. The code authority should request a
hearing of the complaint 'by the Prison Labor Authority.
The Code Authority may send a representative or repre-
sentatives to the hearing. The representative should
be authorized to crzpress the view of the code authority
on the matters which will be determined by the Prison
Labor Authority.
"If the prison competition is of sufficient importance,
a joint conference by the code authority and the Prison
Labor Authority may "oc arranged upon request.
"Under Article VII, Section 2, the acts and deter-
minations of the Prison Labor Authority arc subject on
appeal or review to disapproval or modification by the
President, This power lias been delegated by the
President. in the aforesaid Executive Order of April
19 to the Administrator for Industrial Recovery.
"No code authority may pass upon or adjudicate any
matter pertaining to a contract between a -orison and
a contractor or coming under the jurisdiction of the
Prison Labor Authority but must submit any complaints
or objections arising thereunder to the Prison Labor
Authority.
"The questions affecting this Compact will be referred
to Division Eight in Washington, and correspondence
should be addressed to Division Administrator Division
Eight.
Securing Observance of Compact _
"The several Code Authorities have certain valuable
rights in securing and enforcing the observance of the
Prison Labor Compact by the prisons of the subscribing
states. The prevailing price and fair charge which are
to be determined by the Prison Labor Authority, as
mentioned above, must be observed by all of the prisons
of every subscribing state. In case any prison violates
the duly determined fair prevailing price or charge, the
1T.E..A. insignia may be withdrawn. An IT.E.A. insignia for
the use of the prisons of a subscribing State has been here-
tofore authorized by Administrative Order. This insignia
is issued to each prison of a subscribing state which
signs a certificate of compliance. The Prison Labor
Authority lias -the right to withdraw this insignia. If
the insignia should be withdrawn from a particular prison,
retailers would be forbidden by Article IX, Section 2 of
the Betail Trade Code, from purchasing, selling, or ex-
changing any merchandise thereafter manufactured by such
prison,
9742
-48-
"A complaint alleging the violation by a prison of
a fair prevailing price or fair charge provision should
Dc forwarded to the Prison Labor Authority through the
Code Authority covering the particular Industry. The
Prison L bor -authority will call a hearing on this cam-
plaint. The Code Authority involved is entitled to
representation at the hearing. The right to appeal to
the national Industrial Recovery Administration upon a
determination on a complaint of violation is full and
complete under Article VII, Section 2."
V. C0MPLAIITT3
The collowing are a few of the major complaints received
by the HEA-against prison products:
Complaint of Steel Locker Industry against the Attica,
Hew York Prison Claim that the bids on steel lockers
by the prison was far below bids of free industry.
This was referred to Dr. Walter IT. Thayer, Jr.,
member of the Prison Labor Authority in hew York state
by the Administration and was investigated by him and
copy of his investigation was sent to the Secretory,
Steel Locker Industry. There was a. misunderstanding
on the part of the Attica prison as to the number of
openings in lockers and therefore their bid was lower
than it should have been.
Complaint received from the Label Review Officer of
the Cotton Garment Code Authority that the Oklahoma
prison was sewing on labels, partly concealing the
v/ord Compact.
The Administration wrote the warden of the prison
asking that he correct this ratter and also referred the
matter to the Prison Labor Authority who likewise wrote
him. Letter has been received from the warden that this
method of sewing an the labels has been corrected and
the Label Review Officer ;f the Cotton Garment Code
Authority has been se notified,
Several Complaints "nave been received from the Marking
Levice Industry concerning unfair competition of the
prisons in the making of automobile tags.
More than 80' i of bhese license tags made by the
prisons are for state use and .are not put on the open
market. This is a good example of a state use ind\istry.
Complaint received from Benjamin T. Crump, Co., Inc.
against the Kentucky V/hip and Cellar Co., — Stated
that the prices ef the Kentucky Whip and Collar Company
were considerably below prices of free industry.
9742
-49-
This Conrolaint was referred to the Prison Labor
Authority "by the Administration with the request that
an investigation he made. A conference was held between
the Prison Tabor .Authority and the Saddlery Industry
Code Authority with members of the above companies and
a satisfactory agreement to all parties was reached.
Rom-plaint received from the Diamond Jthip Co., of Chicago,
Illinois, against the State prison at Moundsville, Test
Virginia, that the prices at which the prison sold whips
was considerauly below the price of free industry.
This complaint was referred to the prison Labor
Authority and was handled oy that Authority in the same
manner as the complaint against the Kentucky TThip and
Collar Co. , that is, a conference was held between
prison officials at Moundsville and the Saddlery Industry
and prison Labor Authority and a satisfactory agreement
reached.
Complaint received from J. J. Mcintosh Sons, Corp. ,
of Tipton, Indiana against the Indiana prisons con-
cerning the sale of prison-made brooms on the open
market without any identification label.
This matter was referred to the Prison Labor Authority.
The Authority asked Mr. Hanagan of the Indiana prison
industries to confer with come members of the Mcintosh
Company to see if some satisfactory arrangement could not
be made, Sucha conference was held, but under the Com-
pact, it is not necessary for brooms to have a label and
neither is there any law in the State of Indiana for-
biding the sale of prison products on the open mark3t.
Therefore, this does not come within .the scope of the
Prison Labor Authority.
Complaints received from the Belmont Trap P.ock Company,
Ind. , of Staunton, 'Virginia and the Powhatan Lime Co.,
of Richmond, Virginia, against the State Lime Grinding
Plant, which uses convict labor.
Virginia is not a signatory to the Compact and also
operates under the State Use System, therefore, this
matter does not come under the jurisdiction of the Pri-
son Labor Authority or the Administration.
Several Complaints received against the Gatch Brush and
Wj re Goods Company of Baltimore using convict labor and
that their prices were considerably below that of free
industry.
As the -convict labor used by this company is from
the City Jail in Baltimore, the Administration and the
Prison Labor Authority have no jurisdiction over them
9742
-50-
under the Compact* The Gatch Brush and Wire Good
Company has expressed its drsirc to cooperate at such
time as they may come under the Compact of ^Fair Com-
petition.
Complaint received from E. C. Stammer John of Boonvillc,
Missouri against 'the Missouri Training School for Boys
of that City. Unfair competition in flower "business.
This was referred to the Prison Labor Authority who
referred it to lir', Stephen 3. Hunter, Director of the
Missouri Penal Institutions with the request that he
straighten this '■'matter out. Mr. Stanmer John .'was asked
to furnish affidavits substantiating his complaint 'that
the prison prices were much lower than his.
Complaints received from the Cotton ferment Code Authority
and many nationally known clothing manufacturers against
the proposed contract of the Kentucky State Department of
Public W elfare and the Muffine Shirt Company of Mashville,
Tennessee.
Public hearing was held on this Kentucky contract and
the Kentucky officials agreed to write a new contract.
However, from the records available the State of Kentucky
did not enter into the new contract.
In addition there' had boon -many minor complaints and objections
filed concerning the methods used by prisons and "orison contractors
in disposing of their manufactured or processed articles. In the
majority of cases, these were disposed of "by referring them directly
to the Prison Labor Authority where practically all were settled
amicably. There was, however, objection on the part of the Cotton
Garment Manufacturing Industry against the placing of prison manu-
factured' cotton garments on the open market. During the months of
January, February and March, \L935, the Public A encies Division of
H.R.A. received several petitions which had been forwarded to Mr.
Donald Ricliberg, Chief Counsel of H.R.A. from the United Garment
Workers' of America, District Council, No. 4, of St. Louis, Missouri. (*)
These petitions protested against any form of an M.R.A. label on prison-
made cotton garments. On March 6, 1934, a letter was submitted to the
above mentioned Council of the Mnited Garment Workers of America by
V. J. Clarke, Assistant Deputy Administrator, Public Agencies Division,
M.P..A., informing' the "Council that prior to the adoption of a MRA
insignia as set forth in Administrative Order Mo. 7-3, the question
involving the use of IT. R. A. labels on prison-made products was
presented to the public in general in the form of a public hearing
on May 28, 1934, at Washington, D*. C. The hearing lasted throughout
the entire day. and the question was discussed at considerable length
by both representatives of prison institutions as well as representa-
tives of organized labor. Further the American Federation of Labor
(*) See petition submitted to H.R.A. by United Garment Workers of
America, District Council Mo. 4, St. Louis, Mo.', United Garment
Workers of America File. Prison Labor Files.
9742
-51-
was represented at this hearing by its Secretary, Mr. Frank Morrison,
and that the contentions of the labor groups as set forth in the
above mentioned -petitions were ably presented at that time. (*)
When satisfactory settlement regarding complaints could not be
reached after representatives of the complaining Code Authorities
and industry had conferred with the Prison Labor Authority, the MA
would reauest the Prison Labor Authority to hold * hearing as t>ro-
vided for under Article VII, Section 3 (g) of the Compact. The out-
standing case which the Prison Labor Authority handled involved the
refusal to sell labels to a -orison contractor. In this case the
Huffine Shirt Company of Nashville, Tennessee, entered into what
purported to be a -orison labor contract with the Department of Public
Welfare of Kentucky which supervised the State Penitentiary at
Eddieville, Kentucky. At the public hearing on this cuestion the
legality of this proposed contract was questioned because it lacked
any specific element of consideration. However, the Prison Labor
Authority, after a hearing, decider! that it would not sell labels
to the Huffine Shirt Company or the State <">f Kentucky under the terms
of this contract because there was no assurance that the Prison con-
tractors would comply with the terms of the Compact. (**)
Furthermore it was felt that for the State of Kentucky to engage
in the contracting of its prisoners for the manufacture of work shirts
would not assist in prohibiting the expansion of an existing -orison
industry which already bore a disproportionate share of competition as
provided for in Article VII, Section 2 (f-2).
VI. COMPLIANCE DIVISION COMPLAINTS.
After the Prison Labor Authority was formally organized on
May 1, 1934, practically all complaints against -orison-made goods
were adjusted by that Authority. However, Division Eight of the N.R.A.
did handle such ccnvolaints as were filed with the Compliance Division
by referring them to the Prison Labor Authority for settlement. As
the Compact was a voluntary agreement no coiiroliance cases were taken
into court. All questions involving compliance difficulties were
handled in a cooperative manner by the" complainant Code Authorities,
(*) For further complaints of various natures against -orison-made
cotton garments by the Cotton Garment Code Authority and the
National Work Shirt Manufacturers Association, see Prison Labor
File titled "Cotton Garment Code Authority and National Work
Shirt Manufacturers," Former Public Agencies Division, N.R.A.
(**) Kentucky Prison Contracts. Prison Labor File.
9743
-53-
the Prison Labor Authority, the Compliance Division and Division
Eight of U.S.A. under the direction of Acting Division Administrator,
Linton M. Collins.
VII. NATURE OF COMPLAINTS.
The following classification is an appraisal of the nature of
complaints broken down into five general groups.
( 1) Complaints '"based upon the contention that the
■prisons were selling -orison-made goods in conroeti-
tive areas "below the price for which free industry
goods was selling in the same areas - 70^.
(2) Complaints concerning the sale of prison-made
goods in states o-oerating under the Hewes-Cooper
Act or under a -potential State Use System - 10*1.
(3) Conrolaints concerning the improper sewing on
prison-made goods of the Conroact label for the
apparent puroose of hiding identity of where the
goods was manufactured - 5^.
(4) Complaints against various -orison institutions
attempting to increase -orison production or con-
tract for new products - approximately 10^.
(5) Complaints of a miscellaneous nature - 5^.
VIII. INDUSTRIES MOST ACTIVE IN ENTERING COMPLAINTS AGAINST PRISON
MADE GOODS
Although the Cotton Garment Industry Code Authority and the
various national associations connected with the Cotton Garment
Manufacturing Industry were most active in entering conrolaints and
protests with the National Recovery Administration against the sale
of prison-made products on the public market, the following industries
were outstanding in filing complaints and protesting against prison
production affecting their industries.
1. The Twine and Cordage Manufacturing Industry.
2. The Marking Devices Industry.
3. The Saddlery and Leather Goods Manufacturing Industry.
4. The Farm Eauipment Manufacturing Industry.
5. The Furniture Manufacturing Industry.
6. The Stove and Stove Casting Manufacturing Industry.
7. The Crushed Stone Industries.
8. The Brick, Tile and Reenforced Pipe Manufacturing Industries.
IX. OTHER INDUSTRIES AFFECTED BY PRISON COMPETITION
In addition to those industries there are other industries
affected by prison production making a total in all of some sixty
industries. (*)
(*) Appendix No. 3.
9742
CHAPTER VI
ULI'AN COH ITTSE REFORT
1. 36-HOUR WEEK" FOR COTTON GARMENT INDUSTRY.
By Executive Order No. 6828, Amendment No. 7, to the Code of Fair
Competition for the Cotton Garment Industry was approved on August 31,
1934. Farts II and III of the Amendment changed the maximum hour
(Article III) and minimum wage (Article IV) provisions of the Code. (*)
The 40-hour work i"eek of the Cotton Garment Industry Code resulted in
unfair competition between members of the apparel industry under it
and members under other apparel codes which had rrovisions for thirty-
five and thirty-six hour weeks. In order to bring about more reemploy-
ment and correct the unfair competition existing because of the Cotton
Garment Industry Code forty hour work week provision, it became necessary
to make a reduction to thirty-six hours, and, at the same time, make a
proportionate increase in pay of employees so as to maintain the same
weekly wage rate as provided in the approved Code of November 17, 1933. (*f)
On September 28, 1934, an Executive Order of an Administrative
nature, No. 118-132, pertaining to the Cotton Garment Industry Code was
approved by the President. This Order stayed Executive Order No. 6828
of August 21, 1934, to and including October 15, 1934. (***) It directed
the National Industrial Recovery Board to appoint an impartial committee
of three persons to hear protests, investigate the facts and report re-
commendations to the President no later than October 10, 1934, on the
Amendment of Articles III and IV of the Cotton Garment Code, approved
August 21, 1934.
The Committee appointed by the National Industrial Recovery Board
consisted of D. M. Nelson, Member of the Industrial Advisory Board;
Willard Hotchkiss, Chairman of the NRA General Code Authority, and W.
Jett Lauck, economist. This Committee (frequently referred to as the
Hotchkiss Committee on Cotton Garments) submitted their report in com-
pliance with the President's request and recommended that Executive
Order No. 6828. of August 21, 1934, be sustained. They also recommended
that the National Industrial Recovery Board designate a commission to
investigate the effect of competition of products of prison labor and of
sheltered workshops on certain subdivisions of the Cotton Garment Industry
to study the operation of the Prison Labor Compact, especially as to the
enforcement of standards of competition of private industry there setup,
and report not later than December 1, 1934, upon ways and means of effect-
ively meeting this issues. (****)
(*) See Volume XV, Fage 387 Frinted Code.
(**) Administrator's Letter of Transmittal to Fresident of Amendment
No. 7, August 21, 1934.
(***) See Volume XVII, Fage 523 Frinted Code.
(****) Appendix Bo. C — N.R.A. Release No. 8314.
9742
-54-
II. EXECUTIVE ORDER NO. 118-135, OCTOBER 12, 1934.
On October 12, 1934, another Executive Order of an Administrative
nature, No. 110-135, pertaining to the Cotton Garment Industry Code was
approved by the Fresident. Among other matters concerning the Cotton
Garment Industry the Order provided:
"That the National Industrial Recovery Board forthwith
appoint a committee of three impartial persons, which
committee shall investigate the effects of competition
between the products of prison labor and sheltered work-
shops on the one hand and of the cotton garment industry
on the other, study the operation of the Frison Labor
Compact especially as to the enforcement of the standards
of competition with private industry established therein,
and report to the National Industrial Recovery Board con-
cerning said matters not later than December 1, 1934." (*)
In accordance therewith the Ulman Committee was appointed. This
Committee consisted of Judge Joseph N. Ulman, as Chairman, Frank Tannen-
baum and W. Jett Lauck. Mr. James F. Davis of the Division of Research
and Flanning of NRA, was selected as secretary to the Committee.
III. FOINTS CONCERNING FRISON LABOR COVERED BY THE INVESTIGATING
COMMITTEE.
The Committee started holding hearings on November 7, 1934, and
continued through until November 26, 1934, when they submitted their
report to the National Industrial Recovery Board. (**)
The following was taken from the letter of transmittal accompanying
the -report of the Committee to the National Industrial Recovery Board,
covering the points considered by the Committee in arriving at its
conclusions:
"In order to consider adequately the relatively narrow
questions that have arisen and will arise between the
Prison Labor Authority and the several Code Authorities
administering industries subject to prison labor compe-
tition, we have taken into account the whole question of
prison labor as it is related to
(a) the underlying purposes of imprisonment for crime;
(b)'the economical and effective administration of prisons;
(c) the extent and effects of competition between prison labor
and free labor in specific industries;
(d) the developed policies of State and National governments
in relation to the whole subject;
(*) See Volume XVIII Fage 621, Frinted Code.
(**) Appendix D, NRA Release No.'9029-A
9742
-55-
(e) attitudes of industry;
( f ) attitude of labor;
(g) the relationship of a proper regulation of prison labor
to a rational attack upon the problem of crime." (*)
IV. LIST OF FERSONS APFEARING BEFORE ULMaM COMMITTEE REPRESENTING
INDUSTRY, ORGANIZED LABOR, PRISON ADMINISTRATORS AND NRA OFFICIALS
The following persons appeared before the Committee and made state-
ments for the record and answered inquires from the Committee Members.
Those representing Industry were:
Raymond A. Walsh, General Counsel,
Cotton Garment Code Autnority.
R. B. Paddock, Executive Director,
Cotton Garment Code Authority.
Ben Geaslin, Assistant Counsel,
Cotton Garment Code Authority.
A. B. Dickinson, Washington Representative,
Cotton Garment Code Authority.
Herbert Mayer, Chairman, Frison Committee,
Cotton Garment Code Authority.
A. B. Salent of Salent and Salent, Incorporated.
Isadore Fine, Freaident,
Bational Workshirt Manufacturers Association.
Harry Johnson, Oberman and Company.
W. W. Harlin, Frison Committee, Cotton Garment Code.
C. F. Habegger, Frison Committee, Cotton Garment Code.
L. M. Jones, Frison Committee, Cotton Garment Code.
Walter Mitchell, Jr., Executive Secretary,
Furniture Manufacturers Code Authority.
D. F. Forterfield, Director,
Department of Marketing, United Typo the tae
J. H. Nelson, Secretary, Trade Fractice Committee,
Public Seating Industry.
W. C. Craig, Chairman,
Binder Twine Agency of Code Authority.
(*) Appendix No. D -NRA Release No. 9029-A.
9742
-56-
J. S. McDaniel, Executive Secretary.
Cordage and Twine Code Authority.
Those representing Organized Labor were:
Thomas Rickert, Fresident, United Garment Workers.
Charles II. Green, International Ladies Garment Association.
William C. Hushing, American Federation of Labor.
G. E. Meadows, American Federation of Labor.
Rose Senile idermnn, Labor Advisory Board,
National Recovery Administration.
Jacob Fetofsky, Assistant President,
.-American Clothing Workers.
Sidney Hillman conferred with the Committee in his dual capacity
as Fresident of the Amalgamated Clothing Workers and Member of
the Labor Advisory Board; However, his statement is not in-
cluded in the stenographic transcript of the hearing.
Those representing the Penal Instit\itions were:
Sanford Bates, Director, Federal Bureau of Frisons.
James V. Bennett, Secretary,
Frison Labor Authority.
Howard B. Gill, Economic Adviser,
Frison Labor Authority.
Walter N. Thayer, Commissioner,
Department of Correction, New York State
K. H. Stewart, Superintendent,
Frison Industries, State of Alabama.
Robert Chapman, Superintendent,
Prison Industries, Missouri State Frison.
L. E. Eunkle, Warden, Indiana Fenitentiary .
E. L. Fardue, Superintendent,
Industries State of Tennessee.
C. L. Stebbins, Superintendent,
Michigan State Industries.
Samuel E. Brown, Warden, Oklahoma Fenitentiary.
9742
-57-
H. E. Donnell, Superintendent,
Prisons of State of .Maryland.
i
Those representing the National Recovery Administration were:
Linton M. Collins, Acting Division Administrator,
National Recovery Administration.
J. M. Keating, Legal Adviser of Dress Manufacturers
Code Authority; formerly Legal Adviser to National
Recovery Administration on the prison. labor problem.
B. J. Gitchell, Special Adviser,
National Recovery Administration.
H. E. fahrenbrock, Legal Adviser,
National Recovery Administration.
Feter Seitz, Legal Adviser,
National Recovery Administration.
Lester Xintzing, Industrial Advisory Board,
National Recovery Administration.
Mercer G-. Johnston, Consumers Advisory Board,
National Recovery Administration.
Sol A. Rosenblatt, Division Administrator,
National Recovery Administration
David Ziskind, Labor Advisory Board,
National Recovery Administration.
V. COMMITTEE REFORT - NRA RELEASE NO. 90139 -A.
On November 26, 1931. the Ulrnan Committee submitted its report to
the National Industrial Recovery Board on competition of products of
the Cotton Garment Industry with products of prison labor as directed
by Executive Order No. 118-135 of October 12, 1934. A copy of this
report was mimeographed for public release on November 28, 1934. (*)
The arguments which Industry presented are broken down into three
sections. First, that of The Cotton Garment Industry, which is briefly
summed up by the following quotation:
"The testimony given by this group is important out
of all proportion to its accuracy in detail, a state
of mind, whether based on fact, fear, or fancy, is some-
thing that must be reckoned with. These manufacturers
are determined that competing prison labor must. go.
They regard the Prison Labor Compact as a means' of
perpetuating it, of increasing rather than decreasing
(*) Appendix No. D -NRA Release No. 9029-A
9742
-58-
the competition of prison made goods with those
of their own manufacture. Sight or wrong, they
are prepared to fight on this issue to the bitter
end. In this fight they are working hand in hand
with lator, and they have the support of large
sections of the distributing trade and the consuming
public. Such women's organizations as the federation
of Somen's Clubs, tr.e Consumer's League and others
have joined the manufacturers and labor in the dis-
semination of the thought that goods made in a prison
are essentially wicked goods that must not enter into
commerce ."
"This group favors the State Use System of prison
production." (*)
Second - The Twine and Cordage Industry:
"Although the prisons produce one- third of the binder-
twine made in this country, this industry seems willing
that prison industry in this line shall continue, pro-
vided that under the Prison Labor Compact there can be
secured equality, of competitive prices, and provided
that each State snalL confine its sales within its own
borders. It relies upon the Hawes-Cooper Act and the
Prison Labor. Compact as means toward these ends, although
it complains that a differential in favor of prison labor
costs has been set up and that there has been a lack of
cooperation with the industry in the fixing of prices
of prison-made goods.' It makes no charge of bad faith,
but asserts vigorously that administration of the compact
has been inefficient. "(**)
Third - Other Industries, particularly Furniture, School
Desks, etc . :
"Witnesses appearing before us indicate no ' immediately
pressing questions in these lines.' Generally, they
object to a labor cost differential favoring prisons
and urge closer cooperation between' Prison Labor Authority
and the several trade Code Authorities. They favor the
State Use System but admit that in some States where that
system prevails certain industries have succeeded in cur-
tailing the distribution of prison-made products to state,
county, and municipal agencies of ' government ." (***)
Then came the. arguments of Frison- Management which are summarized
but covered in a general way by the last paragraph of the argument which
is as follows:
(*) Appendix No. D, Fage 5 - IRA Release No. 9029-A
(**) Appendix No. D, Page 5 - N3A Release No. 90S9-A.
(***) Appendix No. D, Fage 5 - USA Release No. 9029-a.
9742
-59-
"In short, while this group as a whole favors the
State Use System in principle, it emphasizes the
practical difficulties that stand in the way of its
general adoption, therefore, its members urge that
the Prison Compact be upheld and that practice under
it be perfected; but they are positive that this can
be accomplished only if the NHA label for prison made
goods is continued in its pres-jnt form. In answer to
the suggestion that this label differs only metaphysically
from the ordinary NBA Blue Eagle Label of commerce and
therefore operates as an instrument of deception to
which the Federal Government ought not give its sanction,
they reply that under the Compact the labor of men in
prison must conform to the same standards of hours, com-
pensation, and sound working conditions as are required
for free wor3:ers. They tend to blink the obvious facts
that compensation paid to a State by a prison contractor
is not precisely the same thing as wages paid a worker
for his and his family's support, and that many States
operating prison factories on the State Account System
justify the payment of merely nominal wages to their
prisoners (often as low as 50 cents a month) on the
ground that the State spends $1.00 or more per day to
feed, house, clothe and guard each prisoner. And they
ignore entirely the additional fact that goods made in
prison and bearing a Blue Eagle label can by no stretch
of the imagination be said to nave been produced by
labor invested with the right to collective bargaining." (*)
The arguments advanced by the witnesses for organized labor take a
firm and uncompromising stand. They are as follows:
"(a) Competition in the open market between goods
made in prison and free labor production must
cease at once.
"(b) The Hawes-Cooper Act is sound policy and good 1
aw.
"(c) The Frison Labor Compact has no legal or moral right
to en N3A Blue Eagle label. She present form of
label works a deliberate fraud upon the public and
is unfair to labor.
"(d) To them the foregoing principles are so fundamental
and so irrefutable that one of the principle witnesses
in this group refused to discuss, even by way of
assumption for the purpose of argument, such questions
as (l) whether the differential allowed in favor of
prison labor is so great as to defeat fair competition
under the compact or (2) what, if any, administrative
changes may be desirable to bring ab rat a better cooper-
ation between the Frison Labor Authority and the several
competing Code authorities." (**)
(*) Appendix No. D. Fage 6 - IIRA Relea^T No. 9029-A.
(**) Appendix No. D. Fage 8 - IIRA Release No. 9029-A.
9742
-60-
The following summary of the testimony of the Staff ■Ilembers of tlic
Legal ancl other 'Divisions of the IIRA is as follows: •
"These witnesses were very helpful to us ir. clearing away
numerous points of o.ifferehce r< 1 .ting to the proceedings leading
to the preparation and adoption of the Compact and the authoriza-
tion l the EhA' label under the Compact. Especially in regard
to the latter, it had b en charged, by the Cotton Garment Industry
not merely that the label is misleading and deceptive but that it
?;as authorized without notice and put into use surreptitiously.
There witnes r- detailed to us the official steps taken in these
procedures and also told of various preliminary conferences be-
tween representatives of the interested groups. .The importance
of this testimony is reflected in our Finding III, (infra).
"They insisted that 'the regulation of prison industry must
he committee" to its own Prison Labor Authority Administrator and
that it would be unsound and impracticable to transfer this
function to the several interested and competing Cede Authorities
and Administrators. Eut they conceded the desirability of
developing a plan for the better co-ordination of -these activities.
They tvc us convincing evidence of lac1; of co-operation and
obstructive ta.ctics on the part of the Cotton Garment Code
Authority during the months that the Conroact has been in existence.'
The testimony of Dr. Louis II. Robinson of Swarthmore College,
Swarthmore., Pennsylvania, one of the foremost authorities on the subject
of orison labor in the United States, is summarised as follows': —
"Professor Robinson was the only witness whose testimony may
be described as entirely objective. In theory, he favors the
State Use System above all others; but he: ;oointed out tnat in
practice this system not only has- failed- to reduce idleness in
prison but in many instances has increased it. This he attributes
to several factors, viz:-
"1. Host State's that have- adopted this plan passed imperfect
laws. A State Use lea', if it is to produce satisfactory
results, must -orescribe the compulsory tmrchase by
State agencies, departments, institxitions , counties, and
municipalities of all chesses of goods produced in the
Stete*s prisons that are required by such agencies,
-achusetts is "oointecl out as the State that has de-
vised and adopted the best Statiite.
','2. He questions the sincerity of some of the proponents of
this system. For example, individual members of a
certain organization I manufacturers which is conduct-
ing an "educational ca-mpai; . " for State Use are known
to have trier., in States -ner. the.- system is already
established, to restrict the torch; a of orison made
_ ggoods to institxitions for the housing of prisoners.
(*) Appendix Uo. D - Page 2 - NBA lelease Ho. 3029-A.
9742
similarly, the representatives of given industries use
political pressure and like means to secure the exemption
of their particular industry from the operation of the
lav;. Tor example, in the State of I-Tew York, though the
prisons are equipped to build furniture of all kinds,
not a stick of school furniture is permitted to "be made
by prison labor. Certain labor organizations have been
active in similar attempts to restrict the effective
operation of the State Use System, in spite of the fact
that Labor gives the system its unqualified indorsement
when it is discussed as an abstraction.
"3. If the State Use System is to become effective in re-
ducing prison idleness, each 'State employing it must
conduct a careful investigation by competent production
engineers to determine the needs of the State and of
its political subdivisions that can be sup lied by the
labor of prisoners. This must be followed by a
thorough over-hauling of the State's setup of prison
industry,'- always with an eye to the following requisites:
"a. The safe confinement of the prisoners.
"b. The provision for them of real, productive work on
• full time, as measured by free industry in like
fields.
"c. The diversification of prison products to the
greatest practicable degree, so that no one product
will monopolize the market to the injury of outside
industry and free labor.
"d. The selection, to as great a degree as possible,
of industries for prison labor that tend to fit the
prisoner to make an honest living after his release..
"Professor Hobihson admits that this ideal has not been
realized anywhere up to the present time. But he attributes
this primarily to the factors outlined in subdivisions (1)
and (2) above and not to any wealcness inherent in the System."
(*)
VI. TRANSCRIPT OF HEARISG
The transcript of hearing on the investigation conducted by the
Ulman Committee comprises a stenographic record of more than 1200 pages
of exhibits ana testimony. The several witnesses listed heretofore
were heard and all other interested parties were afforded an opportunity
to be heard. The record appears to be quite complete insofar as the
recommendations and arguments presented by the Cotton Garment groups
are concerned. However, as to the 50 remaining odd industries affected
by prison competition, the writer is of the opinion that much more
evidence could have been secured from both free industry and prison
industries had time permitted.
(*) Appendix "_To. D - Pages 9 and 10 - ERA Release Ho. 9029-A.
974-2
-62-
VII. FIEDIHGS OF ULMA2J COMMITTEE.
After an analysis of the testimony submitted at' the hearing the
Ulrnari Committee arrived at the following conclusions, which Fere:
"I. The Prison Labor Compact has not solved the problem
of prision labor and will not solve it permanently and con-
structively.
"II. The Prison Labor Compact is an indispensable part of
any larger plan for the real solution of the problem of
23rison labor. ■'-Hit it must be regarded as an interim measure .
"III. The Compact was the product of a genuine desire to
solve a hard problem. It has been administered fairly "by
persons of the highest integrity. Any past errors in its
administration have been only such as are inevitable in
the development of a new instrumentality.
"IV. The only true solution of the prison labor -oroblera is
one that Fill effectually remove the products of prison
labor from the ordinary channels of competitive trade and
commerce. This means the State Use System.
"V. The present and potential competition of prison in-
dustry with the Cotton Garment Industry has created a
special and acute problem that calls for immediate at-
tention and relief." (*)
VIII. PECOLilEIDATIOlSrS OF THE ULi.Ail CCMIlTIEE .
After consideration the specific issues which were responsible for
the Committee being called -ere:
"(a.) The difficulties in the Cotton Garment Industry created
by prison competition, and
"(b) The complaints against the operations of the Prison
Labor Compact." (**)
The Committee made the following recommendations:
"1. The Committee recommends that the National Industrial.
Zecovery Board use its good offices with the President to set up
through the Public 'Jorks Administration a fund of $50, 000,000 for
the purpose of helping the states to meet the conditions specified
in this report, so as completely to replan and reorganize their
prison industries, removing prison-made goods from the open- market
and finally bringing to an end the prison labor controversy vhich
(*) Appendix 7lo. D - Pages 10, 11 and 12 - 1T3A Release To. 9029-A.
(**) Appendix Ho. D - Page 13 - ERA Release No. 9029-A.
9742
-63-
has ^burdened American industrial and political, life for so long
a t irae .
"2* The Committee, recommends that in the interim between the
present and the tine vrhen the reorganization of the prison in-
dustries can be effected by the use of the funds suggested above,
the national Industrial Recovery Board use its good offices through.
the president and the Federal Emergency Relief Administration to
effect the purchase from the prisons of prison-made grrments, or to
\vtilize the labor now employed on prison-made garments to make such
other garments as the Federal Emergency Relief Administration nay
deem preferable. The purchase of these garments by the Federal
Emergency Relief Administration from the state prisons should be
scheduled on a declining scale, and should cearje at the end of two
years.
"3. In addition to the -.immediate adoption of the "above program,
the Committee further recommends that prison-made garments be barred
in t: e public market by the xLthdrav/al of the Rational Recovery
Adninistrr.tion label no1- attached to them, or by its modification to
rea.d "prison made". The Committee suggests that a maximum of 1C
days after the publication of this report be allowed to elapse be-
fore the above proposal for the taking over of prison-made garments
~q-j the Federal Emergency Relief Administration be effected.
"4. The Committee recommends that the Prison Labor Authority
be continued, and that its offices bo used as the agency in co-
peration with which the above program is to be carried out, and that
the loss in funds to the Prison Labor Authority v'hich may result
from the withdrawal of the label or its modification be supplied
from the funds set aside by the Public TTorks Administrrtion.
"5. The Committee recommends that an Executive Order empower
the Rational Industrial Recovery Board to require an agreement bet-
ween the Prison Labor Authority and the Code Authorities in the in-
dustries affected by prison-made products in every instance of
change in price or costs of products sold by the prison industries.
If such an agreement cannot be had by mutual consultation, an im-
partial chairman especially designated for that purpose should be
named.
"6. The Committee recommends that, by cooperation between
the Rational Industrial Recovery Board, the Prison Labor Authority,
end the Code Authorities affected, a quota system be established
for all prison industries, limiting their production for the open
market at a point no greater than that which existed at the time the
prison Compact came into existence.
"7. The Co miittee recommends that' i'f 'the -Rove conditions be
fully met then the remaining state, county, .and city institutions
now producing for the open market bs brought under the Prison
Compact." (*)
(*) Appendix Ro . D - Page 21 - RRA Release Ro. 9029-A.
9742
-64-
A "brief summary of the Committee Report with the major findings
and recommendation listed is made a part of this report as Appendix "0".
This was published in the form of a Public NRA .Release Ho, 9029,
November 29, 1934, This release is titled - "Replanning of Prison In-
dustries in Stctes to Remove Products From Open Market Recommended to
Nttioiial Industrial Recovery Board." (*)
IX. BRA PUBLIC RELEASE 110. 9073.
The national Industrial Recovery Board, on December 3, 1934, selected
its Chairman, S. Clay '.Tilliaras, Sidney Hillman, Member, and Linton ".:,
Collins, Acting Division Administrator in charge of the Compact to con-
tact the Federal Emergency Relief Administration in an effort to det mine
if that governmental agency could utilize prison labor garment production
in the relief program, so that these garments might be removed from the
open market. This was done in an endeavor to folic-' out Recommendation
Ho. 2 of the Ulman Committee Report. (**) Several conferences ^ere held
by this Co;.iiittee with representatives of the Federal Emergency Relief
Administration, but at the time of the Schechter Decision by the Supreme
Court no definite action had resulted and from the records available no
purchases of prison goods were made by the Federal Emergency Relief Ad-
ministration as part of the proposed program.
Becau.se the National Industrial Recovery Board wished to obt ain
additional data and legal opinions on the proposal for a $50,000,000
P. J .A. program, it took no action on the proposal at its meeting of
December 3rd, 1934.
The Board requested the Division Administrator in charge of the
Compact to look into the possibilities of limiting all prison production
by a quota system based on the output of prison factories at the time the
Compact was put into effect. The Board also deferred action on the Ulman
Committee recommendation that the N.R.A. label then used by prison plants
under the Prison Compact be taken away or made to carry the words
"Prison Hade", pending further information and reports. (***)
X. DEFINITE ACTION OF NATIONAL INDUSTRIAL RECOVERY BOARD ON ULFiAN
COIIIITTEE REPORT, DECEMBER 3, 1934.
Briefly the definite action by the National Industrial Recovery
Board, December 3, 1934, may be stated as follows:
"1. The Legal Department of.N.R.A. will give their views as
to whether it is possible to enforce the quota system of prison
'roduction, although they feel unofficially that it cannot be done
without the voluntary acceptance by the states.
"2. The F.E.R.A. will be interviewed to see if it willacccot
the cotton garments as recommended.
(*) Ap-oe::di:; No. E - NBA Release "To. 00r:? .
(**) Appendix No. D - NBA Release No. 9029-A.
(***) Appen&is No. F - NRA Release No, 9073.
9742
-65-
"3. Division VIII of N.R.A. will gather statistics as to the
manufacture and sale of prison products of all types during the
last two or three years." (*)
XI. COIISITTS OF PEISOiT LABOR AUTHORITY 0IT ULMAN COiiilTTEE REPORT.
At the joint meeting of the Association of States Signatory to the
Compact and the Prison Labor Authority, on December 10 and 11, 1934,
considerable discussion took place over the merits md demerits of the
Ulman Committee Report. After a talk by Judge Ulman, Chairman of the
Investigating Committee, the Association appointed a Committee to study
the Ulman Report and offer suggestions, to the Association -and the Prison
Labor Authority so tha.t they might be in a better position to prepare a
response to the Ulman Report. The following is the report of the Com-
mittee to the Association which, in a general way, presents the reaction
of the Prison grouos to the Ulamn Report;
"R
"REPORT OP CO; LITTLE OF THE. ASSOCIATION
OF STATES SIGNATORY OH TLPLY TO ULi Ai.' REPORT.
"Ue, the undersigned, members of the Committee appointed by
the Chairman of the Association of States Signatory, to consider
the Ulman Report beg leave to submit the following:
"In the brief time at out disposal we were unable to do more
than point out some of the obvious defects of the Ulman Report and
to indicate very briefly what we think should be the reply of this
groxip .
"The Prison side of this prison labor controversy seldom is
presented to the public, and it would take too long to do it in
this report. Ue would call attention, however, that even if one
left out of account entirely all the financial benefits that accrue
to the state, the prisoner, and his family from the successful em-
ployment of the prisoner, it must be remembered that there can be
no successful rehabilitation program set up in the prisons which
does not in large part rely on the employment of the prisoners.
"This argument cannot be met by a. naive statement- of the sice
of the state-use market. It is not the total sice of this market
that metters but the amount of this market that the prisons "hen
confronted by the active and unceasing opposition of free manu-
facturers and free laborers can hope to "in for themselves.
"There is a naive assumption running all through the Ulman
Report that the adoption of the State-Use System means either the
elimination of all competition between prison made goods and those
produced by free labor or at least the reduction of this competition
to a negligible amount. Actually the taking away from free manu-
facturers of their present market consisting of state and local
official buyers would have practically the same effect on the price
(*) prison Labor Kinutes File, December 11, 1934. Meeting of prison
Labor Authority - Page 10.
9742
-66-
structure as the presence in the open market of the quantity of
prison made goods which these official buyers had been accustomed
to buy from free manufacturers. The truth is that in practice only
lip service is paid to the ideal of state-use, namely the giving
up by the prisons of the open market in exchange for a closed
market. It is a one-sided contract which the states make when they
enact a state-use law. They promise not to sell in the open market
but the free manufacturers and the free laborers make no promise not
to invade this closed market set aside for the prison industries.
"Before the Federal Government or any of its agencies should
try to force on the states the adoption of the state-use system, it
should ask the code authorities of the industries affected to in-
sert a clause in their respective codes forbidding their members to
invade the state-use market. The time has come to demand a cessation
in the pressure to adopt the state-use system until a way can be
found to preserve the state-use market for the prison industries.
Or if this plan is not feasible, Congress could act. It sought to
prevent the appearance of prison goods on the open market, let it
now finish the task by enacting if necessary a law which will keep
the goods of free manufacturers out of the state-use market.
"It has been suggested by the Ulman Committee that the Federal
Government in some way finance the setting up of industries in
those states which will agree to go over to the state-use system.
We suggest that such loans be made a claim on the prison industries
themselves and not on the states. This will compel the opening up
of the state-use market to prison industries since without this
market, the prison industries would fail. It is best for the
Federal Government to make its loans in this fashion, as only thus
will it get a true picture of the forces at work to make idleness
in the prisons not a temporary but a permanent condition.
"In our opinion, diversification will have more to do with the
elimination of the prison problem, if by that we mean the employment
of prisoners under fair conditions, and not simply the pleasing of
certain specified free manufacturers and free labor groups, than
will the adoption of a closed state-use system. We believe that
the States should enter into a closer agreement on prison labor,
and if they do not have the power to do this they should be given
it by Congress. Following this, diversification should be a major
policy of the Association of States Signatory and its decisions
should be law.
"Our final suggestion, on which we would lay most stress, is
that the National Industrial Recovery Board send a committee con-
sisting of its own experts and of individuals primarily interested
in providing work for prisoners as a part of a rehabilitation pro-
gram to the individual states or to a specified group of states,
not for the purpose of helping the states to meet the conditions
specified in the Ulman Report, as is requested, but to determine for
itself by consulting legal authorities of the respective states and
by observing at first hand the working of the state laws and the
functioning of the prison labor industries themselves the exact con-
9742
-67-
ditions prevailing in the prisons of these states and for the further
purpose of suggesting what these states should do in the light of a
larger prison labor program. We believe that the situation is so dif-
ferent in some of the states from what it is in others that the uni-
form adoption of the statc-usc system would be little short of a calam-
ity. If the funds can "be had from the PWA, so much the better, but the
point- which we wish to emphasize is that the Ulman Report does not fur-
nish sufficient facts for a decision by the NIHB in view of the obvious
economic and political defferences of the individual states. A com-
mittee which" started out on the assumption that all it had to do was to
determine the extent of the state-use market in a given State paid to
plan the industries to supply this would find itself handicapped at the
very start.
"In the meantime, the PLA should be continued and should operate
much as it has done under government oversight and in full agreement
with the codes of the industries affected.
'"(Sgd.) Louis ".'. Robinson, Chairman
E. L. Parduc
II. ". Stewart
h. C. i.; chill an
C. F. UcClintic."
With this background the Prison Labor Authority undertook to pre-
pare a. comprehensive report titled "Comments of the Prison Labor Author-
ity on the Report of the Ulman Committee". This report was then pre-
sented to the National Industrial Recovery Board for their considera-
tion. (*) A summary of the conclusions reached hy the Prison. Labor
Authority arc as follows: —
"A. State-use
"In order to promote diversification and to reduce the com-
petition of prison-made products with the products of free in-
dustry sold on the open market, we recommend
"1. That the States Signatory to the Compact accept the aid
of the Federal Government in setting up state-use in-
dustries;
"2. That any State having. or adopting an adequate state-use
law may be entitled to a sha,re in- such aid;
{*) Appendix Ho. G- - Comments of the prison Labor Authority On the
Report of the Ulman Committee.
9742
-68-
"3. That a state-use law to be "adequate" must include pro-
visions that (a) all tax supported institutions or agen-
cies must purchase from the prison industries such sup-
plies as are made "by these industries and used "by such
institutions or agencies unless granted a written re-
lease from such purchase by the Governor or other of-
ficer legally authorized to issue such releases; (b) pub-
lic works and ways including highway construction, agri-
cultural, horticulture, or mining activities constitute
a proper state-use industry; (c) the SERA, or other state
agency supplying products for the relief of unemployables
on relief rolls, or for prisoners' families shall he re-
garded as tax-supported institutions and agencies; and
that (d) no statutory exemption from prison labor shall
be granted to any industry.
"4 That an "adequate" state-use law may be either a law
establishing a state-use system exclusive of other sys-
tems or a state-law concurrent with other systems as de-
termined by the respective legislatures, so long as this
law incorporates the essentials outlined under (3).
"B. L State-use Prison Industries Corporation,
"In order to carry out -the purposes set forth undir Section
A, we recommend
"1. That a Corporation known as the State-use Prison In-
dustries Corporation be created by the President under
Title I of the N.I.R.A. and that a fund of $1,^00,^00 I?
set aside* to carry, out its purposes;
"2. That the members of the PLA. constitute the Board of
Directors of this corporation with power to appoint a
General Manager and such other personnel as nay be neces-"
sary to effectuate the purposes of the Corporation;
"3. That grants to the states for the purposes of setting
up and operating prison industries shall b« made only
upon the recommendation of this Corporation;
"4. That in granting such aid the Federal Government do so
only on request from the properly constituted authorities
and in anticipation of or subsequent to the adoption of
an "adequate" state-use law in any state and after a care-
ful study of the market for state-use and the necessary
building, equipment, and personnel has been made by the
Corporation in co-operation with the proper state. offic-
ers in charge of the state prisons affected;
"5. That the Corporation on the recommendations submitted to
it by its staff and approved by the state officers af-
feeted, shall recommend the grant of funds to be made to
the State to build the necessary buildings, -to -purehap*
9742
-69-
and install the necessary equipment using prison labor as
far as practicable, and to supervise and operate such in-
dustries as are established by these means for 5 years,
the cost of such supervision and operation to be paid from
the funds allocated and all expenses and receipts and any
profits cr losses accruing from such operation to be
charged against such funds/ and all buildings, and equip-
ment, and any balance remaining in the fund a t the end of
that period to be the property of the State as provided in
the grant;
"6. That the personnel to supervise and operate such indus-
tries shall be chosen in the manner and under the regu-
lations governing the choice of personnel in the prison
affected and subject at all times to the Warden, Superin-
tendent or other authority in charge of the prison, but
for a period of five years the Corporation shall have the
right to inspect and make recommendations as to the prop-
er conduct of such industries and to audit their ac-
counts. _
"C. Limitation on Opon iiarket Gales.
"In such states as t>ermit the sale of prison-made goods on the
open market, we recommend
"1. That it be a condition precedent to the granting of Fed-
eral aid as set forth in Sections A and 2, that an agree-
ment be made, after consultation with the industrial code
authority affected, between the Corporation and the prop-
erly con stituted State authorities and those in charge
of prison industries, which shall establish the limits
beyond which such prison industries may not sell on the
open market;
"2. That the FERA. in anticipation of such limitation creat-
ing further idleness or even maintaining present condi-
tions and in furtherance of a constructive penal adminis-
tration, permit the cooperating prison administrations to
in troduce the following "work projects" for the free un-
employed: medical, dental and nursing care; academic,
vocational and a vocational instruction; occupational ther-
apy; case studies including the mailing of case histories,
treatment programs, and psychological and psychiatric ex-
aminations and classifications of prisoners; welfare work
among prisoners' families; recreation programs; and super-
vision of paroled convicts including preparation for re-
lease, such services to be supplied only upon the request
of and to the extent ashed for and under the rules and
regulations prescribed by the State authorities.
D. Prison Labor Authority.
"With regard to the aftnin'i strati on and enforcement of the
9742
-70-
Prison Labor Authority, we recommend
ul. That the PLA be continued and that provided the signa-
tory states agree all state-use products be brought under
its jurisdiction and assessments made on them for the sup-
port of the PLA;
"2. That for such goods as are sold on the open market by
states complying with the Compact and agreeing either
voluntai'ily or by statute to a limitation on such sales,
the Compact label be issued as at present;
"3. That the present price policy of the PLA as set forth in
the minutes of the meeting of October 16, 1934, be con-
tinued with appeal to the URA or to a permanent impar-
tial arbiter appointed by the HIRE in case of dispute as
provided in the Compact;
"4. That the PLA be given jurisdiction over industries in
any penal institution, jail, or house of correction
which agrees to comply with the Compact.
Respectfully submitted for
The Prison Labor Authority
TEIORSTSII SELLIH
JOHH J. HAHHAH
STEP HEN B. HUNTER"
XII. PHI SOU LABOR AUTHORITY PROPOSAL TO EFFECTUATE RECOii.iEHDATIONS
OF ULiiAB COMMITTEE.
Prior to the Supreme Court decision of May 27, 1935, the Prison
Labor Authority submitted a plan to the national Industrial Recovery
Board. In the opinion of the Prison Executives of the States Signatory
to the Compact, this plan if put into effect would have accomplished the
objectives outlined in the recommendations of the Ulman Committee Report.
Because of the nature of these recommendations and the extent to which
the prison groups would willingly cooperate, the- writer feels that this
entire plan should be embodied in this report. The plan is quoted as
follows:
"A Plan to Effectuate the Recommendations of
the Ulman Committee Re Prison Competition
"To effectuate the program outlined in the Report of the
Ulman Committee and the Reply of tie Prison Labor Authority there-
to, as requested, tie following is submitted for your consideration:
PURCHASE OF PRI SOH-uAIXB GAPuiEITTS
"1. 1TRA issue an order with, the anproval of the President
9742
■71-
declarin g all cotton garments made in prisons and not sold to tax-
supported institutions or agencies to "be "surplus commodities", of-*
fective June 1st, 1935.
"2. FEBA contract with the following prisons to purchase cot-
ton garments or equivalent amounts not less than those specified
below per year for two years at prices which shall be equal to the
cost of production plus 5f&„ (Cost of production shall include cost
of all materials; ■ cost of civilian labor used for industrial super-
vision, instruction or administration, but not including the cost
of custodial guards; cost of overhead items including heat, light,
power, machine repairs, and other items of general manufacturing
expense including insurance, supplies, and small tools and reserves
for replacements of plan and equipment; cost of wages paid inmates
directly employed in the production of said articles, and cost of
maintenance of inmates so employed.) In no case, however, shall the
prices paid exceed the fair prevailing wholesale market price for
comparable garments.-
■Work Pants
- Value -
Quantity
Dele ware
(he)
$ 75,000 -
10,000 doz.
Indiana
(or)
250,000 -
35,000 "
Kentucky
Car)
250,000 -
35,000 "
Missouri
Up)
500,000 -
75,000 "
Maryland
(op)
500,000 -
75,000 "
Oklahoma
(sp)
500,000 -
75,000 «
Llichigan
(op)
200,000 -
30,000 "
W. Virginia
(sp)
200,000 -
$2, :.-75,0O0
30.000 "■
365,000 "
Work
Shirts
- Value -
Quantity
Florida
(of)
$ 75; 000
- 20,000 doz.
Tennessee
(op)
250,000-
- 75 j 000 «
Kentucky
(op)
250,000
- 75,000' "
Missouri
(op)
250,000
- 75,000 "
Maryland
(he)
150,000
- 40,000 «
Michigan
(or)
150,000
- 40. COO "
$1,125,00
325 ;, 000 "
. ,
2.475.000
365*000 "
Total
5,600,000
690,000 "
sp - State Prison ;
he - House of Correction
sr - State Reformatory
sf - State Farm
"While these amounts arc tentative, they are based on actual
production figures for 1934 and represent a fair division of the
existing business among the prisons.
"In order to provide labor for the inmates of the Alabama
State Prison during this emergency, it is recommended that in mak-
ing contracts with the States of Florida, Kentucky, Maryland,
Michigan, Missouri, and Tennessee for the purchase of shirts (es- _
timated at $1,125,000 annually), the F3PA agree to furnish the
chambray and purchase same from the Alabama prison at cost plus b)o.
9742
-72-
This will provide approximately $500,000 worth of "business to the
Alabama prison.
"It should "be noted that allowing for free labor employed in
prison industries and the cost of materials and trimmings purchased
from free plants, that half of the money paid the prisons f*r
these products (or $1,750,000) will go to free industry.
"The above action would make unnecessary the withdrawal of the
Compact '„Lab el sin ceit would no longer he us^d on cotton garments,
the only prison product now requiring the label. Nevertheless the
possession of the Compact Label by other prison industries is a
valued insignia of cooperation and should be maintained.
DEVELOPMENT OF STATE-USE III DUSTRISS IN STATE
PRISONS AND LIMITATION OF OPEN MARKET SALES
"1. PLA request the assignment of personnel for 2 years
beginning Hay 1, 1935, under the Public Works Bill (K.J. Res. 117)
which provides $300,000,000 for assistance for educational pro-
fessional, and clerical persons (a) to conduct surveys of the law
affecting prison industries especially in States now selling pris-
on products on the open market and to present necessary legislation
to establish adequate state-use laws in such States; (b) to make
surveys of the market for state-use products among the institutions
and other tax-supported agencies of these States and their polit-
ical subdivisions, to prepare a program of state-use industries for
these States as a result of such surveys, and to present to the
proper Federal authorities projocts for the erection of buildings,
purchase and installation of equipment and other necessary expend-
itures for plant and personnel to establish such state-use indus-
tries in the States co-operating; and (c) to study the problem of
providing constructive activities for idle prisoners and to develop
such activities.
"Following is a tentative list of personnel to carry out the
work outlined herewith.
"(a) For purvey and preparation of stats
legislation affecting prison industries
1 Attorney and 4 Field Agents
2 Assistants (Stenographic and clerical)
(for 2 years)
"(b) For surveys of state-use markets and
preparation of state-use projects
6 Industrial Engineers (l Chief, 1 Assistant,
4 Field Supervisors)
1 Assistant ( Stenographic and Clerical)
(for 2 years)
9742
-73-
144 Statisticians (l Chief, 1 Assistant, 1 Clerk
in each of 48 or more States)
(for 6 months)
"(c) For development of programs of constructive activities
for idle prisoners
6 Directors of Rehabilitation (l Chief, 1 Assistant,
4 Field Agents)
1 Assistant (stenographic and Clerical)
(for 2 years)
255 Case-Workers, Teachers, Instructors, etc., for
75 State Prisons and Reformatories and 10 Jails
having industrial programs. (Average of 3 to each
institution.)
(for 13 months)
"Total personnel required 420
Approximate total cost $1,110,000 ($485,000 first year
615,000 second year)
"By the spring of 1936, each of the groups of 3 in the 85
prisons, reformatories, and jails (see (c) above) will have
developed a program which can employ an additional 1500 workers to
promote constructive activities for the 75,000 idle prisoners who
are n ow in these institutions. This assumes one worker for each
group of 50 idle prisoners.
"2. States will then, in co-operation with the Prison Labor
Authority, present to the President proposed projects for setting
up these state-use industries under the provisions r>f public Works
Act (E.J. Res. 117) which allots $900,000,000 for loans or grants
or both for projects of States, Territories, etc., under conditions_
as set forth in the Conclusions cf the Comments of the PLA on the
Report of the Ulman Committee (See PLA Conclusions, B - 3, 4, 5, 6).
"It is understood that funds as recommended by the Ulrnan Com-
mittee will be set aside to provide for such projects. (See Report
of Ulman rCommit tee, Recommendation Ho. 1.)
"It is understood that States receiving such aid must (1)
adopt "adequate" state-use laws. (See PLA Conclusions A - 3 and
4); (2) agree, after consultation with the PLA and the Industrial
Code Authority affected, to establish the limits beyond which
prison industries in these States shall not sell on the open market.
(See PLA Conclusions C - 1); and (3) make adequate provisions for
taking care of idle prisoners. (See PLA Conclusions C - 2) .
"Based on the estimates made by the Ulman Committee, if these
projects are approved in the 30 or 40 States now manufacturing
prison products, they should by the Spring of 1936 provide work for
1 year for approximately 7000 workmen making materials and equipment
9742
-74-
and for 7,500 construction workmen. This assumes a total expend-
iture of- $50,000,000 'as proposed by the Ulman Committee for shops,
equipment and materials for State-use industries divided as follows:
$25,000,000 for equipment and materials representing the labor of
5,000 industrial workers for 1 year and $25,000,000 for construction
of which $15,000,000 represents labor of 7,500 workmen for 1 year
and $10,000,000 represents material or 2,000 industrial workers
for 1 year.
"Altogether then this program can provide work for at least
one year for approximately 2,000 "white collar" workers and 15,000
construction and industrial , workers; and set in operation the means
of reorganizing the prison program of America in line with the re-
port of ,'the Ulman Committee.
"3. To defray the expenses of maintaining the office of the
PLA and to carry on the functions outlined in the Compact, the PLA
will continue to make assessments on prison products sold on the
open market. The PLA recommends .that similar assessments be levied
on all prison products sold for State-use in States Signatory in-
cluding cotton garments sold to the FERA or SERA. A revised bud-
get and program covering these items will be submitted to the NRA
at the close of the PLA fiscal year April 30, 1935.
"If desired, the PLA will incorporate in order to -insure a
continuing supervision over the projects noted in (2) beyond the
emergency period. A number of Code Authorities including Retail
Trade, Cotton Garment, Construction, have incorporated."
Because of its nature and the possibilities involved, this plan,
in the opinion of the writer, should be given careful consideration by
both the prison and free industry groups and any Governmental Agency
which may hereaf.tei attempt to solve the problem of prison labor versus
free labor in the production of commodities which can be manufactured
within the penal institutions.
XIII. ACTION OF N.I.R.B., MAY 27, 1935, ACCEPTING IN PRINCIPLE PROGRAM
TO REP LAN- AND REORGANIZE PRISON INDUSTRIES
The morning of May 27, 1935, the national Industrial Recovery
Beard met with Messrs. Coonley, Code Administration Director, and Collins,
Acting Division Administrator, Public Agencies Division, in charge of the
Compact. At this meeting the Board discussed the question of tho compet-
ition of the products of prison labor with the products of frae industry.
A statement was prepared, approved and later published for publicv're-
lease which is as follows:
"The National Industrial Recovery Board today adopted in
principle, subject to the working out of details, the following
statement in reference to the competition of prison-made products
with the products of private industry:
"1. The desirability of utilizing approximately $50,000,000
of the relief fund to enable the states completely to
9742 '
-75-
replan and reorganize their prison industries and prison
welfare activities, remove prison-made goods from the
open market through diversification for state use, and
finally "bring to an end the prison labor controversy which
has so long burdened American industrial and political
life. To this end it will at once suggest to the Presi-
dent,
(a) The desirability of establishing an agency, prop-
erly representative of the interests concerned, to
coordinate and supervise this work.
(b) The desirability. of at once placing the Division
' of Research and Planning of NEA in charge of the
necessary survey. (The survey should be under
way within a week.)
"2. The , desirability (in the interim between the present
and tho time whop the reorganization of the prison
industries can bo effected by the use of the fund sug-
gested above) of having the Federal Emergency Relief
Administration effect the purchase from tho prisons of
prison-made garments and other products, or arrange for
the labor now employed on prison made garments to be '
utilized to make other garments for such purchase. The
purchase of these garments by the Federal Emergency Re-
lief Administration from the state prisons should be
scheduled on a declining scale, and should cease at the
end of two years.
"3. The desirability of establishing by cooperation between
the National Industrial Recovery Board, the Prison Labor
Authority, and the Code Authorities affected, a que ta
system for all prison industries.
"4. In the meantime, the question of an appropriate label
for any goods going into the open market will be re-
examined by the NBA."
9742
-76-
CHAPTER VII
PRISOI! INDUSTRIES REORGANIZATION ADMINISTRATION
I. MEMORANDUM OF MAY 18, 1935,, FROM ACTING DIVISION ADMINISTRATOR
COLLINS TO Lc C, MARSHALL URGING THAT DEFINITE ACTION BE TAKEN
BY NATIONAL INDUSTRIAL RECOVERY BOARD TO FURTHER PRISON PROGRAM
RECOMMENDED 3Y ULMAN COMMITTEE.
On May- 18, 1935, Linton M. Collins, Acting Division Administrator,
submitted to L. C. Marshall, .Executive Secretary of the National In-
dustrial Recovery Board, a memorandum urging the Board to take definite
action on the Prison Program recommended by the Ulman Committee. The
body of the memorandum is as follows-:
"It is evident that soms definite action should be
taken by the National Industrial Recovery Board to further
the prison program recommended by the Ulman Committee. The
Prison Laboi Authority has appointed a committee to confer
with the National .Industrial Recovery Board. The representa-
tives of the states, are all anxious and eager for this pro-
gram to be consummated at this time. *"e "ill secure their
cooperation no1", whereas an apathetic attitude is apt to
result in a waning of their enthusiasm and cooperation.
••There will be held' in Chioago on tne 23rd, a meeting
of the representatives of the code authorities and industries
affected by prison competition. There are now some fifty-
seven industries in prisons. All of these groups have been
invited to attend. Mr. Clarke and I "will be present at this
meeting. This group is very eager to work out some program.
"The President has indicated his interest, but has ex-
pressed a doubt as to whether or not the program as recom-
mended by the Ulman Committee would meet the "fundamental
principles" which he must recognize in determining the
eligibility of any projects. The Department of Justice has
concurred in this. Mr. Sanford Bates, Director of the Bureau
of Prisons dictated a plan whereby the Federal Government may
assist the states to abolish unfair prison competition. This
is solely a statement of policy which, if the President will
sign and approve, will possibly, for these particular projects,
be a substitution of the rules as to recognizing the necessary
"fundamental principles". A copy of this is attached. It
should have the approval of Mr. Richberg as Chairman.
"It is necessary for the Board to take some kind of action
and make its recommendations to the President immediately. If
this could be done prior to the Chicago meeting on the 23rd and
also prior to the hearing which the National Industrial Recovery
Board will give the cotton garment group on Thursday, the 23rd, it
will be most effective. Is there some way for you to work this
out?" (*)
(*) Memorandum of May 18, 1935, Prison Labor Program File, Former
Publid Agencies Division, NBA.
9742
-77-
The plan referred to as having been dictated by Mr. Sanford Bates,
Director of the Bureau of Federal Prisons, is attached to this report as
Appendix "PI". (*)
The significant nortion of the memorandum is that in which the
Acting Division Administrator joints out that representatives of the states
were eager for the prison program to be consummated and that their coopera-
tion could, at that time, be secured. It has previously been sho^m that
the National Industrial Recovery Board did take action on May 27, 1935. (**)
II. REPORT OP ORGANIZATION L2EETIHB CONFERENCE OF FREE INDUSTRIES ON
ECONOMIC PLAN FOR PRISON MADE GOODS.
At a meeting in Chicago on May 23rd of industrial groups interested
in solving the problems involved in orison labor, the following actions
were taken: —
A. A permanent organization committee was selected and
authorized to secure the active cooperation of all
interested industries, if possible, and, pending
final organization, to carry on the work in accord
with the program adopted. The committee chosen
was as follows: Henry J. Hanson, Chairman, Marking
Devices Industry; Bon Geaslin, Attorney, Cordage
Institute and Cotton Garment Industry; J. C. McCarthy,
Furniture Mfg. Industry; G. H. Redding, Concrete Pipe
Industry; Joseph C. Hodges, Advertising Metal Sign and
Display Mfg. Industry. (***)
B. The following five principles were adopted and endorsed
singly and as a complete platform:
"1. COOPERATION. Any permanent solution requires the
the joint effort of free industry, orison officials, the
Prison Labor Authority, and the Federal, Gocernment to de-
velop an industrial program for the prisons which shall be
fair to the prisons;,, the prisoners, free industry and labor,
and the taxpayer.
"2. DIVERSIFICATION AID LIMITATION. Prison competition
with free labor and free industry should be limited so far as
possible, with due regard to the reasonable employment of pri-
soners, by diversification of prison industries and limitation
of the amount and kind of articles produced and/or processed,
without undue encroachment upon any industry.
(*) Appendix No. H - A Plan TJhereby the Federal Government May Assist
the Several States to Abolish Unfair Competition In Prison Indus-
tries.
( * * ) Page
(***) Report, Conference of Free Industries on Economic Planning for
Prison Made Products - Prison Labor Program File, Former Public
Agencies Division, NBA.
9742
-78-
"3. REGULATION. Prices and trade practices of prison
industries, including state-use industries, should be brought
under the jurisdiction of the Prison Labor Authority.
"4. REHABILITATION. The use of income from prison in-
dustries to develop educational, vocational and other construc-
tive activities for otherwise idle prisoners should be a corroll-
ary of any adequate prison industrial program.
"5. FEDERAL AID TO PRISON INDUSTRIES. With .the aid of
Federal funds the development of a "orison industries program in
accordance with the principles outlined above should proceed
immediately." (*)
Ci Since it was deemed desirable to institute immediate, action
and prepare the ground work of -oersonal conference, at an
early date, the following telegram was sent to President
Roosevelt:
11 At a conference of representatives of free industries
affected by prison comnetition, held at the Edgewater
Beach Hotel today, it was. voted to. endorse the principle
of Federal Aid to state prison industries as a basis
for establishing an industrial program in the prisons
of America which shall be fair to the prisons, ,free
industry and the several states. We urge your approval
of the proposal to allot funds to the states under the
Emergency Relief Appropriation Act of 1935 to make sur-
veys in the several states as a basis for such a program
and to aid the' states in establishing a diversified
program of prison industries and a constructive program
of activities for idle prisoners. We respectfully re-
quest that you appoint a joint committee representing
free industry, the orisons, and the Federal Government
to advise with the Emergency Relief Administration as
to the conditions upon which such a program shall be
established. We are prepared to send representatives
to Washington to cooperate with the prisons and with the
Federal Government in this program at your request." (**)
On May 27, 1935, Mr. J. R. Swift, Chairma.ii of the Code Authority
for the Marking Devices Industry, wrote the following letter to Mr.
Donald Richberg, Acting Chairman of the National Industrial Recover
Board.
(*) Report, Conference of Free Industries and Economic Planning for
Prison Made Products - Prison Labor Program File, Former Public
Agencies Division, ERA.
(**) Report, Conference of Free Industries on Economic Planning for
Prison Made Products - Prison Labor Program File, Former Public
Agencies Division, NBA.
9742
" Supplementing my letter of May 3, 1955, you will
be interestec1 to loiow that a conference of free i.i-
dus tries, interested in the proposed program of
Federal Ai# for prison industries, was held in
Chicago, May 2':, at which twenty-Jane representatives
of twelve industries seriously affected "by prison
competition were present. As ■• result of the delib-
erations of this conference, a platform of principles
was adopted and a message sent to the President. A
copy of each is enclosed.
"An Organization Committee consisting of five repre-
sentatives from the Fabricated Metals, Furniture,
Cordage, Gotten Garment, Clay Products, and Marking
Devices Industries v/(is appointed to formulate a per-
manent Conference Committee. This Organization Commit-
tee has also delegated me to go to Washington immediately
and confer with you and the other members of the U.I.H.3.,
as to the procedure to follow in being of any assistance
we may, in forwarding the plans how under consideration.
"As I must be in New York or. other matters the early
part of the week, beginning May 27 , I should like to
make appointments to discuss these matters with you and
any others you suggest, on Friday and Saturday, May 31
and June 1. Will you kindly advise me, in care of the
Superior Type Company, 203 Fifth Avenue, Mew York,
whether this meets your convenience?
"From the contacts which we have already had with Mr.
Linton M. Collins, Division Administrator of 1T.R.A.
Division Eight, nd with the officers of the Prison Labor
Authority, as well as with representatives of free industry,
we were led to believe that there is general approval of
the proposal that Federal Aid be erctended to the states
to reorganize prison industries from the funds available
under the Emergency Relief Appropriation Act of 1935.
We trust the President has given his approval to this
general policy. We are, however, concerned about the
conditions under which this money shall be alloted to
the several states in order to insure the results desired.
Several suggestions have been proposed, out the one which
appeals most to the industries represented in the confer-
ence recently held in Chicago, I believe, is that an
Advisory Committee representing free industry, the prisons,
and the Federal Government shall be established to asnist
the Emergency Relief Administration in determining these
conditions.
"As action on this matter seems both imminent and im-
perative (assuming that the President will approve the
general policy of extending Federal Aid to state prisons) ,
I should like to propose that such an Advisory Committee
be established by the President, five members of whom
9742
-80-
shall be selected by the Conference of Free Industries,
five by the Association of States Signatory to the
compact, and five from the several departments and
Agencies of the Federal Government interested, and
that this Committee meet in Washington not later than
June 50, to formulate the general conditions under which
this Aid shall be granted, and to cooperate with the Fed-
eral Government in this matter in any way possible.
"I offer this suggestion in the hope that it may at least
serve as a focus for discussion in any conference which
may be possible while 1 am in Washington at the end of the
week." (*)
It is to be noted that Mr. Swift proposed (assuming that the Presi-
dent will approve the general policy of extending aid to state prisons)
that an Advisory Committee be established by the President of whom five
members shall be selected by the conference of Free Industries, five by
the Association of States Signatory to the Compact, and five from the
several departments and Agencies of the Federal Government interested.
Although invitations had been issued to interested industries,
state prisons, Government and Labor Officials, to attend the Chicago
"Organization Meeting Conferences of Free Industries on Economic Plan-
ning for Prison-Made Good?", several representatives of trades and of
industries whose products compete with prison made products met in New
York City, May 30, 1935, and took such action as is outlined in the
following 'telegram:
"DONALD RICHBERC-
CHAIEMAN NATL- INST NATL INDUSTRIAL CONFERENCE BOARD
WASEDC '
AS CHAIRMAN OF INDUSTRIES CONFERENCE Oil PRISON LABQR ■,.
ELECTED AT MEETING CITY CLT.B NEKYORK I.'-iY 20 ATTENDED
BY REPRESENTATIVES OF COTTON TEXTILE BROOM HOSIERY
DHDEBWEAIt COIDAGE TOYS FURNITURE COTTON GARMENT M/JJUFACTURERS
AND WHOLESALE AND RETAIL DRY GOODS MERCHANTS STRONGLY URGE
FOLLOWING PRINCIPLES AS BASIS FAVORABLE ACTION BY NIRB ON
PRISON LABOR STOP FIRST IMMEDIATE APPROVAL ULMAN REPORT
IN PRINCIPLE SHOOED IMMEDIATE WITHDRAWAL BLUE EAGLE FROM
PRISON PRODUCTS THIRD RECOMliENDATION THAT APPROXIMATELY FIFTY
MILLION DOLLARS BE EATIIAEKED UNDER RELIEF PROGRAM TO PROVIDE
BUILDING AND EQUIPMENT FOR EXCLUSIVE STATE USE PRISON INDUSTRIES
WHEN PROJECTS SUBMITTED MEET RELIEF REQUIREMENTS SUPPLEMENTED BY
APPROVAL FROM NIRB CERTIFYING EACH PROJECT TO BE IN HARMONY WITH
GENERAL INDUSTRIAL RECOVERY PROGRAM AND ULMAN REPORT FOURTH THAT
REPRESENTATIVE ADVISORY COMMITTEE FROM INDUSTRY LABOR AND. PRISON
(*) Letter of May 27, 1335 from Mr. J. R. Swift to Mr. Donald Richber;
Prison Labor Program File, For.er Public Agencies Division, NRA.
974-2
-81-
GROUPS WORK WITH KIR3 TO INSURE EXPENDITURES IE CONSTRUCTIVE
MANNER STOP INDUSTRIES CONFERENCE HOLDS NEXT SCHEDULED MEETING
JUKE 4 INVITING ALL INDUSTRIES HOT ALREADY REPRESENTED STOP
OUP. PP.OGPJUv! CONTEMPLATES FURTHER DEVELOPEMENT OF AND ASSISTANCE
TO SIMILARLY INTEGRATED STATE COMMITTEES ALSO COOPERATIVE AC-
TIVITIES WITH ORGANIZED LABOR AND COHSUI.IER GROUPS INTERESTED
IN PRISON EMPLOYMENT PROBLEMS.
A E ALLISON CHAIRMAN 40 WORTH ST 1TEWY0EK" (*)
III. MEMORANDUM OE ACTING DIVISION ADMINISTRATOR COLLIES TO L. C.
MARSHALL, EXECUTIVE SECRETARY OE THE NATIONAL INDUSTRIAL
RECOVERY BOARD, MAY 29, 1935, OUTLINING STEPS TO 3E TAKEN IN
CONNECTION WITH NATIONAL INDUSTRIAL RECOVERY BOARD ACTION IN
PRISON LABOR FIELD.
After consultation with Mr. James Porter Davis, of the Division of
Research and Planning, Acting Division Administrator Collins submitted
a memorandum on May 29, 1935, to the Executive Secretary of the National
Industrial Recovery Board outlining his opinion of the next steps to be
taken in the prison labor field.
Mr. Collin's suggestions were as follows:
"1. That the Board submit to the President immediately the
recommendations as adopted by it at the meeting on Monday, May 27
with the request that he immediately earmark fifty million dollars
from --the relief monies now available to carry out such a program.
"2. That the Board make a definite proposal as to the creation
of an agency, at the earliest possible moment to initiate, coordinate
and supervise a program of action, to effectuate so far as may be
practicable, the recommendations of the Ulman Committee. There is
attached a suggested draft of an executive order creating the Prison
Industries Reorganization Administration which may be used if it con-
forms to the President's views. This order, following that creating
the Rural Electrification Administration, provides for the appoint-
ment of an Administrator to head such agency.
"3. That the Board request the President to ask the Administrator
of the Federal Emergency Relief Administration to proceed to make con-
tracts with the Prison authorities in those states where cotton garments
are now made, and that these contracts be entered into and work under
them begun with all possible speed. This is particularly necessary now
and if undertaken will preclude a grand rush on the part of some con-
tractors to prisons which are now confronted with a great deal of idle-
ness. It will remove from the open market those products which have
the worst effect upon goods manufactured by free labor and sold in
the competitive field. There is attached a schedule recommended by
both industry, labor and prison authorities as to the amounts which
will be satisfactory. It is my belief that this is a fair apprasal
(*) Prison Labor Program File, Former Public Agencies Division, ERA
9742
-82-
except for the state of Kentucky. The estimates there may be re-
duced. However, this is a matter to be worked out between the
Federal Emergency Relief Administration and the respective states
with the cooperation of the ERA and the proposed PIRA.
"4. That the facilities of the Research and Planning Division
of the National Recovery Administration be utilized for the survey,
such surveys to cover:
"(a) Surveys of the market for state use products among
the institutions end other tax-supported agencies
of these states and their political subdivisions
and surveys which might prepare and recommend. a
program of state use industries -for these states and
to aid the respective states -in presenting to the
Prison Industries Reorganization Administration pro-
jects for erection of buildings, purchase and instal-
lation of equipment and other necessary expenditures
for plants and personnel to establish state use in-
dustries in the states applying and cooperating.
" (b) A study of the problem of providing constructive
activities fo.r idle prisoners and methods of de-
veloping such activities.
"(c) Laws effecting prison industries especially in
States now selling prison products on the open
market and recommendations as to necessary legis-
lative work for the establishment' of adequate state
use laws in s\ich states, This survey will of neces-
sity require legal research men, and probably. should
be separate from the other surveys. . .
"It is feasible that in this survey there can be utilized
approximately four hundred, white collar relief workers In
addition to the staff of the Research and Planning Division.
The latter agency will collate and coordinate all the surveys
made.
"5. That contact be made with the prison officials through
the Prison Labor Authority inviting the latter to cooperate with
representatives of affected industries with the view of recommending
programs of diversification and a quota system for all prison industries
in accordance with the findings of the survey.
"6. That provision be made for the selection of representatives of:
t." .'.. c
a. Prison officials
b. Industry and Labor
c. Affected Federal" Agency
to act in an advisory capacity to the Administrator of the agency es-
tablished to administer the Prison Labor Program." (*)
(*) Memorandum of May 29, 1935, from Linton M. Collins to L. C. Marshall
Prison Labor File, Former Public' Agencies Division, HRA.
974-2
■ 83-
IX PROPOSED EXECUTIT3 0 DER ESTABLISHING PHI SOW INDUSTRIES REORG-ANI-
ZATI 0 ! ADMINI STRATI OB .
Accompanying A.cting Division Administrator Collins' memorandum
of May 29, 1925, to the Executive Secretary of the National Industrial
Recovery Board "Fas a -ororjosed Executive Order prepared for the purpose
of establishing the Prison Industries Reorganization Administration uoon
approval and signature "by the President. The proposed Order is as fol-
lows:
"EXECUTIVE ORDER
ESTABLISHMENT OF THE -RISOH INDUSTRIES REORGANIZATION
ADMINISTRATION
"By virtue of and pursuant to the authority vested
in me under the Emergencv Relief Appropriation Act of
1935, approv-d April 8, 1935 (Public Resolution No. 11,
74th Congress) , I hereby establish an agency within the
Government to be 'cr.own as the "Prison Indistries Re-
organization Administration", thehead thereof to be known
as th^ Administrator.
"I hereby prescribe the follo^inf duties and functions
of the said Prison Industries Reorganization Administra-
tion to be exercised and performed by the Administrator
thereof to be hereafter appointed :
"To initiate, formulate , administer and super-
vise a program of approved projects with
respect to replanning and reorganizing the
existing -orison industry system and -orison
welf ar • activities of the several states
and the political subdivisions thereof, with
the view of replacing such systems by adequate
state use systems as rapidly as conditions
may permit: thereby removing prison made
products from the open market.
"In the performance of such duties and functions,
expenditures are hereby authorized for necessary supplies
and equipment; law books and books of reference, director-
ies periodicals, newspapers and press clippings; travel
expenditures, including the expense of attendance at
meetings when specif icall - aeeth-rized by the Administrator;
re- tal at the seat oT Government and elsewhere; pur-
chase, operation and raaintenan.e of passenger-carrying
vehicles; printing and binding; and incidental expenses;
and I hereby authorize the Administrator to use the
services of such agencies of the Federal government as
may be necessary to carry out +he purposes herein stated,
to accept and utilize such voluntary and uncompensated
services, and witn the consent of the State, such State
and local officers and employe s, and appoint, without
9742
-84-
regard to the provisions of the civil service laws-, such
officers and employees, as may "be necessary, prescribe their
duties and responsibilities and without regard to the
Classification Act of 13.3.r*, as amended, fix their compen-
sation: Provided, That in so far as practicable, the
persons employed under the authority of this Executive
Order shall he selected from those receiving relief.
"For the Administrative expenses of the Prison
Industries Reorganisation Administration there is hereby al-
locrted . to the Administration from the appropriation
made by the Emergency Belief Ar-.ropri'ation Act of 1935
the sum of $100,00". Allocations will be made hereafter
for authorized projects."
The White House,
June , 1935" (*)
This proposed Executive Order provided for one he?d of the
prison Industries Reorganization Administration to.be known as
"Administrator". According to the plan outlined1 in the memo-
randum of May 29, 1335, representatives of prison officials,
Industry, Labor and any affected Federal Agency would act as
advisors to the Administrator. This would have given all in-
terested groups representation.
On June 15, 1935, the President 'by Executive Order 1T0. 7075
terminated the "National Industrial Recovery 3oard and re-
organized the National Recovery Administration for the iurpose
of continuing the administration of the -provisions of Title 1
of the National Industrial Recovery Act, as amended by Public
Resolution 23 of the 74th Congress, and created the office of
Administrator of the National Recovery; Administration. This order
appointed James L. O'Nei'Ll as Acting Administrator of the National
Recovery Administration,
V.' MEMORANDUM OR ACTING DIVISION ADMINISTRATOR COLLINS TO THE
ACTING ADMINISTRATE OR THE NATIONAL RECOVERY ADMINISTRATION
. URGING THAT HE PRESENT THE PRISON LABOR PROGRAM TO THE PRESIDENT.
Acting Division Administrator Linton M. Collins submitted the
following memorandum to the Acting Administrator of the National
Recovery Administration on June 20, 1933, in an effort to stimulate
proposals, to the President regarding the nrison ">rogram.
(*). Prison Industries Reorganization Administration File, Former
, . Public Agencies Division, N.R.A.
9742
-35-
11 1. Mr. O'Heill, Dr. Marshall and Mr. Coonley, or
someono &' lignated "by them should, present tho Prison
Program to the President and ascertain from hirn whether
he wants this undertaken at this time, and is willing to
havo $50,000,000 of relief monies appropriated end
segregated for the effectuating of such Prison Program.
This follows up recommendations of the NIHB. Ho thing
further can he done until this step is taken and
attitude of President made known. Monies are rapidly
being allocated and a further delay will be fatal.
"2. Set up agency or designate authority to
Public Agencies Division of 1JRA, for accomplishment
of the Program.
"3. Contact Mr. Hopkins of FSRA and have his
agency ma^3 contracts with prison authorities for the
manufacture of cotton garments for relief purioses in
accordance with recommendations of Ulman Committee.
"4. Have Public Agencies Division with assistance
of Mr. Davis of Research ana Planning Division begin
immediately to make the necessary surveys, if
President gives assent." (*)
VI. CONFERENCE OF UFA EXECUTIVES 01T PHI SOU LABOR QUESTIONS, -JULY 1, 1935
On July 1, 1955, Messrs. L. C. Marshall , Director, Division of
Heview, Premiss L. Coonley, Director , Division of Business Coopera-
tion, Linton M. Collins, Acting Division Administrator in charge of
prison matters, James P. Davis of the Division of Research and Plann-
ing and Burton E. Oppenheim, Deputy Administrator in the Textile
Division, all of HBA, held a conference on the -roblem of prison labor
competition. The following statements represent the concensus of
opinion af those present according to 2 memorandum of July 1, 1935
from the Director of the Division of Business Cooperation to the
Acting Administrator:
"1. It is highly desirable that some constructive
program alon^ the lines recommended by the Ulman Committee
and approved in principle by the national Industrial
Recovery Board on May 27, 1935, be inaugurated.
(*) Prison Labor Program File, Former Public Agencies Division,
NRA Memorandum of June 20, 1935, From Linton M. Collins to
James L. 0' Weill.
Q7A?
742
-86-
"2. It appears that only the President and his
advisers can decide as to whether this can and should
be done with funds from the Work Relief Appropriation.
"3. If Federal funds are to "be allocated for this
purpose an independent agency should he set up to make
surveys, develop and coordinate projects and supervise
the expenditure of the funds provided.
"4. The definite ear-marking of a substantial sum
such as the $50,000,000 proposed by the Ulman Committee
is necessary to insure state cooperation.
"5. The supervisory agency should have the active
cooperation of ?dvisory committees representing industry,
the prisons and the affected Government agencies.
"6. Since the Prison Labor Authority and industries
affected by Prison Labor Competition have been pressing
the HRA for advice, the Acting Administrator of the NBA
should be requested to present the statements hereinabove
noted to the President for final determination on the
f o 1 1 o wi ng b a s i s :
"A. The President should be asked if he- is
favorable to the ear-marking of funds for
the promotion of the i;state use" system
in prj sons and the removal of prison pro-
ducts from open competitive markets. If
he is not favorable, the matter can be
dropped.
"B. If the President is favorable inclined
toward this matter, he should be asked
to obtain advice ^s to whether this can
and should be done with funds from the
Works Relief Appropriation. If the Presi-
dent determines, after proper advice, that
the funds cannot he so used, the suggestion
of the Ulman Committee must be abandoned.
"C. If such funds can be used, it is recommended
that the President set up an independent
agency to make surveys, develop and coordinate
projects and supervise the expenditure of
funds ■'•irovided. Such agency should have the
active cooperation of advisory committees
representing industry, the irisons r-nd the
affected Government agencies." (*)
(*) Prison Industries Reorganization Administration Pile,
Former Public Agencies Division, 1T.R.A.
9742
-87-
VII. MEMORANDUM OF DIVISION ADMINISTRATOR COLLINS TO PRENTISS COONLEY,
DIRECTOR, DIVISION 0? BUSINESS COOPERATION.
On July 23, 1935, Acting Division Administrator Collins again
attempted to expedite action on the Prison Labor Program by sub-
mitting a historical review of the Compact and its operations under
the N.R.A. This review is in the form of a memorandum to Mr.
Coonley. The memorandum further points out that steps should he
taken to present the national Industrial Recovery- Board's action
of May 27, 1935, to the President and ascertain from him whether or
not he desires that the proposed program he encouraged. If the
President looked upon the program with favor it was necessary that
an agency he 'set up to carry out the program; While this program
was being instituted it was felt that relief for the Cotton
Garment Industry could be obtained by the FERA, talcing over cotton
made prison garments for relief ;urr oses so that the same would
be removed from the public market as recommended by the UTman
Committee. (*)
VIII. EXECUTIVE ORDER 7194 ESTABLISHING PRISON INDUSTRIES REORGANIZA-
TION ADMINISTRATION.
Mr. Prentiss Coonley, Director of the Division of Business Co-
operation, conferred with the President concerning the prison
program early in September 1935. Shortly following this conference,
Executive Order No. 7194 was issued establishing an agency within
the government to be known as the "Prison Industries Reorganization
Administration". The order specifies that "the governing body of
the Prison Industries Reorganization Administration snail be a
Prison Industries Reorganisation Bo~id consisting of five members to
be appointed by the President and to hold office at his ■ pleasure."
This Board is authorized to prescribe such rules and regulations and
to delegate to its agents and representatives such powers, as, in
its discretion, it shall deem necessary and proper for the performance
of the duties and functions of the Prison Industries Reorganization
Administration and for effectuating the purposes of the Order.
The duties and functions prescribed for the Prison Industries
Reorganization Administration are set forth in the Executive Order
itself. (*)
(*) Appendix No. 1 Memorandum of July 23, 1S35 from Linton M. Collins,
to Prentiss Coonley, Prison Industries Reorganization Pile, Former
Public Agencies Division, IT,R.A.
(**) Appendix No. J - Executive Order Ho. 7194
9742
-88-
In addition to differences in minor details this Order differs
essentially from the proposed Administrative Order recommended "by the
Acting Division Administrator in charge of the Prison Compact in that
it provides for a governing Board of five members rather than an
Administrator.
The establishment of the Prison Industries Reorganization' Board
by the approval of the President of Executive Order Ho. 7194 on
September 26, 1935, terminated official action of the ilational
Recovery Administration with respect to the prison labor problem.
The Prison Industries Reorganization Administration was thereafter
responsible for the carrying forward of the constructive attack on
the problem originated by the National Recovery Administration.
9742
-89-
CHAPTER VIII
ADMINISTRATIS' OF PRISON LABOR COMPACT
I. N.H.A. PERSONNEL.
From the time the National Recovery Administration received the
proposed Code of Fair Competition for the Prison Industries to December
3, 1933, practically all -orison matters presented to the N.R.A. were
referred to Mr. John M. Keating, Assistant Counsel who was the N.R.A.
official whom industry and prison representatives consulted and advised
with in formulating the Compact.
After Mr. Keating resigned from the N.R.A. the Prison Labor problem
was handled principally by Mr. Howard E. Wahrenbrock, Assistant Counsel,
up to April "33, 1934. In a few cases Mr. Wahrenbrock was assisted by
other members of the Legal Division during this time, but these assistants
worked Tinder his instructions and guidance.
On 'April 23, 1934, Mr. Linton M. Collins was appointed Deputy Admin-
istrator in charge of the Prison Compact, and Acting Division Adminis-
trator of Division Eight. Mr. Collins continued in this capacity until
August 20, 1935, when he resigned from the National Recovery Administration.
During the time he had charge of the administration of the Prison Compact
he was assisted by the following: V. J. Clarke, Senior Assistant Deputy
Administrator; Howard E. Wahrenbrock; Sydney R. Prince, Jr., Peter Seitz;
William Wise and Spencer Pitts, Assistant Counsels and Legal Advisors;
James Porter Davis, Research and Planning Advisor; Miss Rose Schneidermann
and Sidney Hillman, Labor Advisors; Mercer S. Johnston and Stacey May,
Consumer Advisors; Jonathan Chace, Dexter A. Tutein and C. L. Heyniger,
Industrial Advisors.
II. PRISON LABOR AUTHORITY PERSONNEL.
In addition to the three Presidential Appointees and the duly elected
members of the Prison Labor Authority (*•) this Authority employed Mr.
Howard B. Gill as Economic Advisor. Mr. Gill acted in the capacity of
a managing agent for the Authority as well as Economic Advisor, and
supervised the headauarters office in Washington, D. C. Prior to his
appointment by the Prison Labor Authority to this position in May, 1934,
he was Superintendent of the State Prison Colony at Norfolk, Massachusetts,
for six years. (1928-1934). Before 1938 he neld the following position
with the United States Government.
1925 - Special Investigator of Prison Industries, United States
Department of Commerce.
1926 - Purchasing Agent, United States Department of Justice.
1927 - Chief Investigator of Prison Studies, United' States Bureau
Department of Efficiency.
(*) Chapter III, Section III, Election of Formal Prison Labor Authority,
ante.
9742
-90-
With this back-ground it "as recognized that the Authority left the actual
management of its affairs, subject to their ap-nroval, in the hands of a
man who had considerable experience from the standpoint of managing -orison
industries, investigating penal institutions and -Durchasing fcr such
institutions.
III. EFFORTS OF N.R.A. OFFICIALS TO COORDINATE OBJECTIVES OF THE COMPACT
WITH PRISON LABOR AUTHORITY AMD AFFECTED CODE AUTHORITIES.
The major problem N.R.A. officials encountered in seeking to obtain
compliance of the terms of the Prison Compact was that of reaching satis-
factory voluntary agreements between -orison manufacturers and free industry
manufacturers with respect to establishing charges for labor and overhead
in an effort to arrive at prices for which prison goods could be sold and
conform to the provisions of Article V of the Compact. The provisions of
this Article are as follows:
"ARTICLE V"
"Section A. -- Prison products, when sold by the -orison or
through a. contractor, whether sold direct or through any agency,
shall be scld not lower thftn the fair current price prevailing in
the market 5n which -che product is customarily sold — to whole-
salers, ret?ilers: or consumer'- as the case may be."
"Section 3. — Ho peral or- correctional institution or agency
thereof shall enter into -jiy ccbt&p.t for the labor of prisoners
which does not insure a returii irom the contractor to the state or
its political subdivision and/or the prisoner of an amount eaual
in value to the cost Der unit of product for labor and overhead
necessarily paid in competing domestic private industry on the
comparable product: Provided, that the imposition or collection
of such amounts or charges stall not be such as will requre the
sale of urison products at a higher price than specified in Section
A hereof. "
In order to determine '"hat these prices shonld be it became necessary
for the Prison Labor Authority and Representatives of the various Code
Authorities affected by -orison competition to meet and review their costs
in an effort to arrive at some favorable decision. In .most cases where
this was done the results were beneficial to both groups and fair prevail-
ing prices fcr the prison products were agreed unon. However, the diffi-
culty would arise when labor rates and the cost of raw materials would
change in a given area. These changes would materially effect the prices
at which the goods would be sold to wholesalers, jobbers, retailers or
whomever the purchaser might be, and because of these changes, especially
if the prices were lowered, other competitors in the market would rush in
and complaon about the unfair -oractices that were carried on by the prisons
and how these prices were demoralizing their respective markets. Especially
was this true in the case of the Cotton Garment and Binder Twine Manu-
facturing Industries. Nevertheless the Prison Labor Authority was con-
tinually attempting to hold its orison manufacturers in line and in most
cases were successful until so.ne free industry manufacturer would cut
his -orices. Then the Prison Labor Authority would authorize their insti-
tutions to meet such -orices. This, of course, resulted in continual
9742
-91-
complaint and dissatisfaction on the part of both groups. However, as
the Cotton Garment Manufacturing Code and many others contained no nrice -
fixing provisions, the only way to adjust these differences was through
conferences with the affected Code Authorities as provided for in Article
VII, Secticn 2 (d) of the Compact which is as follows:
"To determine, after conferring with the Code Authority of
the Industry affected, and upon reauest of any persTi or firm affected,
the prices, charges and amounts nrovided for in Article V, Section A
and 3 hereof; such determination to be subject to aD"oeal to the Pres-
ident of the United States. In establishing fair current prices,
charges and amounts, the Prison Labor Authority shall take into con-
sideration all factors necessary to insure the marketing of prison
products on a fair competitive basis. It may consider, among other
factors, the extent to which monopolistic -practices exist in any trade
or industry in which the prison industry operates, the degree to which
prison products may be discriminated against, the ability of the
prison industry tc a.djust its operations and production to meet
changing styles, designs, and/or other conditions beyond its control,
and any restrictions placed upon the marketing of prison products.
The fair current nrice may net be such as will effectually prevent
the sale of prison products or destroy existing markets, nor shall
it permit the sale of -orison products at such -nrices or in such
manner or in such quantities as will depress the standards, wages or
working conditions of the competing private industry or defeat the
purpose sought to be obtained through adherence by a competing
private industry to a code of fair competition under the National
Industrial Recovery Act." (*)
Continual effort was made by the 1T.R.A. Officials charged with super-
vision of the administration of the Compact, to see that fair decisions
with respect to the various questions presented were arrived at wherever
possible. As an example of this effort to assist those interested in
arriving at such decisions the following take'n from the minutes of the
Prison Labor Authority Meeting of October 16, 1934, indicates the attitude
of the Deputy in charge on problems which require fair and honest admin-
istrative judgment.
"Mr. Collins discussed the -orice policy adopted by the Prison
Labor Authority and expressed his approval of it -providing the Prison
Labor Authority was willing to change its authorization of minimum
prevailing prices whenever it was shown that competing firms whose
prices were used as a basis for determining such minimum prices, were
not complying with code provisions."
The -oricp policy referred to in this statement is quoted in Chapter
III, Section VI of this report.
The Prison Labor Authority was unable to accomplish a great deal with
respect to encouraging the various states signatory to the Compact in
diversifying their -orison industries. Although the Compact gave the Auth-
ority the power tinder Article VII, Section 2-(f)-l to -
"formulate such regulations as may be consistent with statutory
9742
(*) This re-oort does not attempt to discuss the legality of
such conferences.
Provisions and as may be necessary to assure a diversification of
the output of prison industries in fair proportion to the production
of the industries affected. "
Undoubtedly the action of the Prison Labor Authority in establishing
by agreement minimum charges for prison made. products resulted in some
curtailment of the sale of such goods on the open market. However such
statistical information as was collected by the National Recovery Admin-
istration by means of a questionnaire (*) sent out early in 1934, is
inadequate for the ourpose of drawing conclusions as to the extent of
curtailment.
Many complaints which were filed with the H.H.A. against prison
competition, were of a general nature in that the complainant would write
or wire in objections to the activities of some particular prison with
respect to the manner in which said prison was disposing of its goods,
alleging the goods \vas going onto the public market at prices unfair to
free industry. However, in many instances when the complaint was traced
down it would develop that some other free industry competitor had lowered
his price on the given commodity and as a result the -orisons were forced
to meet this lowered price in order to dispose of their products. This
happened many times when the code which both free industry competitors
were operating under did not contain price fixing provisions and both
were living up to their codes in other respects. This method of meeting
competition was looked upon as unfair. However, when free industry could
not control its own members through the Code Authorities, it was felt
that the prison people could hardly be expected to restrain their members
with respect to such sales. This was especially true in the Cotton
Garment Trade.
In the State of Minnesota There the state prison manufactures farm
machinery for sale to the public, many complaints were filed with the
N.R.A. regarding the prices at which these products were being placed
on the open market in that State. Upon investigation it was found that
the legislature of the State of Minnesota, in 1933, passed a statute which
provided that the maximum price of machinery made in the State Penitentiary
for the calendar years 1353, and 1934 should not exceed 80c/o of the average
price charged in 1932. (**).7or 1932 the maximum price was set by statute
in the 1931 State Legislature. This statute in substance is as follows:
"That for the calendar years of 1931 and 1932 the maximum price
charged to wholesalers, retailers and selling agents within the
State of Minnesota for agricultural machinery of all kinds manufac-
tured in the state prison should not exceed 85fi of : the average price
charged for similar items of such machinery sold in similar quantities
to such wholesalers, retailers or selling agents during the year 1930. "
( *** )
As the Minnesota State Prison was the only prison engaged in the
manufacture of farm machinery subject to the Compact, this problem was
(*) See Pago 153 of This Report.
(**) Chapter 343, 1933 Session Laws- Minnesota.
(***) Chapter 340, 1931 Session Laws - Minnesota.
-93- •
confined solely to that State. However, such legislation did have a
demoralising effect uoon the Farm Eouipment Manufacturing Industry,
hut as these sales were controlled "by & state statute, it was a matter
beyond the control of the National Recovery Administration.
After Linton M. Collins was anointed Deputy Administrator in charge
of the Prison Compact all -orison matters with respect to provisions of
Codes of Fair Competition were to be handled through his office either
by himself or his assistants. In the main a goodspirit of cooperation
existed between other Deputies in charge of industrial and agricultural
codes and Division Eight. A few tiies those in charge of industrial codes
would look with favor upon some proposed provision which would have re-
sulted in hardship to the Prison Industry effected, but these generally
fail©d for want of formal approval. On June 5, 1934, Order No. 303-5
titled "Code of Fair Competition for the Cordage and Twine Industry
aporoval of Application for Exemption of the Binder Twine Manufacturers
from Schedule B" was issued. This Order was actually an exemption from
Schedule B of the Binder Twine and Cordage Code and granted permission
to manufacturers of binder t^ine to dispose of their twine at prices
other than those stated in their price list, provided that detailed in-.
formation concerning all such sales be reported iinmediately to the
Code Authority. The stay w s to be effective until August °8, 1934. This
was one order which went into effect some time before the prison people
had any knowledge of its approval and resulted in permitting the free
industry binder twine manufacturers to lower their nrices and sell their
twine before the Prison Labor Authority knew anything about the authorized
change in price policy. This was Tie of the few times when administrative
action was taken which seriously affected the prison industries without
the Deputy in charge of Prison Industries being informed. Usually when
objectiens were filed by the Prison Labor Authority, an opportunity would
be given the Prison people to enter their objections formally after the
issuance of a temporary stay so that opportunity would be given everyone
interested to be heard.
IV. LESAL ASPECTS OF THE COMPACT.
During the formulative period of the Prison Compact in the fall of
1933, those who assisted in drafting the Compa.ct provisions, as well as
those who signed it as officials of their respective states did not
formally consider the legal aspects of such a working agreement. The
purely legal phases of the instrument were never given very serious con-
sideration as it was recognized each institution was regulated by the
statutes of its respective state and the Compact was entered into volun-
tarily with the spirit of cooperation in an endeavor to assist in effect-
uating the policies of Title I of the National Industrial Recovery Act.
In a file co-ny of a letter of September 4, 1934, to Professor Burke
Shartel, of the Michigan Law Revie", from James V. Bennett, Assistant
Director, Federal Bureau of Prisons and. Secretary-Treasurer of the
Prison Labor Authority, are tis,o paragraphs which briefly state Mr. Bennett's
understanding of the legal aspects of the Prison Compact.
"You understand, I presume, that the Prison Compact, so far,
is merely a voluntary arrangement between the states and has no
>742
-94-
legal status1 other than that derived from the National Recovery Act.
I think that' Practically everyone realizes that the Federal Govern-
ment has but little authoritative jurisdiction over the states in
this matter, , out it can and does help us to enforce the provisions
of the Compact by invoking -nosers vested in it ov*r other industries.
"Our 'Compact is implemented by the clause in the Retail Code
which prohibits the sale on the open market of prison-made goods
not ma.de under its terms. In other i"ords, if the State of Michigan
should be declared a violator of our Compact, the Retail Code Auth-
ority would immediately forbid any of their members from selling
the products of the State of Michigan. There are also other clauses
in certain of the other Codes which help us to enforce our C ompact.
It is, however, admitted .that with regard to certain products, the
Compact cannot legally be enforced under present conditions. To ci + e
an example; Minnesota manufactures a large amount of binder twine
which it sells directly to the farmers or through farmers' unions
and coopera.tors. If Minnesota should violate our Compact it is very
doubtful that we could prevent the sale of its Products because no
N.R.A. Code applies to, these agencies." (*)
In response to an inouiry of Acting Division Administrator, Linton
M. Collins, relative to the legal validity of the Prison Labor Compact,
to Assistant Counsel Peter Seitz-, a memorandum •- wc s submitted which in
substance is as follows:
"This memorandum is not intended to be a thorough nor exhaustive
legal analysis of the validity of the Prison Labor Compact. It merely
represents a precis of several legal arguments which come to mind
on the subject. A definitive legal opinion would reauire a thorough
study of the following aspects of the problem."
"1. The nature of state compacts.
"2. Whether Congress may delegate authority to consent to
state compacts expressly granted in Article I, Section 10
of the Constitution to the Executive Branch of the Govern-
ment.
"3. Whether the National Industrial Recovery Act contains such
delegation of authority.
"4. Whether a state compact is an "agreement" under Section
4(a) of the National Industrial Recovery Act.
"5. If so, whether a. compact is such an agreement, if it fails
to contain the mandatory provisions of Section 7(a) of the
National Industrial Recovery Act.
"6. Whether a state compact signed by governors wardens of
state ririsons, commissioners of correction, etc., on
behalf of the signatory states, without supporting state
T*) Prison Labor General File "B", August to" December, 1934.
3742
-95-
legislation adopting or anproving the conpact or
making its provisions the law of the state is duly
signed by the state and enforcible against it."
" A. State compacts require the consent of Congress*
Article I, Section 10, Clause 3 of the Federal
Constitution reads in part as follows:
"Ho State shall, without the Consent of
Congress,*** enter into any Agreement or
Compact with another State, or, with a
foreign power***"
11 B. It is doubtful 'The the r Congress nay delegate
its norTer to give such consent.
There is a well recognized "body of lair -to the
effect that Congress may delegate to the Execu-
tive Branch of the Government its power to make
rules and regulations even when the use of such
power involves exercise of considerable degree
of discretion. It is doubtful, however, whether
a delegation can be made under a clause of the
Constitution which specifically requires the
consent of Congress. Delegation ha.s usually
been effected under broad and general clauses,
such as the Commerce clause."
" C • The Hational Industrial Recovery Act does not
contain any Dele,. -at ion of Congressional -lower
to consent to Compacts to the Executive and
the CoiTjact is not an Agreement within the
meaning of the national Industrial Recovery
Act.
Assuming (without conceding) that a delegation
of authority to approve Sta.te Compacts may be
made by Congress to the President, in this in-
stance it must be made by the national Indus-
trial Recovery Act, which is cited in the Pres-
ident's Order of Approval of the sa.id Compact,
approved April 19, 1934, Section 4-a of Title
I of the IIIRA provides that:
"The President is authorized to ***
approve voluntary agreements between
and among, persons engaged in a trade
or industry, labor organizations, and
trade or industrial organizations, as-
sociations, or groups relating to any
trade or industry, ****".
9742
-96-
Let us assume further that the States engaged in
Prison industries are persons or groups within
that meaning of Section 4<a; out is the Compact
an agreement within that Section? Section 7-a
reads as follows :
"Every Code of Fair Competition, agree-
ment and license apprcveds prescribed
or issued nndef this title shall con-
tain the following conditions: ,(l)
That employees shall have the right to
organize and "bargain collectively *****
etc".
Obviously a compact relating to the regulation of
Prison industries cannot contain the provisions
set forth in Section 3-a, required in all agree-
ments which may he approved under Title I of the
Actc In ray opinion this Section must he read in
connection with and is a limitation upon Section
4~a>-. In other words the agreements, which the
Fresident may approve under Section 4-a, are those
which contain provisions set out in Section 7-a.
The present compact aontains no such provisions.
The conclusion must follow that the ITIRA cannot be
relied upon as a basis for the authority of the
President (delegated by Congress) to approve the
Compact."
"D. The Prison Labor Compact may not have been 'properly
executed.,
The signatures of the sever; 1 States affixed to the
Compact were subscribed by Governors, Wardens of
State Prisons and State Commissioners of Correction.
In only one instance (Kentucky) was there State Legis-
lation in support of the Conpacto Ho definite rules
are set forth in the Federal or State Constitutions
as to the procedure to be followed in subscribing the
signature of a State to a Compact. However, it is
considered to be the better rule to require State
legislation adopting the act of its agents in signing
the Compact and providing that the provisions • of the
Compact are the laws of the State."
"A further inquiry is being made into this subject and I
will report to you as soon as it is completed." (*)
(*) Prison Labor General Pile "3",' August to December, 1934, Memoran-
dum Dated December 1, 1934,
9742
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From this nenore.nd.imi it is evident that the Compact lacks validity for
reasons of the points raised and answers contained therein. Attached
to this report is Appendix K and supplement (*) which are two memoranda
of December 4, 1934, and December 7, 1934, respectively from Assistant
Counsel Peter Seitz, to Associate Counsel, Jack Garrett Scott. These
memoranda quite clearly establish the Assistant Counsel's views on the
legal questions involved. After study and analysis it is apparent to
the reader that the Prison Compact was merely a voluntary working
arrangement by the States Signatory thereto and the National Recovery
Administration, to carry out the objectives of the national Industrial
Recovery Act so far as was possible under existing circumstances. On
May 14, 1935, I.Ir. Israel Packel, Assistant Counsel, Legal Research,
N.R.A. , submitted a memorandum on the Federal Regulations of Prison Labor
Products. (**) This memorandum deals with various phrases of the prison
labor problem. The following question was prepared and conclusions were
reached:
"Question: To what extent nay the Administration
regulate the use of orison labor or its products
and to what extent can immunity from such regula-
tion be claimed oi-r the State or its contractors
as governmental agencies?"
"Conclusions: 1. The interstate movement of pri-
son made goods may be regulated by way of pertinent
code provisions.
2. The production of state prison goods and their
consumption by the state itself may not be regu-
lated.
3. The -production of state prison goods even though
they are eventually sold in the state is a govern-
mental function, immune from regulation.
4. The sale of prison made goods by the State is
so incidental to the production that it also is
probably a governmental function.
5. Contractors who deal with the State may be re-
gulated, so long as the regulations do not discrim-
inate, interfere with or impair the right of the
state to sell the goods. "
These were transmitted to I.ir. Jack G. Scott, Associate Counsel,
1J.R.A. by Mr, H, E. Wahrenbrock, Assistant Counsel, II. R. A. Hay 22, 1935.
(*) Appendix Ho. K and Supplement. •
(**) Prison Labor, Legal Division Piles, tf.R.A. Legal Research V.o . 864.
9742
V. IIITEBPHETATIOilS.
On July 20, 1934, the Interpretation Committee of the Cotton Garment
Code Authority issued the following ruling ruling:
"YThen a manufacturer employs convict lahor in the
production of cotton garments and also employs free help,
such as office employees, foreman superintendents,, ship-
ping clerks, etc, in connection with production of said
garments, these latter employees and this manufacturer,
insofar as -orison production of cotton garments is con-
cerned, is subject to the jurisdiction of the Cotton Gar-
ment Code, However, such a manufacturer is not entitled
to the Cotton Garment Code Authority Label for such gar-
ment."
This interpretation was submitted to the IT. I.. A. and in a letter dated
August 6, 1934, the: Cotton Garment Code Authority was advised of ap-
proval as follows:
"This rulinr in question 76, tia&e 3 of the Ilinutes
of the Interpretation Committee of July 20, is hereby
approvedc"
On October 16, 1934, the Prison Labor Authority voted the following re-
solution:
"All goods produced, in whole or in part, in the
prisons as defined in Article 1 of the Compact come under
the sole jurisdiction of the Prison Labor Authority, hence
the prison contractors insofar as they produce or distri-
bute such )roduots are under the cole jurisdiction of the
Prison Labor Authority^"
The Prison Labor Authority contended that under the provisions of
Article I of the Compact they should have sole jurisdiction of this class
of employees becuase the Compact specifically states in that Article in
the l,\.st sentence which defines the word product that "'product' shall
mean all goods, wares, merchandise and minerals manufactured, produced or
mined, in whole or in part by prison industry for other than State Use."
After receipt of the above resolution by Division Eight, the matter
wos referred to the Legal Division for action. Pending a decision briefs
were filed with the IT. R. A. from both the Prison Labor Authority and the
Cotton Garment Code Authority each supporting the contention that they
should have jurisdiction over such employees in question. Hoirever, on
December 28, 1934, .~r, Clarence I. Blau, Assistant Counsel submitted, a
memorandum to Mr. Janes C. Worthy, acting Assistant Dervuty Administrator
of the Apparel Section of IJ.R.A. , which states as follows:
9742
-99-
"I hr.ve your memorandum of December 26, 1934. Clearly,
LIr. Clarke is correct. If the Prison Labor Authority has
jurisdiction over the -products, it is difficult to see how
the Cotton Garment Code Authority can have jurisdiction of
i)?rt of the working conditions.
"I have discussed this letter T7ith the Assistant Counsel
assigned to the Prison Labor Compact. He feels that it may
be lossible to work out some agreement ^oj which the Prison
authorities will see that free labor employed under the con-
ditions described in adequate cnmoensa.ted. He, however, feels
that this matter must be handled through the 'Prison Labor Au-
thority and not through the Cotton Garment Code Authority in
view of the rather delicate relationship between the Cotton
Garment weo-ole and the Prison Labor people." (*)
Thereafter, it "as considered that free labor employed by contrac-
tors operating in state orisons -ere subject to the jurisdiction of the
Prison Labor Authority insofar as working conditions were concerned
rather than the Cotton Garment Code Authority. However, there appears
to be no reason why employees of free labor working in a state prison for .339-
contractors should not have complied with the -rpr;et hour and general
labor provisions of the corresponding free industr--- codes as to such
labor. (**)
Another interpretation was proposed ~o~j the Cotton Garment Code Auth-
ority which would in effect place all -orison contractors under the Cotton
Garment Code Authority. An opinion o.i this proposal "as given on April
11, 1935, by LIr. Clarence I. Blau, Assistant Counsel, N. R.A. , as follows:
"I do not think that the" interpretation requested is
legitimate. Hor do I think that the result desired can be
legally achieved through amending the Code. I do not think
that we can indirectly control the activities of a. sovereign
state in the conduct of its penal institutions by making one
who contracts with such state a member of a competing free
industr;-. It would seem that if we can regulate by Cole
procedure the relationship between one who contracts with
the prison and the prison, we can indirectly regulate the
affairs of the sovereign state in derogation of its con-
stitionally reserve powers.
"If I am wrong in this, I think it is certainly clear
that a different type of an amendment should be proposed than
the one suggested by the Cotton Garment Industr-/. This amend-
ment obviously conflicts with other parts of the Code structure.
For example, the Code apparently prohibits cutting oy a con-
tractor. The definition of "manufacturer" at the ore sent time
is so worked as to take account of that wrohbition. If the
(*) Prison Labor Interpretation Pile.
(**) Letter dated June 10, 1935, 'from V. J. Clarke, to J. V. Bennett,
Prison Labor Interpretation Pile.
9742
-100-
amendment were approved that would m longer "be the case.
Further, r those who enter into contracts with prisons would,
if this amendment were approved and interpreted in the way
in which the Cotton Garment' Code Authority desires, be com-
pelled to place Cotton Garment Code Authority labels on
their merchandise. That would certainly bo in conflict with
the desires of the Code Authority, if one can assume that
they have not completely reversed anything that they have
stood for for the last year or so. (*)
This question was raised by Mr. Raymond tfalsh, Counsel for the Cotton
Garment Code Authority in a letter to D. C-. Edwards, Division Adminis-
trator, Textile Division, IT.il.A. , >'f August 23, 1934. Likewise, on
September 10, 1934, the Prison Labor Authority joined in a similar re-
quest of the 1I.H.A. on the sane question and submitted reasons why they
felt that such contractors should be under the jurisdiction of the Pri-
son Labor Author it"/. (**)
VI. STAYS
In addition to the stay of Administrative Order Ho. V-2 referred to
previously in this report (Chapter IV, Section VI), the Cotton Garment
Code Authority acquired approval on October 15, 1934, of an Or~er propos-
ing to amend the Cotton Garment Code by including. the following as a fair
trade practice provision of that Code:
11 Section PI. Shipment of Prison iladc Goods.
No member of the industry shall ship any merchandise or
goods manufactured by prison labor into any State where
the sale of said goods is prohibited or, restricted by
State law, and in the event that State laws shall require
other conditions such as branding, then the same member
of the industry shall conform with all of the local re-
quirements o." the particular state."
The Order of Approval contained a ten day stay affording an opportunity
for interested persons to file objections. Pending this ten day period
the Prison Labor Authorit3r filed a formal protest against the inclusion
of such a provision in the Cotton Larment Code. The protest was based
on the following:
1. The Prison Labor Authority had not been consulted in
regard to -oroposed provision although it pertained to
prison made goods.
2. The enforcement of the provisions would result in dis-
criminatory action against a few -prison factories.
3. Such a clause would place in the hands of the Cotton
Garment Code Authority the police power which right-
fully belong to the states themselves, without giving
them the responsibility for enforcing the law uniformly
in all industries.
(*) Prison Labor Interpretation Pile.
(**) Prison Labor Interpretation Pile.
9742
-101-
In a memorandum of August 25, 1934, from Mr. Horward E. Tfahrenbrook,
to Linton il. Collins, the following is stated with reference to the
above order of October 16, 1934*
"In my opinion the -provision is illegal, it is not in
accord with U.S.A. policy and should, in no event, irrespec-
tive of questions of legality and policy, become effective
without an opportunity for the prison Industries affected to
be heard."
The result was the Order was never put into effect. (*)
VII. PRISON IHDUSIHIE3 STATISTICS AS COMPILED 3Y. N.R.A.
Luring January and February, 1935, the Public Agencies Livision of
the N.R.A. , pursuant to a request of the National Industrial Recovery
Board initiated a set of prison industry questionnaires which was sent
out to all of the states in an effort to obtain adequate information re-
lative to various phases of prison production, employment, and the sale
of prison products by the respective states. This was done with the objec-
tive of establishing a. quota-system for ail prison industries limiting
their oroduction for the open market at a ?;oint no greater than tha.t which
existed at the time the Compact came into existence.
The Public Agencies Livision obtained some information from 31 states
and the Listrict of Columbia upon the return of these questionnaires.
However, as the Administration did not, from the questionnaires, obtain
complete information regarding each state institution, even in these
states, no general conclusions can be drawn from the information in com-
parison with that published by the United State Lepartment of Labor in
Bulletin No. 595 of 1S32.
VIII. PRODUCTS RECEIVED BY THE N.R.A. AGAINST TIE USB OP PRISON LABOR
ON THODUCTS TO BE SOLE III TIE OPEII MARKET.
In addition to the protests referred to previously in this report
relative to the use of convict labor in the manufacturing of cotton gar-
ments, binder twine, farm machinery, etc., by their respective Code Auth-
orities, the following entered similar protests at various times with the
N.R.A.: "Union-Made Garment Manufacturers Association of America, National
Association for Hen's Shirts and Boy's Blouse Contractors, Southern Gar-
ment Manufacturers Association, National Work Shirt Association, Fabri-
cated Metal Products Manufacturing and Metal Finishing and Metal Coating
Industry, Central Trades end Labor Union of St. Louis, the Sp.aide Shirt
Company, She Marking Device Industry, etc."(**) Besides these there are
minor protests from individual members of industry, all of which are
matters of record in the Prison Labor Files.
(*) Prison Labor General File - August to December, 1934.
(**) Prison Labor Files, Protests — Complaints.
9742
•102-
IX. ^COOPERATION BY OTHER GOVERNIEEITTAL DEPARTLiENTS AND NATIONAL
ASSOCIATIONS VI TH N.R.A. IN ADLIINISTDRiNG THE COMPACT.
t
Other Governmental Departments and national Associations nho co-
operated Trith the National Recovery Administration in vrorking out pro-
blems encountered in the administration of the Corcpact we're:
United Sta.tes Department of Labor
United States Department of Agriculture
United States Department of Justice — United States
Bureau of Federal Prisons.
United State Department of Commerce
United Stated Federal Emergency and Relief Administration
National Committee on prisons and Prison Labor
The American Federation of Labor
Federated Vomens' Clubs of America.
9742
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CHAPTER IX
EFFECT A1ID CONCLUSIONS
I. STABILIZATION OF PRICE STRUCTURE.
The Compact as approved by the President, April 19, 1934, and ad-
ministered by the States Signatory through the Prison Labor Authority and
the 1I.R.A. , did eliminate to a large degree the "burdening of the public
market with prison goods manufactured, mined or processed under unfair
competitive conditions. Article "V of the Compact was the provision which
made it a violation for prisons, contractors, or selling agencies to sell
prison products at prices lower than the fair current price prevailing
in the market where the products were customarily sold. However, it "be-
came the duty of the Prison Labor Authority, under the provisions of
Article VII, Section 2,(d) of the Compact, after conferring with the af-
fected free industry code authority, to determine the prices, charges and
amounts necessary to establish the fair current price prevailing .in the
market where the goods were customarily sold. It was these two provi-
sions which afforded the greatest net return to free industry of all of
the elements of the Compact, When the Cotton Garment, Binder Twine or
other affected code authorities would sit down with the Prison Labor Au-
thority and arrive at a fair amount for labor and overhead to be charged
against prison made goods before such goods entered the public market,
the result was generally a better understanding of the corresponding
industry -oroblem which tended toward a stabilization of the prices
which each would charge for like services and costs. In addition, agree-
ments on price differentials and discounts, whether legal or not, aided
materially in establishing a price structure which could be agreed upon
by affected parties.
While a review of the files on this subject reveal that there were
many complaints with respect to both the prisons and free industry sell-
ing goods at lower than file price or customary market price, it is
acknowledged that the efforts made by the prisons to abide by their vol-
untary Compact diminished the dumping of prison goods on the market at
lower than fair current prices.
II. ENCOURAGE UIIPORI.; PHI SOU OPERATIONS III LAMIFAC TURING AND SELLING.
Article II and Article III of the Compact did establish uniform
prison operations with respect to the hours of labor inmates were per-
mitted to work in industrial, production and the hours of operating pro-
ductive machinery in the institutions. As a result of Article II, which
limited the hours of labor in prison industries to hot more than those
prescribed by the applicable code (meaning the corresponding code for
free industry)* the prisons reduced their maximum hours per week per
man from 40 hours to 36 hours in the manufacture of cotton garments upon
notification of the approval of Executive Order No. 6828 affecting the
hours in the Cotton Garment Industry.
Uniform sales policies, agreements between free industry code au-
thorities and the Prison Labor Authority with respect to quantity dis-
counts and percentage of mark-up for sales to wholesalers, jobbers and
retailers, worked out fairly successfully during the period industry was
9742
-IOC-
operating under Codes of Pair Competition,
III. DIVEHSIPI CATION SP3PADS W0EK A1.I0KG PHISONEBS AID EXPEDITES
LATEP PEHABILITATION.
One of the major problems confronting all prison officials today
is that of providing sufficient work in the institutions to keep the in-
mates employed .on projects which have rehabilitative features. Although
Article VII, Section 2 (f~l) of the Compact provided that the Prison
Labor Authority va.s to formulate such regulations as may be consistent
with statutory provisions and as may be necessary to assure a diversifi-
cation of the output of -orison industries in a fair proportion to the
production of the industries affected, only a snail amount of diversifi-
cation of prison industries Has accomplished while the Codes of Pair
Competition and the Compact ^ere in effect. The diversification program
as originally intended uhen the Compact '-as formulated, was never given
a fair trial. The concentrated efforts of. such groups as the Cotton Gar-
ment Code Authority and others which "ere continually objecting to the
sale of prison made goods on the open market undoubtedly resulted in some
decrease in the total dollar value of clothing producted in jorisons.
Thus it is evident that unless there is an outlet for the products
made in penal institutions the result is very detrimental to society in
that it is compelled to pay a greater proportion for institutional main-
tenance through taxation and the 2Ji"i>:'>oner is not provided rehabilitative
work which trains him for useful employment r.hen he is discharged. It
is agreed bjr all authorities that the diversification of industries in
penal institutions apreads vrork among the inmates and "oy the spread of
such -fork the inmates have the opportunity to receive training in the
performance of varied tasks 'which is beneficial to them rhen'they again
join the ranks of free society,
IV. PUTUBE LEGISLATION.
As the prison labor problem involves so many different elements,
all of rrhich are a part of our penological system it is believed the
time has arrived mien Federal Legislation should be enacted which will
encourage the states to enter into a Prison Compact to which they may
subscribe through approval by their respective legislatures. The objects
and purposes of the Compact nould be to:
(a) Maintain fair competition between products of private domestic
industry and those of prison industry.
(b) To assure a diversification of the output of prison industries
in fair -proportion to the production of affected free industries,
(c) To relieve unemployment within the respective penal institutions
of the states by providing work for the inmates of a rehabili-
tative and character building nature .and lessen the dangers
inherent to idleness,
V. STATE USE SYSTEM.
i.kny prison officials contend that it is necessary for penal insti-
tutions to sell their goods at prices lov^er than those charged in the
9742
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nublic market for free industry; goods of a similar nature in order to
counteract the effects of free industry propaganda and the attempts to
establish boycotts against prison made goods. Such methods nay- "b'~ re-
garded'as unfair" competition:: and should be eliminated.
Because of the problems incident to the distribution of prison made
goods, there has been advanced ~oir some authorities a system of disposi-
tion to the state and its political subdivisions. This is commonly known
as the state-Use system. Under this system, when properly enforced, it
becomes possible to remove all prison goods from the public market. In
theory the plan sounds simple but in enforcement and practical applica-
tion it has many defects, particularly -here it results in depriving free
industry of its proportionate share of business from governmental insti-
tutions, thereby offsetting benefits which might be gained from the
standpoint of labor and industry. On the other hand the State-Use Sys-
tem does eliminate prison made goods from the free industry market there-
by doing away with the tendency to undermine the price structure. Fur-
thermore it may be contended that the State-Use System, especially where
it is tied in with a program of diversification of products, is more
readily adaptable by the larger states. It seems to the writer that a
partial state use system co-old be put into effect in every state in the
Union and serve an economic benefit to each state however, an exclusive
State-Use System as a means of solving the prison labor problem is re-
garded by many authorities as impractical and contrary to the best in-
terests of the public in general. After all, from 1T.R.A. experience,
prison competition is not as vicious as some industrial groups would
lead us to believe. If the prison goods are manufactured and placed on
the onen market under fair competitive conditions, has not the public
the right to be the judge as to whether or not it wants to buy such
goods? Let us approach this life-long problem through the adoption of a
Compact of Fair Competition for the Prison Industries and provide our in-
mates with productive labor. If 'this is done the tax burden for insti-
tutional maintainence can be lightened and prison production can be so
diversified that no free industry will be compelled to carry a dispor-
portionate share of prison competition. It is the -Titer's opinion
that if an exclusive State-Use System is ever put into effect on a broad
scale and proven successful the prisons must be guaranteed the exclu-
sive market by the States and their political subdivisions for all
prison products.
The Federal Government can be of assistance to the various states
in advising and aiding then in the establishment of a diversified prison
program, but under no circumstances would it appear to be sound policy
to attempt to dictate to the states or try to force any program into
effect which the states do not wish to voluntarily accept. However,
where the States are willing to adopt an adequate State-TTse System of
marketing their prison products, it is believed such a system will
generally leet with public approval.
VI. LEGAL HEqjJIHEIiEHTS III DISPOSING OF P3IS01T LADE GOODS.
As many of the states have enacted regulator;'- statutes for the pur-
pose of identifying and controlling the shipment of prison made goods
within their borders and the Congress of the United States has recently
9742
-105-
enacted legislation with respect to prohibiting interstate transportation
on -orison nade goods in certain cases, the latter commonly referred to
as the Sumner-Ashurst Bill; (*) those dealing in prison made goods
should constantly be informed with respect to the legal aspects thereof.
In order that the States Signatory to the Compact might have up to
date knowledge of the shipping and labeling requirements of legislation
effective in the various states, the Prison Labor Authority classified
and listed the states as to legal requirements late in the summer of
1935, to the penal institutions under the jurisdiction of the Compact.
A copy of the classifications is attached to this report as Appendix
»L" .(**) The information contained in Appendix "17", along with the
action taken by the states which have passed legislation enabling cer-
tain provisions of the Hawes-Cooper Act, Appendix "C" , to become effec-
tive is very useful to those dealing in prison goods, A list of states
which have, up to December 4, 1935, accepted provisions of the Hawes-
Cooper Act are listed in Appendix "M"« (***) While there are many
other statutes both Federal and State which have an important effect
upon the distribution of prison made goods, those referred to in this
Section are of vital importance and should be analyzed carefully if
any future legislation relative to a Hew Prison Compact is contemplated.
The Federal Prisons operate exclusively under the state-use system,
consequently none of the products made in these institutions enter the
public market. However, the United States Bureau of Federal Prisons did
become signatory to the Compact' through the signature of its Director,
Mr. Sanford Bates, who signed the Compact as a matter of cooperative ef-
fort, thereby lending the support of that Bureau to the Prison Labor
Program under the National Hecovery Administration.
(*) Bill, Public No. 215, 74th Congress.
(**) Appendix No. »L».
(***) Appendix No. "Li".
9742
-107-
APPENDIX A
.. iV;sTrucTio:'s to comHaina^ts
AGAINST
UNFAIR PHI SOI' COMPETITION
The quotations "below, unless otherwise indicated, are taken from
the letter of the Administrator to the President, of April 18, 1934,
transmitting for approval the Compact of Fair Competition for the
Prison Industries of the United States -of America.. 'This agreement
will he referred to as the "Prison Labor Compact" .or simply as the
"Compact".
"A Compact of Fair Competition for the Prison industries of the
United States of America has "been signed "by the governors or
prison executives of the following twenty-eight States of the
United States of America:
Alabama Maryland Pennsylvania
Connecticut Massachusetts Hhode Island
Delaware Michigan South Carolina,
Georgia Minnesota South Dakota
Illinois Missouri Tennessee
Indiana Nebraska • ' Vermont
Kentucky New Hampshire West Virginia
Louisiana ■ New York Wisconsin
Maine North Dakota Wyoming
Oklahoma
It is expected that the Compact will be signed by other states
in the future. This has been the result of a long and continous
effort by this Administration to establish and maintain fair
competition between products of private domestic industry and
those of prison industry."
The state cf Iowa has also subscribed to the Compact.
Some of the general provisions of the Compact are mentioned in
the next -paragraph of the Administrator's letter which follows:
"The Compact covers products mined, manufactured, produced or
distributed by prison labor in the state signatory to the
Compact. It limits the hours jf labor in prison industries to
not more than those prescribed in the applicable code, adopted
under the laws of the United States governing each particular
industry, and provides further that in no case shall any inmate
be required or permitted to work more than forty hours in any
one week. The hours of operation of productive machinery are
limited to not more than is prescribed in the Code of the
competing private domestic industry. It prohibits the employment
of persons under sixteen years of age in any prison industry and
of persons under eighteen years of age at operations or
974-2
-108-
occupations which are hazardous in nature or dangerous to health,"
Host of the complaints against prison competition allege that the
prison is selling in the open market at a price which is "below fair
current prices prevailing in the market in which the oroduct is
customarily sold. Under the Compact it has been agreed by the States
that
"prison products, when sola by the prison or through a contractor,
whether sold direct or through any agency, shall be sold not
lower than the fair current ririce prevailing in the market in
which the product is customarily sold - to wholesalers, retailers,
or consumers as the case may be." Article V, Section A.
Under Article Vii, Section (1), of the Compact, there is created a
Prison Labor Authority which has the power and duty to enforce compliance
by subscribing states. The Compact also provides the procedure to be
followed by an individual complaining that the Compact is not being
observed. The Prison Labor Authority has the power and duty, :
"To hear and adjust complaints arising under this compact made
by affected parties: Provided, however, that at the time any
such complaint is made the complainant must agree to submit
such facts and figures as may be necessary to the determination
of the issues involved," Article Vii, Section 2 (g).
Any complainant who is covered by a Code should forward to his
Code Authority his complaint. Accompanying his complaint he should
forward the facts and figures which sustain his complaint and which
are necessary to the determination of the issues, or in the alter-
native he should indicate his willingness to appear before the Prison
Labor Authority and present such facts and figures. The Code Author-
ity should forward this complaint, together with any other complaints
of the same nature, to the Prison Labor Authority, c/o J. V. Bennett,
Tower Building, Washington, E.C. The Code Authority should then request
that the complainant be granted a hearing before the Prison Labor
Authority. The Code Authority may send such representative or
representatives as it wishes to this hearing, (One copy of each
complaint and of the supporting papers should be enclosed.)
It is also provided in the Compact that it shall be a power and
duty of the Prison Labor Authority
"To determine, after conferring with the Code Authority of the
industry affected and upon request of any person or firm
affected, the prices, charges and amounts provided for in
Article V, Sections A and B hereof; such determination to be
subject to appeal to the president of the United States."
Article VII, part of Section 2 (d).
The representative or representatives sent by the Code Authority
to the hearing should be authorized by the Code Authority to express
its view of the matter at the hearing.
9742
■10fJ-
In the Compact it is made the duty of the Frison Labor Authoritjr
to determine the fair current price which is to prevail in a given
market when complaint is made.
The subscribing States have also agreed that ;rison labor will
not be contracted to provide manufecturers for small return which
would affect the competing outside labor. This part of the agreement
is contained in Article V, Section (b). If there is any complaint
alleging the non-observance of this latter provision, the complainant
should follow the same procedure in submitting his complaint.
The various Code Authorities have been informed of their rights
to co~o "erate in this matter. They also have a copy of these instruc-
tions and we feel sure that any well-founded complaint will receive
careful consideration from the appropriate Code Authority.
971-2
-110-
APPEMDIX B
SIXTY IIIDUSTRIES
which have "been successfully established in prisons in the U.S.A., and
the Code Authority addresses..
*1. Abattoir. Beef and pork products, , lard, sausage, smoked meats, etc.
2. Agricultural Implements. (Farm Equipment Manufacturing Industry)
3. Automobile Tags, Hunters' Licenses, etc. (Marking Devices Industry)
4. Bags, bagging, burlap, and jute products, spinning and weaving
(Textile Bag Industry, Hair & Jute. Felt Industry)
5. Baskets, split wood (Lumber & Timber products Industry)
6. Binder twine, rope cordage, etc. (Cordage & Twine Industry)
7. Book Bindery, including the re-binding of school end library books,
(Book Publishings Book Sellers Trade Industry)
8. Brooms, corn and fiber, and brushes, paint, scrub, staple set
and rubber set, etc. (Broom Manufacturing, Brush Manufacturing)
9. Canning, including fruits, vegetables, pulping, butters, vinegar, etc.
(Canning Industry)
10, Cement Manufacturing mill. Element Products ; Blocks & posts, culvert
pipe, garden furniture
(Concrete Masonry, Concrete Pipe Mfg.) and ornaments.
11. Cotton Garments: Children's play suits, dresses, hoover aprons,
smocks, pajamas, night gowns, etc.
Coats, pants, breeches, and knickers for men and boys of cotton and
duck.
Overalls and coveralls.
Shirts, dross, work, blouses, flannel, etc.
Underwear, men's shirts, shorts, and women's undergarments
Cotton yardage, including duck, sheeting, shirting, ginghams,
percales, broadcloth, denim, toweling, ticking, knitting yarns,
and mop yarns.
(Underwear & Allied Products Industry, Undergarment & Negligee Industry,
Cotton Garment Industry) .
(*) Ho code approved
9742
-Ill-
12. Spinning, Weaving, Finishing (Hair and Jute felt Industry)
13. Dehydration, fruits, vegetables, etc.
(Pacific Coast Dried Fruit Industry)
14. Foundry products, including hollow ware manhole frames and
covers, alley grates, lamp posts, valves fittings, spigets,
hydrants furnace parts, etc.
(Fabricated Metal Products Manufacturing & J^etal Finishing and
Metal Coating Industry)
15. Grey iron. (Grey Iron Foundry)
16. Brass, bronze, and aluminum (Copper & Brass. Mill Products Industry
Copper, Brass, Bronze & Related Alloys Trade, Aluminum Industry)
17. Furniture, (wood) office, household, and institution. Beds,
"bureaus, desks and tables, chairs, benches and settees.
(Furniture Manufacturing)
18. Files, cabinets. (Office Equipment Mfg. Industry)
19. Caskets. (Funeral Supply Industry)
20. Galvanizing, hot and electric-galvanizing and nickel plating.
(Galvanized Ware Manufacturing)
21. Handles, ax, pick, broom and brush. (Lumber & Timber Products
Industry, Broom Mfg. and Brush Mfg. )
22. Highway Markers, street, and road signs, etc. (Marking Devices *
Industry)
23. Harnesses, whips and leather goods. (Saddlery Manufacturing) '
24. Hats, caps, and gloves, (Hat Manufacturing industry,'
Cap & Cloth Hat Industry)
25. Hosiery, men's, women's, children's, work and dress
(Hosiery Industry) .
?■ :. [ ' . »'. ■
26. Ice. (ice Industry)
27. Knit goods, including underwear and sweaters'
(Knitted Outerwear Industry, Underwear & Allied Products Industry)
28. Laundry and dry cleaning (Laundry Trade)
29. Mattresses and pillows (Bedding Manufacturing Industry)
9742
-112-
30, Mill work and pattern work, (Lumber & Timber Products Industry)
31, Metal working; Aluminum ware, stamped and spun (Aluminum Industry)
32, Galvanized and tin ware, tin cans, (Galvanized Ware Mfg.)
33, Badges and Seals, (Marking Devices Industry)
34, Piles, lockers, shelving, metal furniture, vzire products, baskets,
trays, fly swatters, etc. (Fabricated Metal products Mfg.)
*35. Nursery, reforestation, and shrubbery
37. Paint, including traffic paint, house paint, varnish, etc.
• (Paint, Varnish & Lacquer Mfg.)
38. Printing and ruling, including job, reports, forms, school books..
(Printing Eouipment Industry & Trade^ Book Manufacturing Industry,
Book Publishing Industry)
■ «
39. Bugs, carpets, runners, etc. (Carpet & Rug Mfg. Industry)
•i *
40. Rubber products, including mats, and tire retreading
(Rubber Mfg. Industry)
41. School Furniture (Furniture Mfg. Industry)
42. Shoes and Shoe Repairing (Boot & Shoe Mfg. ( Industry)
43. Soap, including chip, toilet, powders, insecticides, and
disinfectants. (Soap & 'Glycerine Mfg. Industry)
*44. Snow fencing
45. Quarrying, crushed rock, building stone and cast stone.
(Marble Quarrying & Finishing Industry, Building Granite Industry)
46. Brick, tile, and clay products (Structural Clay Products Industry)
47. Sugar, cane or beet, including molasses, syrups, etc.
(Beet Sugar Industry)
48. Suits, uniforms, and overcoats (Cotton Garment Industry)
49. Tanning Industry (Leather Industry)
50. Toys, wooden and Metal (Toys & Playthings)
(**) No code auoroved
<:■/■■•
-11b-
51. Wicker, willow, and rattan ware (Lumber & Timber Products Industry)
52. Woolen Yardage, including blankets, suiting.
(Woolen Textile Industry)
53. Scouring ( Steel Wool Industry)
54. Woolen Yardage, Spinning, Weaving, Finishing
(Woolen Textile Industry)
9742
-114-
APPENDIX C
NATIONAL RECOVERY ADMINISTRATION
IMMEDIATE RELEASE
OCTOBER 16, 1934 RELEASE NO. 8314
TEXT OF CCTTOII GARMENT COMMITTEE REPORT
The tent of the report submitted to the national Industrial He c every
Board October 10, by the Cotton Garment Committee is given below.
The appointment of this committee was directed in the Executive Or-
der which stayed until October 15 an amendment to the code to reduce the
maximum work-week to 36 hours and increase the schedule of minimum wages.
The committee was empowered to "hear protests, investigate the facts and
report its recommendations on or before October 10." It is composed of
D. Li-. Kelson, member of the Industrial Advisory Board, Milliard Hotchkiss,
Chairman of the IIRA General Code Authority; and W. Jett Lauck, economist.
The text of the report follows:
"The Cotton Garment Industry has requested reconsideration of amend-
ments to Articles III and IV of the Code of Fair Competition for the Cot-
ton Garment Industry which amendments were approved by Executive Order Ho.
6828 of August 21, 1934.
"This Committee has been constituted a Board of Review to consider
this request.
"The Code of Fair Competition for the Cotton Garment Industry as ap-
proved on November 17, 1933, contains in Article III on the subject of
hours, the following language:
'A. No manufacturing employee shall be permitted to work in
excess of 40 hours in any one week, or more than 8 hours in
any one day, provided, however, that the Cotton Garment Code
Authority shall, immediately after the effective date begin
an investigation tinder such rules and regulations as to reports
as the Code Authority may require and the Administrator approve,
to determine whether or not the 40-hour week provision of this
section is resulting in increased employment, and the said Code
Authority shall report its findings on this question to the Ad-
ministrator not later than 60 days after effective date, so that
the Administrator may determine whether or not the provisions of
this Article shall be changed.'
"Article IV on wages is also effected by the Order.
"At the instance of the Code Authority for the Dress Manufacturing
Industry and the Code Authority for the lien's Clothing Industry, hearings
were held in Washington on June 18, 19, 20, and 22, to determine among
other things whether or not the 40-hour provision of the Code should be
modified.
9742
-115-
"These hearings were participated in by a large number of the
members of the Cotton Garment Industry representing every branch
of the Industry and every section of the country. The widest oppor-
tunity was also given for other interested parties, including
numerous members of Congress, to present views and submit facts in
respect to this issue.
"At these hearings the Code Authority was represented by the
Chairman, the Director, the Counsel, and the statistical staff.
"In addition to the representatives of the above mentioned Code
Authorities for the Dress Hanufacturing Industry and the Hen's
Clothing Industry, representatives of Labor presented arguments for
the shortening of hours below the 40-hour limit originally provided
in the Code and the adjustment of piece rates.
After the hearings, the Division of Research and Planning of
the National Recovery Administration caused a study to be made as
to the operation of the 40-hour provision expecially in respect to
employment as revealed by the statistical data prepared and present-
ed by the Code Authority and many conferences were held in which
members of the Industrial Advisory Board, the Consumers Advisory
Board, and the Legal, Economic, and Administrative staffs of the
National Recovery Administration participated, and all of them at
one time or another gave full expression to their respective views.
"The Committee has reviewed carefully the complete records of this
case to date.
"Neither the state of facts uoon which the case came before us nor
the time available indicated an occasion, on our part, for the assembling
of original new data. Nevertheless, we have interpreted our status as
a review board broadly and have excluded no new facts or viewpoints
vhich might have a bearing on the issues.
"Immediately upon our appointment we conferred with the attorney
of the Code Authority and arranged to visit its offices in order to
have direct access to the data which it has assembled. In connection
with this visit the attorney, the chairman, representatives of the
statistical and compliance staffs of the Code Authority and members of
the industry designated by the Code Authority ioresented the case of the
industry. By mutual assent, proceedings were informal and largely in
the nature of conference, but a transcript was kept and has been care-
fully reviewed along with numerous exhibits which '-'ere placed in the
record.
"17 e requested the Labor Advisor;'- Committee to arrange for similar
conferences with such representatives of Labor as were known to have an
interest in the questions at issue. A transcript of these -oroceedings
was also made and carefully studied,
"Representatives of those Codes which We're known to have overlapping
interests with the Cotton Garment Code were also asked to oresent any
9742
-116-
pertinent material. In this group there was representation of manufac-
tures who operate both under the Cotton Garment and other Codes. A
transcript of these proceedings was made and studied.
"In addition to securing facts and views from the above groups, we
have received and considered all volunteer contibutions, oral or written,
including an oral presentation by former Senator James A. Reed and
Mrs. Reed, speaking particularly from the standpoint of the Donnelly
Garment Companjr of Kansas City.
"Finally, we have cles.red with the appropriate divisions of the
National Recovery Administration as to the history and status of the
case from a legal and factual point of view.
"The record of the case indicates that decisions hitherto have rested
for the most part on statistics prepared in the offices of the Code
Authority by its agents. Exhibits containing new data and new interpre-
tations have now been presented which do not entirely harmonize with
earlier reports, especially in respect to pre-code and post-code employ-
ment. The present director of statistics of the Code Authority was associated
with the previous director, who was in charge of the earlier studies, and
has testified that there were no changes in the schedules used in securing
information for. the earlier and the later reports and that instructions
accompanying the schedules as well as the handling of the data were the same
in respect to each of the reports.
"Upon these representations the committee at once decided to give
consideration to the contention of the Code Authority that new facts
meriting serious consideration by a review board are now available and to
weigh the information now presented as it stands before undertaking any
detailed checking on our own account of earlier and later reports as to
either their conclusiveness or their statistical comparability.
"In the judgment of the committee there is no zone of factual, con-
troversy wide enough to have a crucial bearing on our decision.
"The Code Authority, as we have understood the testimony and accompany-
ing exhibits, is convinced that there was relatively heavy employment in
the industry during the later phases of the depression preceding the code»
This they attribute to the fact that the consumer's depleted purchasing
power permitted him to buy onljr low-priced merchandise. Unrestricted com-
petition in the Cotton Garment Industry at that time, as the Code Authority
interprets the situation, led to exceedingly low wages, lengthening of hours
and extremely low prices for merchandise.
"When the code came along and established the 40-hour week with a
$13.00 minimum wage in the north and $12.00 in the south, it increased
costs and narrowed the differential in price between the nroducts of the
Cotton Garment industry and competing goods of other industries, at
a time when reemployment in other industries was enabling more -oeople
to purchase goods in the higher price brackets. The effect of all
this, they say, was materially to reduce volume of business and hence
9742
-117-
enroloyment in the Cotton Garment Industry.
"Beneficent and desirable as all the official representatives of
the industry who appeared before us believe the standards originally
set up in the Code to have been, its immediate effects, they say, were
extremely burdensome. For this reason, and because they contend that
enforcing the provisions of the amendment will further increase cost
and preclude any early possibility of increasing employment, they
urge the necessity of a breathing spell in which the industry may
adjust itself to burdens already assumed.
"The end costs of goods manufactured under the Cotton Garment
Code today result in part from burdens already assumed under this
code which the industry freely accepts. In part, they represent in-
creased costs of material's which reflect the cotton processing tax and
costs which embody net/ labor standards in other codes. Concerning all
these elements of cost there is no controversy.
"In these circumstances the Committee has sought the conroetent
testimony of the members of the industry who appeared before us as to
the amount by which enforcement of the provisions of the amendment
would presumably raise prices the consumer would have to pay for arti-
cles manufactured under the Cotton Garment Code. The testimony on
this point is not unanimous but there appears to be substantial agree-'
ment that the cost of a f orty-nine-cent work-diirt would not be in-
creased more than five cents, and otner cotton garments in a sub-
stantially similar ratio to retail price.
"While reemployment is an outstanding objective of the 1JIHA,
bringing sub-standard industries measurably up to competing standards
is, we believe, also an important objective. The industry, as repre-
sented by the Code Authoritjr and its staff has wisely faced the fact
of the previous low standards and it expresses gratification that
standards have been raised. To all appearances, the Code Authority
is making an earnest and well directed effort to make the standards
now officially in force effective throughout the industry. We are con-
vinced, however, that in its anxiety rbout being able to hold its lines,
the Code Authority greatly over-emphasizos the possible adverse effects
upon enforcement and upon the welfare of the industry that any increases
in cost that can possibly flow from carrying out the terms of the amend-
ment may have.
"Moreover, we believe they have not given sufficient recognition to
the prejudice to the public interest and to industrial stability that
must result from maintaining through official approval pockets of pro-
duction under lower labor standards along the competitive border line
of industries whose' codes enforce higher labor standards. The tendency
of production to seek these low standard pockets is inevitable and in
the long run, is bound to complicate the problem of enforcement not
only for the Codes with the higher standards but for all Codes that
operate within a given competitive field.
9742
-118-
"From our discussions with the director of compliance of the Cotton
Garment Code Authority, we believe his excellent organization has now
reached a point at which, irrespective of the amendment, it will need
to require a filing of all piece rates with the Code Authority and pro-
ceed as rapidly as possible with such a degree of standardization as will
enable the Code Authority to assure itself of the integrity of all piece-
rate structures under the Code. As we see the situation, this is the only
material departure from existing practice under the Code which. the. change
to a 36-hour week with the maintenance of present wages for week workers
and a 10 per cent addition to piece rates existing on May 1, 1934, will
require. • ■ -. ■
"Tie admit freely that the terms of the amendment may result in some
inequity as between relatively high-standard and low^-standard producers,
but v/e cannot see that these are any greater than is likely to accompany
any over-all ruling.
"For all these rea.sons v/e recommend that Executive Order No. 6828 of
August 21, 1934 be sustained.
"T7e recommend further, however, that effective date of the Order be
made December 1, 1934. Our reason for this second recommendation is that
the Pall Season in the industry will then be over, and time will thus be
given to the industry to make necessary adjustments or changes in its
working plans and procedure.
"In respect of the sheep lined and leather garment subdivision of
the Cotton Garment Industry the time limit for our decision precluded
consideration of proposals made "by representatives of the industry. These
proposals appeared to merit further consideration and we therefore reouest
an extension of time as to this item.
"In arriving at this decision we cannot fail to recognize the com-
petition of products of prison Ubor and of sheltered workshops on certain
subdivisions of the Cotton Garment Industry. Tie therefore recommend that
the National Industrial Recover"- Board designate a commission to investi-
gate the effect of this competition, to study the operation of the prison
labor compact, especially as to the enforcement of the standards of compe-
tition with private industry there set up, and report not later than
December 1, 1934 upon ways and means of effectively meeting this issue.
"while the committee recognizes that there will be occasion in some
instances for indulgence to particular producers for cause duly shown
and authenticated, we believe that anything resembling wholesale ex-
emptions would undermine the code and the splendid enforcement results
vhich the Code Authority, as now set up, is accomplishing. Tie recommend,
therefore, that the scope of an?/ machinery provided under, the amendment
for hearing pleas for indulgence be scrutinized with great care so that
its decisions ma" improve and not impair compliance.
"77 e wish to commend the organization and the personnel which the
Code Authority has set uo to enforce compliance with all of the provi-
sions of the Code. Under pecv-liarl;;- difficult conditions, they have
achieved most gratifying results. It is highly essential that in apply-
ing 'the orovisionsof the amendment no action be taken which would under-
mine or discourage progress in this important field of activit-*."
f->rr a t-\
-119-
APPENDIX D
For Release Release No. 9029-A
November 28, 1934
NATIONAL RECOVERY ADMINISTRATION
REPORT OP COMMITTEE ON
COMPETITION OP PRODUCTS OF COTTON GARMENT INDUSTRY
WITH PRODUCTS OF PRISON LABOR AS DIRECTED BY
EXECUTIVE ORDER NO. 118-135
of October 12, 1934.
Committee
Washington, D. C. Joseph N. Ulman, Chairman
November 26, 1934 Frank Tan .en"ba.um
W. Jett LauD
9742
-120- Washington, D. C.
November 26, 1934.
To the
National Industrial Recovery Board
Gentlemen:
This letter of transmittal is to "be regarded as an integral part of the
report of the undersigned committee, submitted in accordance with the order of
the President dated October 12, 1934. That order directed us to "investigate
the effects of competition between the products of prison labor and sheltered
workshops on the one hand and of the cotton garment industry on the other,
study the operation of the Prison Labor Compact especially as to the enforce-
ment of the standards of competition with private industry established therein,
and report to the National Industrial Recovery Board, concerning said matters
not later than December 1, 1934."
In order to consider adequately, the relatively narrow questions that have
arisen and will arise between the Prison Labor Authority and the several Code
Authorities administering industries subject to prison labor competition, we
have taken into account the whole question of prison labor as it is related
to
(a) the underlying purposes of imprisonment for crime;
(b) the economical and effective administration of prisons;
(c) the extent and effects of competition between prison labor and
free labor in specific industries;
(d) the developed policies of State and National governments in rela-
tion to the whole subject;
(e) attitudes of industry;
(f) attitudes of labor;
(g) the relationship of a proper regulation of prison labor to a
rational attack upon the problem of crime.
At the outset we realized that we were dealing with a complex problem,
about which it would not do to make a report based upon our general knowledge
of the subject as obtained from the pre-existing literature. Particularly
with respect to the narrower question before us, everything in the literature
is outmoded by reason of the operation of the Prison Labor Compact and the
changes it has made or attempted to make in the competitive relationships
between prison industry and free labor industry. Therefore, we devoted the
first part of the month to extended hearings at which there testified represen-
tatives of industry; of labor; of prison administration; of the legal and
other divisions of NRA; and. one witness who spoke not for any party to the
manifold controversy but from the viewpoint of scientific criminology.
The case of industry was presented by the following witnesses:
Raymond A. Walsh, General Counsel, Cotton Garment Code Authority.
Col, R, B. Paddock, Executive Director, Cotton Garment Code
Authority.
Ben Geaslin, Assistant Counsel, Cotton Garment Code Authority
A. B. Dickinson, Washington Representative, Cotton Garment
Code Authority.
Herbert Mayer, Chairman, Prison Committee, Cotton Garment
Code Authority.
9742
-121-
A. B. Salent of Salent and Salent, Incorporated.
Isadore Fine, President, national Workshirt Manuf acturers
Association.
Harry Johnson, Oberman and Company,
W. W. Harlin, Prison Committee, Cotton Garment Code.
C. F. Habegger, Prison Committee, Cotton Garment Code.
L. M. Jones, Prison Committee, Cotton Garment Code.
Walter Mitchell, Jr., Executive Secretary, Furniture Manufacturers
Code Authority.
D. P. Porterfield, Director, Department of Marketing, United
Typo the tae.
J. H. Ilelson, Secretary, Trade Practice Committee, Public
Seating Industry.
W. C. Craig, Chairman, Binder Twine Agency of Code Authority.
J. S. McDaniel, Executive Secretary, Cordage and Twine Code
Authority.
Organized Labor expressed its view through -
Thomas Rickert, President, United Garment Workers.
Charles N. Green, Int.rnational Ladies Garment Association.
William C. Rushing, American Federation of Labor.
G. E. Meadows, American Federation of Labor.
Miss Rose Schneiderman, Labor Advisory Board, National Recovery
Administration.
Jacob Petofsky, Assistant President, American Clothing Workers.
Sidney Hillman, in his dual capacity of President of the Amalgamated
Clothing Workers and Member of the Labor Advisory Board, also conferred
with us, although his statement is not included in the stenographic tran-
script. However, Mr. Hillman iterated to us the views expressed by him at
the hearing before Acting Division Administrator Collins on May 26, 1934,
which we have read and considered.
Prison Administration presented its case through -
Hon. Sanford Bates, Director, Federal Bureau of Prisons.
Mr. James V. Bennett, Secretary, Prison Labor Authority.
Mr. Howard S. Gill, Economic Adviser, Prison Labor Authority.
Mr. Walter N. Thayer, Commissioner, Department of Correction,
New York State.
Mr. H. H. Stewart, Superintendent, Prison Industries, State
of Alabama.
Mr. Robert Chapman, Superintendent, Prison Industries, Missouri
State Prison.
Mr. L. E. Kunkle, Warden, Indiana Penitentiary.
Mr. E. L. Pardue, Superintendent, Industries State of Tennessee.
Mr. C. L. Stebbins, Superintendent, Michigan State Industries.
Mr. Samuel E. Brown, Warden, Oklahoma Penitentiary.
H. E. Donnell, Superintendent, Prisons of State of Maryland.
We obtained important information regarding HRA policies and especially
9742
-122-
the steps, leading to the formation of the Prison Lafror Compact and its
administration from-*
Mr. Linton M. Collins, Acting Division Administrator, National
Recovery Administration.
Mr. J. M. Keating, Legal Adviser, Dress Manufacturers' Code
Authority. Formerly Legal Adviser to National Recovery
Administration on the prison labor problem.
Major B. H. Gitchell, Special Adviser, National Industrial
Recovery Board.
Mr. H. E. V/ahrenbrock, Legal Adviser, National Recovery
Administration.
Mr. Peter Seitz, Legal Adviser, National Recovery Administration.
Mr. Lester Kintzing, Industrial Advisory Board, National
Recovery Administration.
Mr. Mercer G. Jchnston, Consumers Advisory Board, National
Recovery Administration.
Mr. Sol A. Rosenblatt, Division Administrator, National
Recovery /Administration.
Mr. David 'Ziskind, Labor Advisory Board, National Recovery
Administration.
A detached view on many of the most vexed questions before us was
presented fry Professor Louis N. Robinson, of Swarthmore College, Professor
Robinson is author of a standard book on prison labor - "Should Prisoners
Work?" He came at our express invitation to answer questions that had
arisen out of the other testimony.
It thus appears that in spite of the short time at our disposal we
have tried to assemble the pertinent facts and that our conclusions and
recommendations are based mainly upon data taken from life rather than
from books. For statistics prior to 1932 we have relied upon Bulletin No.
595 of the Bureau of Labor Statistics, f olume ' 9' of the Report of, the
National Commission on Law Observance and Enforcement' (The Wickersham
Commission) has been helpful to us. This deals with the whole subject of
Penal Institutions and contains a valuable chapter on Frison Labor.
The testimony taken and exhibits filed with us comprise a steno-
graphic record, of over 1200 pages. It would not be practible to summarize
the statements of the several witnesses but is important to state that we
have afforded all interested parties full opportunity to be heard. Through
their several spokesmen they have stated their respective positions clearly
and vigorously. These must be set out briefly and objectively because our
conclusions flow directly from them.
The Argument For Industry
This part of the testimony falls into three sections.
First - The Cotton Garment Industry.
From this source and form Organized Labor arises the most vigorous and
determined opposition to the present status. Essentially, this industrial
group demands the absolute and immediate removal of prison-made goods from
9742
-123-
the open market. It repudiates the workability of the Prison Labor
Compact as a means to insure fair competition. It claims that a contin-
uance of prison-made goods upon the open market will destroy the Cotton
Garment Code and push the industry back into the miserable sweat-shop
conditions from which it is emerging. It has a special grievance growing
out of the grant to prisons, members of t he Compact, of the National Recov-
ery Administration Blue Eagle label which the industry declares is a fraud
upon the consuming public. It claims that the action of Congress in adopt-
ing the Hawes-Cooper Act in 1929 led the industry to expect the virtual
elimination of prison labor competition bv 1934 and that relying upon that
expectation its larger units have withdrawn from prison manufacture and
made large new plant investments outside of prisons. It claims that it
was misled further "by early action on the part of the National Recovery
Administration apparently looking to the immediate abolition of prison
competition: e.g., the flat prohibition in the original drafts of the
Retail Code, and special exemptions granted ley the Labor Advisory Board
regarding wages to apprentices in the industry. This industry also charges
that the Prison Labor Authority in administering the Compact has failed en-
tirely to cooperate with the Cotton Garment Code Authoritv and the Adminis-
trator in charge of that Code, has r lied upon misleading data regarding
current prices of merchandise, and has insisted improperly upon an ex-
cessive labor cost differential favorable to prison labor as against free
labor.
Asked whether they would prefer the untrammelled competition of
unregulated prison industry to further efforts to coordinate the industry
with free-Labor industry under the Compact, the representatives of the "
garment trade answered emphatically "Yes". They profess absolute disdain
of the possibility of effective control of prison manufacture; some of
their spokesmen charge every agency of prison management with direct bad
faith. They claim that unless the competition of prison labor is absolute-
ly eliminated, the entire industry will be ruined and its 165,000 em-
ployees will be thrown out of employment.
The testimony given by this group is important out of all proportion
to its accuracy in detail. A state of mind, whether based on fact, fear,
or fancy, is something that must be reckoned with. These manufacturers
are determined that competing prison labor must go. They regard the Prison
Labor Compact as a means of perpetuating it, of increasing rather than de-
creasing the competition or prison made goods with those of their own manu-
facture. Right or wrong, they are prepared to fight on this issue to the
bitter end. In this fight they are working hand in hand with labor, and
they have the support of large sections of the distributing trade and the
consuming public. Such women's organizations as the Federation of Women's
Clubs, the Consumer's League and others have joined the manufacturers and
labor in the dissimination of the thought that goods made in a prison are
essentially wicked goods that must not enter into commerce.
This group favors the State Use System of prison production.
Second - The Twine and Cordage Industry.
Although the prisonsiproduce one-third of the binder- twine made in this
country, this industry seems willing that prison industry in this line shall
continue, provided that under the Prison Labor Compact there can be secured
9742
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eauality of competitive prices, and provided that each State shall confine
its sales within its own borders. It relies traon the vawes- Cooler Act
and the Prison Labor Compact as means toward these ends, although it
complains that a differential in favor of prison labor costs has been set
up and that there has been a lack of cooperation with the industry in the
fixing of prices of prison-made goods. It makes no charge of bad faith,
but asserts vigorously that administration of the compact has been ineffi-
cient.
Third - Other Industries, particularly Furniture, School Desks, etc.
Witnesses appearing before us indicate no immediately pressing Ques-
tions in these lines. 'Generally, they object to a. labor cost differential
favoring prisons and urge closer cooperation between Prison Labor Auth-
ority and the several trade Code Authorities. They favor the State Use
System but admit that in some States where that system r>revails certa.in
industries have succeeded in curtailing the distribution of prison-made
products to state, county, and municipal agencies of government.
The Arguments of Prison Management.
The case for Prison Management was presented in part by persons like
the Hon. Sanford Bates and Dr. Walter 5F. Thayer, who have no personal
or official connection with the controversial auestions before us, and
in part by various wardens, managers of prison industry, State Superin-
tendents of Prisons and others who are concerned directly with the con-
flict. Upon certain points they all agree and it is not possible in a
brief abstract to emphasize these points adequately.
1. Prisoners Must Work.
2. If imprisonment is to have any value as an agency for re-
habilitation, prisoners must work in productive enterprises, on a full
time basis and under conditions -approximately the same «s those prevail-
ing in free society.
3. There is now and for years there has been an appalling
amount of idleness in most orisons; idleness in prison has increa.sed
greatly during recent years and will increase beyond the safety-point
unless a remedy is found at once.
The evidence we have heard from this source has confirmed and in-
tensified our conviction that Prison management faces a grave crisis. A
prison filled with idle men is a prison ready for riot and bloodshed.
But even worse than that, the whole scheme of criminal justice and im-
prisonment for crime becomes nugatory, socially wasteful, and a mockery
unless prison life can be made a constructive experience for the indivi-
dual sent to prison.
These witnesses concede that prison labor ought not to compete with
free labor to the injury of the latter, and that products made in prison
ought not oe sold in the open market at prices that will depress the market
price of like products. They assert that the Prison Labor Compact assures
these conditions of fair competition. Under the Compact, contractors hir-
ing prison labor are reouired to pa.y the prisons at rates based on the
rates of pay for free labor, and States manuf acturing and selling under the
States Account System are reouired to sell at prices determined upon the
basis of current prices of like products in the place where such sales are
made.
-In-
compliance with these provisions of the Compact is sought to "be
assured "by a Prison Labor Authority, with powers and duties similar to
those of the various Code Authorities under National Recovery Adminis^- - ... j.
tration. Similarly, the Prison Labor Authority has obtained the right
to issue to States and contractors operating under the Compact, a Blue
Eagle label for use on garments manufactured in prison and is planning
to issue similar labels to other prison industries when labels are re-
quired under the respective codes affected.
The labels now in use differ from ordinary NRA labels only in bearing
the word "Compact" instead of a Code number. No ordinary purchaser of goods
would be likely to observe the difference! This similarly (denounced as a
fraud by the spokesman for industry and labor, see infra) is defended by
prison management, however, upon the grounds that the operation of the
Compact has made prison labor competition fair competition, for the reasons
stated above, and that without the label goods made in prison will be barred
from the channels of retail trade by the terms of the Retail Code.
When their attention was called to the arguments of Industry and of
Organized Labor against the label (see infra) these witnesses insisted
that the prisons ought, as a matter of right and justice, to enjoy the
benefits of the label, as compensation for the freedom of action they have
given up by entering into the prison Compact. ViTe then directed their at-
tention to the fact that the Prison Labor Authority has granted prison-
made goods a differential in labor cost amounting to approximately 2 per
cent to 3 per cent of their selling price as- compared with goods made by
free labor. Wh<§n pressed, a number of these witnesses' admitted that it
was hard to justify both the label and the differential, although others
insisted that without the differential they could not continue to manu-
facture and sell. All asserted that the label is absolutely essential and
that if it is withdrawn the Prison Compact will be dissolved at once. This
result they viewed with grave concern as they felt that the Compact is the
first constructive step toward a real solution of the prison labor problem.
They testified that idleness in prison increased sharply early in
1934 due to the operation and the anticipated further effects of the Hawes-
Cooper Act, and that although productive labor has begun to revive under
the Compact there is at the present moment far less employment for prison-
ers than there was in 1933 and before that date. They admitted that prison
industry has been concentrated in the manufacture of garments to an extent
that explains, if it does not justify, the complaints of that industry and
of labor. They explained this c o neon t rati on as growing our of the follow-
ing facto rs:
(a.) the relatively small plant investment as compared with other
forms of manufacture:
(b) the degree to which sewing machine labor lends itself to effective
prison management and discipline.
"A large group of men, each anchored at a sewing machine, can be
guarded with a minimum of supervision. They need not move about as in
other shops and they use no tools that can be employed as weapons." To
the suggestion that men in prisons working at this form of industry acquire
9742
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no knowledge that will help them- make a living when released, because
outside prison similar work is done by women almost exclusively, they
replied that such prisoners learn habits of industry and the discipline
of shopwork.
However, the more progressive members of this group admitted freely
that there ought to be greater diversification of prison industry and that
it should he planned and operated with the main emphasis upon its value in
fitting the prisoner to make an honest living when released from prison.
Ninety-four per cent of the men incaracerated are released, sooner or later.
The large proportion who relapse into criminal activity (recidivists)
suggests that imprisonment fails in its aim to protect society by stamping
out the criminal tendency. Most serious crimes are committed hy former
prisoners. A more thoughtfully conceived prison labor policy would be of
outstanding value in society's war against crime.
These same witnesses agreed that the Tsest plan to accomplish these
constructive ends is the State -Use System. They pointed out, however, that
its introduction on a comprehensive scale will necessitate large capital
outlays for plant construction and that the States in which these expendi-
tures are the .est needed are in many instances quite unable to raise the
necessary fun^s. One State was mentioned where the needle trades are prac-
tically the only prison industry, and where it has been necessary tc cut
drastically school terms and teachers' salaries because the State's fi-
nances are at such a low ebb. The Governor of another State has not merely
demanded that the Compact be administered to as to afford an outlet for the
goods manufactured in the prisons of his State, but has addressed a letter
tc the President announcing that the State itself proposes to take legal
action challenging the constitutionality of any action which would deprive
the' state of its investment in its prison factory.
In short, while this group as a whole favors the State Use System in
principle, it emphasizes the practical difficulties that stand in the way
of its general adoption. Therefore, its members urge that the Prison
Compact be upheld and that practice under it be perfected; but they are
positive that this can be accomplished only if the KRA label for prison
'made goods is continued in its present form. In answer to the suggestion
that this label differs only metaphysically from the ordinary HRA Blue
Eagle label of commerce and therefore operates as an instrument of de-
ception to which the Federal Government ought not give its sanction, they -'
reply that under the Compact the labor of men in prison must, conform to
the same standards of hours, compensation^ and sound working conditions
as" are required for free workers. They tend to blink the obvious facts
that compensation paid to a State by a prison contractor is not precisely
the same thing as wages paid a worker for his and his family's support,
and that many States operating prison factories on the State Account
System justify the payment of merely nominal wages to their prisoners
(often as low as 50 cents a month) on the ground that the State spends
$1.00 or more per day to feed, house, clothe and guard each prisoner, And
they ignore entirely the additional fact that goods made in prison and
bearing the Blue Eagle label can by no stretch of the imagination be said
to have been produced by labor invested with the right to collective
bargaining.
9742
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THE AEGUUEFT OF OKGAFIZED LA3Q5.
The witnesses for organized labor take a firm and uncompromising
stand. They assert:
(a) Co rcetition in the open market between goods made in prison
and free labor production must cease a.t once.
(b) The Hawes-Cooper Act is sound policy and good lav.
(c) The Prison Labor Compact has no legal or moral right to an
FRA Blue Eagle Label. The present form of label works a
deliberate fraud upon the public and is unfair to labor.
(d) To tnem the foregoing principles are so fundamental and so
irrefutable that one of the principal witnesses in this group
refused to discuss, even' bv way of assumption for the purpose
of argument, such questions ?s (1) whether the differential
allowed in favor of prison lao*r is so great as to defeat
fair competition under the compact or (?) "hat, if any,
administrative cnanges may ue desirable to bring about a better
cooperation between the Prison Labor Authority and the several
competing Code Authorities.
This position is founded, says labor, upon long and bitter experience.
Its spokesmen declare that they have aosol^tely no confidence in the
Prison Group and refo.se to deal with them. Thev avow P hostility to
the Prison Compact that admits of no compromise. Asked if they would
prefer the unregulated and uncontrolled competition of prison labor if
the Compact is dissolved they do not hesitate in their answer. They
assert that general public sentiment agrees with them that prison made
goods are "outlaw goods," that Congress has so declared in the Haves-
Cooper Act, that many States have adopted supporting laws, and that
Labor rill carry on its fight no matter what this committee or any
other com littee may recommend until all prison made goods are driven
off the competitive market. They assert tnat prison competition has
brought wage levels in some places down. to $2 or $3 per week and that
the Compact is powerless to control this evil no matter how or by whom
it may be administered. Finally, they insist that every article of
commerce manufactured in a prison means one less sucn article manu-
factured by free labor. Therefore, with millions no" unemployed, they
say that society must choose between giving la-'- breakers an opportunity
to work or giving a like opportunity to honest men and women. Asked
if, as tax-payers, they are willing to, support prisoners in idleness,
thev say rather that than impose additional idleness upon the innocent
and add another hundred thousano to the ranks of the unemployed who
also must be supported out of taxation.
However, these same witnesses abandon their pitiless logic when
asked about the State Use System, tuite uniformly, they express approval
of it and admit that upon grounds ooth of humanitarianism and of what
they conceive to be sound economic doctrine, the State has a right to
employ prison labor for the manufacture of products to be used by the
State and its political subdivisions. They concede the penological
9742
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necessity of employing prisoners both tor purposes of discipline in
prison and for the processes of rehabilitation. But this is the sole
concession that Labor makes. It declares p?r to the death on every
other expedient.
THE TESTIMONY OF STAJF uENBERS OF THE
LEGAL AND OTHER DIVISIONS
Or N. £.. A.
These witnesses were very nelpful to us in clearing away numerous
points of difference relating to the proceedings leading to the nrepara-
tion and adoption of the Co ro?ct and the autaorization of the NPA label
under the Compact. Kxpecially in regai d. to the latter, it had been
charged by the Cotton Garment Industry not merely that the label is
misleading and deceptible but tnat it '"as authorizec vitnout notice
and put into use surreptitiously. These witnesses detailed to us the
official steps taken in these procedures and also told of various
preliminary conferences between recresentatdves of the interested
groups. The importance of this testimony is reflected in our iinding
III," (infra).
They insisted that the regulation of -orison incustry must be
committee to its own Prison Labor Authority Administrator and that it
would be unsound and impracticable to transfer tnis iunction to the
several interested and comoeting Code Autnorities and Administrators.
But they conceded the desirability of developing a plan for the
better co-ordination of these activities. They -^ave us convincing
evidence of lack of- co-operrtion and obstructive tactics on the
part of the Cotton C'-prment Code Authority during the montns that the
Compact has been in existence.
THh TESTIMONY OF PPOILSSOfi LOUIS f^ xtOBINSOF
Professor Pobincon was the only witness '"hose testimony may be
described as entirely objective. In theory, he favors the State Use
System above all others; but he pointed out that in practice this
system not onlv has failed to reduce idleness in prison but it many
instances has increased it. This he attributes to several factors, viz:
1. fviOst States that have adopted this plan passed imperfect lavs,
A, State Use la"7, if it is to produce satisfactory results,
must prescribe the compulsory purchase- by State agencies,
departments, institutions, counties, and municipalities of
all classes of goods produced in the State's prisons that
are reouired by such agencies. . iassacnusetts is pointed out
as the State that has devised and adopted the best Statute.
2. He Questions the sincerity of some of the proponents of this
system. For example, individual members of a certain organi-
zation of manufacturers which is conducting an "educational
campaign" 'for State Use are known to have tried, in States
where the system is already estaulished, to restrict the
purchase of prison made goods to institutions for the housing
of prisoners. Similarly, the representatives of given
^742
-129-
industries use -political press\ire end like means to secure
the exemption of their particular industry irom the operation
of the lav. For example, in the State of New York, though
the orisons are eouipped to build furniture of all kinds,
not a stick of school furniture is permitted to be made by
prison labor. Certain labor organizations have been active
in similar attempts to restrict the effective operation of
the State Use System, in spite of tne fact that Labor gives
the system its unqualified indorcement '"hen it is discussed
as an abstraction.
3. If the State Use System is to become effective in reducing
prison idleness, each State employing it must conduct a
careful investigation by competent production engineers to
determine the needs of the State and of its political sub-
divisions that can be supplied by the labor 01 prisoners.
This must be followed by r thorough over-hauling of the
State's setup of prison industry, always vith an eye to the
following reouisites: -
a. The safe confinement of the prisoners.
b. The provision for them of real, productive '-ork on full time,
as measured by free industry in like fields.
c. The diversification of -orison products to tne greatest practic-
able degree, so that no one product "ill monopolize the market
to the injury of outside industry and free laoor.
d. The selection, to as great a decree as possible, of industries
for prison labor that tenr to fit the prisoner to make an
honest living after his release,
Frofessor Robinson admits that this ideal has not been realized
anywhere up to the present time. But he attributes this primarily to
the factors outlined in subdivisions (1) and (2) aoove and not to any
weakness inherent ir- the System.
J INS I Mas OF THIS COfcLHTTKE
The foregoing analysis of tne testimony explains our findings,
which are:
I . The Prison Labor Compact has not s olved the problem of prison
labor and "ill not solve it permanently and constructively,
We arrive at this conclusion regretfully and with extreme reluctance,
The Compac1'' was conceived as a great forward, step and was hailed by
thoughtful ooservers as a major achievement. It aims to bring order out
of chaos, to render justice to the men in orison without injuring
industry and free labor out-side prison. It has failed for a number
of reasons, some of which are so oeeplv rooted ?nd as far-reaching in
9742
-130-
their social and economic implications that no mere modif ication of
the terms of tne Compact j no improvement of the technique 01 its
administration, Till overcome them: e.g.-
a. The basic aims of labor pre incompatible with the purposes
the Compact .
b. The Cotton Garment Industry regards the Compact as unworkpble;
and it is unworkable without the co-operation of that Industry,
c. Other branches of Industry will come into similar conflict with
the Compact if under it other prison products enter the
channels of trace in sufficient volume to endanger such
industries. They have a legitimate fear tnat the Compact
and the use of the l=>bel in prison industries may tend to
expand Mie market for prison made gooes and in the long run
increase rather than decrease the problems of co roetition.
I I . The Prison Labor Compact is an indispensable -cart of any
larger plan for the' real solution of the problem of prison
l^bor. But it Trust be regarded as an interim measure.
Though we find that 'the Compact has failed p.nd must fail of .
achieving its final purpose, nevertheless it supplies the only practic-
able means of regulating prison industry temporarily while a compre-
hensive plan for the solution of the cuestion is being worked out and
put into operation. This '"ill be elaborated in our Recommendations,
infra.
III. The Compact was the product of a genuine desire to solve a
hard problem. It has been acministere d fairly oy pers ons of
the highest integrity. Any past errors in its administration
hpve oeen only such as are inevitable in the development of a
new instrumentality'.
This finding is more important than might be supposed. The Compact
must be kept alive and mast be supported' oy the hearty good-will of
Frison Administration, of Industry, and of Labor; only its ultimate
purpose and its duration must be modified. The success of any compre-
hensive plan -"in be endangered ii the suspicions, iears, and charges
of bad faith reflected in the testimony are allowed to persist. States
of mind, especially when tinged by emotion or inflamed by passion,
are the most stuboorn facts ol life. Success in this difficult enter-
prise will be possible only if the Pfrties to tne conflict resolve to
work together in a spirit of mutual confidence.
IV. The only true solution of the prison labor problem is one that
will effectually remove the products of prison labor frcm the
ordinary channels of competitive trade and commerce. This
means the State Us e System.
Many of the reasons for this finding and the limitations upon its
validity are set forth in our analysis of the testimony of Frofessor
Louis N. Robinson, supra. It seems unnecessary to repeat them here.
9742
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1 e may add that though, under this system, goods made in prison do enter
the field of use, and so compete with the products of free labor, this
competition is made relatively innocuous because: -
a. Such goods are kept off the general market; hence they do not
affect the price structure in any "branch of industry.
b. The labor that goes into the production oi such goods is not
in direct competition ^ith free labor; thereiore -orison labor
cannot become an instrumentality for lowering oi vsses and
the degradation of free labor.
V. The present and potential competition of prison industry with
the Cotton Garment Industry has created a special and acute
problem that calls for immediate attention and relief.
The testimony '":e have heard sho^s that the principal friction and
the most irritating conflicts have arisen between the Frison Labor
Authority ard the Cotton Garment Code Authority. This is due neither
to accident nor to merely personal differences.
The Cotton Garment Industry is badlv over-expanded. This has
been brought about in part through expectations aroused by the passage
of the Haves-Cooper Act. As a result, prison competition, even on
its present reduced scale, actually endangers tne life of the Cotton
Garment Code. The withdrawal of that industry from its own Code would
be a major disaster to labor, spelling a large increase of unemployment
and a return to sweat-shop conditions that were a disgrace to American
industry. This must be avoided at almost any cost.
Here, again, the importance of maintaining Frison Labor Authority
as an interim and emergency agency "becomes apparent. It is not for this
committee to pass in detail upon the appropriate remedy for the immediate
relief of that industry. But we assert that its effective relief is
impossible unless, through the co-operation of Frison Labor Authority,
under the Compact a simultaneous control is exercised over the com-
petitive products of prison industry.
If the price of the rehabilitation of tne Cotton Garment Industry
should be a temporary increase of prison idleness and a temporary
addition to the financial burden of the prisons, it would be a price
worth paying - provided it is part of a comprehensive plan for the
ultimate and realistic solution of the whole difficult problem of
prison labor.
^ar Committee believes that it has such a solution to offer. We
have, in this letter of transmittal, attempted to point out some of
the difficulties we faced when we undertook this investigation. At
times it appeared that irresistiole forces were opposed to immoveable
obstacles, that we should have to throw up our hands anc report that
we saw no way oat of the mess. !n the above findings ™e have hinted
9742
•132-
at our remedy* This will "be stated definitely and fully explained
in the body of our report.
Respectfully submitted,
Joseph N. Ulman, Chairman
i'rank Tanrienbaum
W. Jett Lauck
James F. Davis, Secretary.
9742
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REPORT AMP RECOMMENDATIONS
The Committee's recommendations look to a definitive solution of the
prison labor problem. No partial alleviation is practicable. The
conflicts of opinion and interest between the contending groups are so
sharp that no compromise of the issues at stake is feasible, and even if
feasible would not be desirable. No such compromise would endure beyond
the day on which it was affected, and in a new guise the old issues
would persist in burdening the conscience of the community.
The specific issues that called this Committee into being were:
A. The difficulties in the Cotton Garment Industry created by prison
competition, and
B. The complaints against the operations of the Frison Labor Compact.
A. The Cotton Garment Industry and Frison Competition
The conflict of interests between the Cotton Garment Industry and the
prisons is acrimonious and of long standing. For many years penal insti-
tutions have emphasized the production of cotton garments under a contract
system and have marketed their products at prices which outside shops
found difficult to meet. Prison labor competition made the maintenance of
any standards in the industry outside progressively difficult, and forced
the manufacturer into out-of-the-way places where child laoor, night
work, long hours, and poor pay became the rule. It has been impossible
in the past for the industry to acheive stability, to increase its wages,
or to improve its standards, because of the lower costs of prison manu-
facture. xhe prison contractor haa the advantages oi iree rent, light,
and heat, of low labor costs, and of a controlled labor force - there is
ample evidence in the history of prison contracting that the disciplinary
machinery of the institutions was often used to inflict physical punish-
ment upon the prisoner who failed to complete his allotted task. The
prison contractor supplied work for the prisoners and in one way or
another added emoluments to the agents of the State who '"ere participants
in the execution of the prison labor contract. The system served the
contractor and the prison administration. It was, however, in many
instances a bane and a curse in the lives of the prisoners, and the
low-priced products kept wages do™n and the standard of living below a
decent level for the workers outside.
Against this system a ceaseless battle has been fought on the
grounds that it perverted the prison to a factory for private profit,
that it used the money of the tax payers and of the prison contractors'
competitors to undermine and destroy their basis of income, that it led to
political graft and malfeasance in office, and that it served no useful
ends in the lives of the prisoners when released. This conflict has raged
back and forth for well-nigh a century, with the prison labor contracting
system gradually losing ground and bein^ replaced by other systems of
labor more or less pernicious. But in spite of its decline, the prison
garment industry still made 22,000,000 shirts in 1932, was still operative
in 22 states, and still represented the greatest single labor activity in
the prisons of the country.
9742
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The impact of the depression upon the Cotton Garment Industry ni9.de
the affects of prison labor competition more keenly felt than ever, while
the development of the National Recovery Administration not only brought
the issue to a head but established machinery to deal with it on a
national scale. Earlier attempts to resolve this problem -ere obstructed
by the fact that prisons are state institutions, and that each state has
a different policy.
In some states the forces opposing prison competition achieved its
abolition without supplying a satisfactory alternative for keeping
prisoners at, work. In others the efforts of labor, industry, and in-
terested social organizations completely failed to make any headway against
the combination of prison contractor and local petty politics. The struggle
culminated finally in an attempt to secure congressional legislation.
The Hawes-Cooper Act, passed in 1929, prevented the sale of prison-
made goods in states that had legislation prohibiting the marketing of
such goods from their own institutions. The law was to b.ecome effective in
five years, thus giving the states an opportunity to reorganize their prison
industries to meet the prospective limitation imposed by the lav;. The five
years expired at about the same time that the national Recovery Adminis-
tration came into being. In the meantime, most of the states had neglected
to make the necessary adjustments to meet the restrictions upon their abil-
ity to market their prison-made goods, with the result that their problems
became more acute. The reasons why the states had not set about preparing
to meet the prospective limitations in the Hawes-Cooper Act are inherent
in the very fibre of the prison system itself, and need not be here dis-
cussed. The fact is that the states "just drifted," as was testified by
one of the witnesses before the Committee.
This lack of preparation on the one hand and the coming into existence
of the National Recovery Administration on the other brought the issues be-
fore the Federal Government as an immediate and inescapable conflict. The
Cotton Garment Industry seemed at last to have found the instrumentality
to secure its long-sought objective. It sought by one means or another to
put prohibitory provisions into the industrial and retail codes to prevent
themarketiiig of prison-made goods. It was going to achieve at one blow
what fifty years of public agitation and striving had failed to secure.
The prisons, .unprepared, and now being threatened with a virtually
complete shut-down of the open market for their prison industries, were
faced with a very real crisis; a sudden and large increase of idleness, de-
struction of their capital investment, demoralization of their system of
prison discipline. They were faced with the complete and immediate destruc-
tion of the traditional system of penal administration which they had learn-
ed to operate by custom and which by a slow process of attrition had become
more or less satisfactory to themselves. They had neither the insight, the
time, the money, the ■ experience, perhaps not even the desire to contrive an.
alternative way of governing the prisons. Institutions, no less than in-
dividuals, surrender their traditional ways slowly and grudgingly. Faced
with genuine danger, they appealed to the Federal Administration for
immediate relief.
It was to meet the danger inherent in the National Recovery Administra-
tion codes on the one hand and the failure of the state "orisons to adapt
their industries to the provisions of the Hawes-Cooper Act on the other
that the Prison labor Compact was developed.
9742
-135-
The Compact, in brief, provides that the prison authorities set up
conditions of fair competition in their prisons so as to meet the
standards- imposed by the codes on outside industry. The compromise ps
achieved was one that, for the moment, kept the penal institutions from
shutting down their work shops and gave outside industz'y some measure of
protection against the hitherto unrestricted and uncontrolled prices of
prison competition, .
The working of the Prison Comoact has since its adoption been
subject to a great deal of criticism, especially on the part of the
Cotton Garment Industry. And in this industry the conditions are such
as to make the complaint very real and the necessity for relief urgent.
The source of the grievances of the Cotton Garment Industry arise
from the fact that
(1.) The industry has unduly increased its outside plant and
equipment. The new capital investment was mainly -motivated by the pros-
prect of the withdrawal of prison competition under the Hawes-Cooper Act.
In addition, ■ evidence- indicates that there was some further plant increase
in 'the Cot.ten Garment Industry because the prospective influence of the
National Recovery Administration seemed to point to a complete shut-down
of prison industries. That there was some basis for this assumption is
seen in the temporary exemptions granted by the National Recovery Adminis-
tration for the training of apprentices in the new plants being developed,
(2) The manufacturer of prison-made cotton garments was allowed a
ten percent lower direct labor cost basis than out-side industry. This ..
amounts to from two percent to three percent of the wholesale price of the
merchandise,
(3) The prisons operating on the State Account System are allowed a
price differential of 12g cents per dozen, sufficient to provide a
definite advantage in a .sensitive market.
(4) Finally, the prison-made garment has, been' granted a National
Recovery Administration label which is not easily distinguishable from the
ordinary Isabel used in that industry by outside plants. The granting of
the label by the National Recovery Administration may have been legal, it
may in fact have been inevitable after the ad.option of the Prison Compact,
liut it gives prison industry a kind of moral advantage it has never before
enjoyed.
Until the granting of the label, prison-made garments were always on
the defensive, and their origin was frequently hidden by false labeling so
as to deceive, the consumer. A number of state laws were, in fact, passed
to prevent this deception. This function now comes under the auspices
of the National Recovery Administration, and. the prison industry, as one
warden expressed it, "has been recognized for the first time." The protest
of the garment industry is both natural- and logical. The label tends to
undo the effect of a campaign that has raged in the press and the pulpit for
well-nigh a century. It makes prison goods respectable. It gives them a
market free from opposition and makes the consumer incapable of distinguish-
ing between prison and non-prison made goods. There is no question that
the label tends to deceive, and that the prison contractor has secured the
help of the National Recovery Administration in carrying out this deception,
9742
-136-
To argue that prison conditions have changed so as to destroy the
basis of the onus is, to raise questions on enforceability, questions of
the rapidity with which social institutions change their character; and in
effect it shifts the basis of the argument. It is clear that the attitude
of the Government,' as expressed through Congressional action and through
the reports of commissions, has been that it is undesirable social policy
to promote profit-making industries in penal institutions. The action of
the National Recovery Administration in granting the label tends in effect
to promote and encourage profit-making industries in prisons.
In the face of demand for increased '"ages, shorter hours, and
improved standards for labor, competition with prison-made goods is made
more difficult for the Cotton Garment Industry,-
The position of the Committee is that the making of garments is from
every point of view undesirable as a system of labor in the prisons; that
it does not materially contribute to the ends of a penal sentence; that
its effect upon the morale of the prison was in the past and in the future
probably will continue to be unwholesome; that in view of the increase of
outside plants and the changing standards enforced by the National
Recovery Administration the continuance of prison competition is destruct-
ive of the Cotton Garment Industry and endangers the standards of life and
labor for some 165,000 people; and that, as the prison industry is
insistent that it c»n survive only upon the favoring feature of a cost and
price differential and upon the contributory deception involving the
Federal Government through the National Recovery Administration label, it
is better immediately and finally to remove prison-made garments from the
open market.
The Committee therefore proposes that the Federal Emergency Relief
Administration temporarily parcha.se the garments made in the prisons.
This temporary period should not last more than two /ears and should be
on a declining scale in periods of three months during that time. This
would give an opportunity to carry out the suggestions of the Committee
in reorganizing the prison industries. It will also prevent the increase
of the -federal relief rolls that must ensue if the competition of nrison-
made garments is allowed to continue to absorb the work that would
otherwise go to increase the labor of people outside of prison. It would
immediately remove the source of contention of the Cotton Garment Industry
that it cannot continue to meet the provisions of the codes of fair
competition set up under the National Recovery Administration and increase
the possibility of standardizing an industry that Has been the most .
sweated and the least influenced by the pressure for higher standards of
life and labor for the workers engaged in it.- It would also give the
National Recovery Administration a real moral argument to push its
insistence for higher standards and better enforcement in that industry.
It would save the prisoners from idleness and the prisons from loss through
a sudden destruction of an imnortant part of their industrial svstem,
and it would give time to nlan and execute a different industrial system
for the prisons looking toward the final abandonment of the Cotton Garment
Industry as one of the chief occupational activities in penal institutions.
9742
S. The Prison Contact -137-
The second immediate issue that "brought this Committee into being
concerns the operation of the Prison Labor Compact. On the whole the
situation is not so pressing as in the Cotton Garment Industry, for the
other industries under the Co-many do not feel orison labor competition
so keenly, and, excepting the Cordage and Twine Industry, where the
problems are of a ver1/ special character, the prison industries are not
so large nor is their pressure against outside industry so effective.
There is, however, sufficient evidence before the Committee to sho" that
the situation is serious enough to re.iu.ire remedial a.ction, and that if
such remedial a.ction is delayed the problem Till become more difficult
and its ultimate solution less feasible.
The Prison Compact is, as has already been indicated, a voluntary
arrangement between the States to maintain within the orisons standards
of cost allocation to sales price that will make prison industries
comparable to outside industries. General agreement upon costs is,
however, always affected by traditional differentials in both costs and
prices. Assuming the best possible enforcement, the prison would thus
still have guaranteed to it a certain edge upon certain parts of the
market because of these differentials. Enforcement of the Compact, in
viei- of experience, would be difficult to carry out and dubious in
effect. But even with the best possible enforcement, the fundamental
issues are in the main not different from those in the case of the
Cotton Garment Industry. The Compact still involves the ITTLA. in securing
and protecting a. market for a type of industry that the -sense of the
American people as reflected o;f their representatives , at least, over
a long period of tine and under many different conditions, has attempted
to outlaw on what are claimed to be broad grounds of social policy on
the one hand and narrow grounds of economic policy on the other. The
KRA and the prison Labor Compact have inadvertently reversed this trend
of policy upon this issue, have tended to prolong the existence of the
condemned type of prison industry, have in return for compliance with
certain demands as to working conditions and prices opened to it the
prospects of a more secure market then before, and would, if no change
were made, impose upon the irisons continuance of the financial and
profit consideration in the management of their industries, contrary to
the expressed judgment of their critics.
There is the further specific grievance that the Prison Labor
Authority has acted to change both cost and price schedules without
consultation rrith the Code Authorities affected. Denials and recrimina-
tions one way or another do not seriously change the picture. Some
remedial and corrective measures are essential even for the temporary
period in "hich the Prison Labor Authority is to be accepted as an agency
in the field, to meet the real danger that the Prison Labor Authority
may, by developing interests and setting up expectancies , contribute to
the freezing of the present prison industrial system, contrary to the
repeatedly expressed policy of the American people as exemplified in the
action of Congress and numerous State Legislatures.
The immediate remedial action suggested by the Committee is there-
fore to set a limit upon the expansion of the prison industries, by setting
up quotas in the prisons to limit their production for the open market
at a point no greater than the one existing when the Prison Compact was
9742
-138-
established; and to provide that no changes in price or cost schedules
be introduced in -orison industries without mutual agreement between the
Prison Labor Authority and the special Code Authoritity involved. If
necessary, an impartial chairman night be set uo whenever agreement is
impossible.
The Program
But the prison labor -oroblem is more pervasive than the above
discussion would indicate. The prison industrial system is an integral
part of the very structure of the penal institution and must of necess-
ity shaoe the lives of the -en and determine whether the effect rf
imprisonment is to achieve those ends that the com unity has a right to
expect from the penal institution. If the prison for one reason or
another does not return to the community men strengthened in character,
cleansed of )oor habits, better able to make social adjustments, if it
does not reconstruct their way of life and make then less likely to
follow the path of criminal depredations, then the -orison system has
failed. If the men in prison do not come out hetter fitted to take
their places in the community as citizens, then all the efforts of
society, all of its e:cpenditures, of its manifold plans and programs
for the combatting of cri :e break down at the point where the community
has the greatest opportunity, the most time, and the best chance of
achieving constructive ends with men who have failed in all other
social relationships.
For the prison is the final opportunity of the community to undo
the evil already done, and to retrieve both its own failures and the
failures of the individuals involve.".. It is these considerations that
have motivated the opposition to the essential perversion of the -orison
to a profit-making institituion. The true function of the -orison is
neither to make profit for private contractors nor to make profit for
the state. At its best the function of the penal institution is an
educational one — education in the sense of re-creating a habit system
adequate for social adjustment. To permit the arofit motive to inter-
fere with this broader mrpose is to negate the function of the police
and the judicial agencies, committed to the orevention of crime. The
fact that so large a. mart of the men sent to prison continue in their
career as criminals is evidence that tlie penal system now fails almost
completely of these ends. This is not the nlace for a general essay
on criminological reform. ' But it is the place to insist that no such
reform is possible without an a.dequate prison industrial si'stem; that
no industrial system which subordinates the functions of the -orison to
the making of ->rofit can Meet the purposes of society; and that the
present situation in regard to prison industry must change.
Surely no one will deny that prisoners ought to have work in
prison. But it is no corollary to this statement to say that prison
industries must be run for profit. In fact, the greater measure of
the difficulties that have arisen is due to a willingness on the part
of prison officials to shift to the shoulders of priva.te contractors
their burden of responsibility for contriving an adequate system.
The only alternative to a profit-motivated prison industry is the
development of the State Use System. That has been recognized for a
9742
-139-
long tine, rnr, a iiu-iber of the states as veil a > the Federal Government,
have abandoned the nroduction of goods for the open market and have
confined 07 lav the manufacture of . prison goods to the needs of the
states. The difficulties th t have arisen here are due mainly to t^o
factors: first, on inadequate lav; second, inadequately equiemed and
organized systems 0:' -jrison L dustry. An adequate lav requires that the
public market — i-e., the market made by all ta-c-suo >orted institutions —
shall oe reserved for the prison industries. An adequate prison industrial
system is one that is sufficiently uiversified and equipped to he able
to irodu.ce the great variety of things that the tax-supported institutions
need, and that br its diversity provides a limitation upon an undue
concentration in any one industry, and wakes possible the kind of
administrative and educational classification of the prison mo mla.tion
needed to achieve the broader ends of the prison. An adequate lav
requires compulsory purchase by all tax-supported institutions of the
things that can be jrouuced in the prison; in turn, the prison must have
eauroment and organization to meet the needs of the tax-supported
institutions both as to quality and quantity.
The States Use Lavs have been opt»osed for political reasons. The
development of the state prison sysfceis has been neglected because of
inefficiency, political considerations, and lack of funds. The prison
•problem doe a not bull" large in the Kinds of the mass of people, and it
has been allowed to drift without ruch consideration. Ue propose to
solve the smeci'ic issues that iron ht this Committee into existence
by making it possible for the states to develop a satisfactory
industrial system if the states rill cooperate to the extent of passing
a satisfactory States Use La*'. The lav of the State of Massachusetts
might well be considered as a model for such purposes. If the states
will so cooperate, then --e propose that the Federal Government, in
consideration of the elimination of the difficult national problems
which the com etition of prison industries has created, shall coomerate
by providing the engineering staff to survey, and the funds to organize,
a satisfactory prison labor system for each stake, At no time has the
occasion been more appropriate nor the onportunity greater to do a
constructive task in giving the American- people the kind of penal
system that a civilized conimnity ought to have.
Tie propose that the Public T7orks Administration set aside, subject
to such modification, if pr^-j is fou a le ;rlly necessary, in the provisions
of Section 206 of Title II of the National Industrial Recover-/- Act, a
fund of $50,000,000 to be applied to surveying and reorganizing the prison
industries of the states of the country as they pass the requisite
legislation. Working in cooperation vith the Prison Compact Group, this
fund would set mm an engineering staff to go into the cooperating state
and make a comprehensive survey of the market available in the tax-
suonorted institutions of the state, counties, and municipalities. It
would then survey the prison and -plan the prison industries to meet
those specific needs, -nth all the factors in the situation fully in
vie". The Public TTorks Administration would then, ''oj contract with the
prison, help set up ana overate this system of prison industries for a
period of five years and set it well on its feet before withdrawing.
!7e make no suggestion as to the conditions that the Public TTorks
Administration would itself make in -providing the money. It already has
9742
-140-
a basis in la1-7 and experience to determine its conditions of cooperation
with the states.
Our insistence is that the requisites of an adequate law and a
sufficient diversification he kept in view. T7e also insist that the new
pirn be operated under contract with the prison authorities and ^ith their
cooperation for a period of five years, which ought to be long enough
to set the new model on s firm foundation in practice as well as in
public opinion. The diversification, is important because it ,rould do
two essential things. It would make possible the reducing of pressure
uoon any one industr;*- to a minimum. It would make possible for the
first tine an adequately developed educational systen in the -orisons, and
a genuine effort to :.ialre the -orison errjerier.ce something more than a
resting period between one series of criminal depredations and another.
TTith the help of the Public TTorks Administration a systen of educational
ana occupational classif ications could be worked out in each -orison.
The snail shops could be adapted to their industrial as well as their
educational utility, and ^e might get at last a system of penal
administration that would become a constructive rather than a destruct-
ive influence in the lives of the men in orison and of society which
has to determine how to provide for them. Ho such penal systen could be
operated for long without raising the questions of whether the experience
of imprisonment is essential in all of the cases in which it is now
imposed, and whether societv could not achieve its o1 n purposes in many
instances by decreasing the number of individuals sent to prison. It
seems logical to e-roect that the operations of such a systen of penal
administration as is here outlined would lead to a strengthening of the
very useful agencies of probation and parole, thus alleviating the
problem of prison industries by reducing the number of men sent to
prison.
One of the legitimately proud boasts of the present administration
is the abolition of child labor, which had so long been defended and
maintained by a series of specious moral arguments and political
chicanery. It seems to this Committee that in the possible contribution
to a final settlement of the prison labor problems and in the reconstruc-
tion of the penal systen which must be one of the results of such a
solution, another step of perhaps no lesser significance would have been
taken. The community as a -'hole mould acclaim such a solution of the
prison problem, as it ha.s acclaimed the abolition of child labor. The
Committee wishes to make it as clear and as impressive as possible that
only by the doing of the larger thing can the narrower issues that called
it into being solved.
He con: lendation
1. The Committee recommends that the National Industrial Recovery
Board use its good offices with the President to set up through the
Public Uorks Administration a fund of $50,000,000 for the purpose of
helping the states meet the conditions specified in this report, so
as completely to replan and reorganize their prison industries, removing
or is on- made goods from the open market and finally bringing to an end
the prison -labor controversy which has burdened American industrial and
political life for so long a time.
9742.
-141-
2. The Committee recommends that in the interim "between the present
and the tine -hen the reorganization of the prison industries can he
effected by the use of the fund suggested above, the national Industrial
Recovery Board use its rood offices through the President and the
federal Emergency Relief Administration to effect the purchase from the
■orisons of prison- made garments, or to utilize the labor no-' employed
on prison-made garments to make such other garments as the federal
Emergency Relief Administration nay deem preferable. The purchase
of these garments by the federal Emergency Relief Administration from
the state orisons should be scheduled on a declining scale, and should
cease at the end of two years.
3. In addition to the immediate adoption of the above program,
the Con littee further recommends that prison-made garments "be barred
in the public market by the withdrawal of the national Recovery Administra-
tion label no" attached to then, or by its modification to read "prison
made11. The Committee suggests that a maximum of 15 days after the
publication of this report be allowed to elapse- before the above pro-
posal for the taking over of prison ■made garments by the Federal Emerg-
ency Relief Administration be effected.
4. The Committee recommends that the Prison Labor Authority be
continued, and that its offices be used as the agency in cooperation
with which the above program is to be carried out., and that the loss
in funds to the Prison Labor Authority which nay. result from the
withdrawal of the label or its modification be supplied from the
funds set aside by the public Works Administration.
5. The Committee recommends that an Executive Order empower the
National Industrial Recovery Board to require an agreement between
the Prison Labor Authority and the Code Authorities in the industries
affected by prison-made products in ever'- instance of change in price
or costs of products sold by the prison industries* Tf such an agree-
ment cannot be had by mutual consultation, an impartial chairman
especially designated for that purpose should be named.
6. The Committee recommends that, by cooperation between the
National Industrial Recoverv Board, the Prison Labor Authority, and
the Code Authorities affected, a quota system be established for all
prison industries, limiting their production for the open market at a
point no greater than that which existed at the time the Prison Compact
came into existence.
7. The Comruttee recommends that if the above conditions be fully
met then the remaining str>te, count;r, and city institutions now producing
for the open market be brought under the Prison Compact.
Joseph IT. Ulraan, Chairman
Prank Tannenbaum.
Jam.es P. Davis, Secretary
Sl# W* Jett Lauck.
9742
-143-
AFFENDIX E ... . .
NATIONAL RECOVERY ADMINISTRATION
FOR RELEASE THURSDAY . RELEASE 110.9029
MORNING, NOVEMBER 29, 1934.
' REPLANNING OF PRISON INDUSTRIES IN STATES TO REMOVE FRCDUCTS FROM
OFEN MARKET RECOMMENDED TO NATIONAL INDUSTRIAL RECOVERY 30ARD
A recommendation for complete replanning of the prison in-
dustries of the states which will remove prison-made goods from the
open market and end the longdrawn controversy on the subject was made
to the National Industrial Recovery Board today by a special investi-
gating committee. Use of $50,000,000 Public Works funds for the pur-
pose was advocated.
This group was created under an executive order issued by
Fresident Roosevelt October 12 to investigate effects of competition
between prison labor and sheltered workshop products on the one hand
and those of the cotton garment industry on the other, and also on the
operation of NRA' s prison labor compact.
The report has not been acted upon by the Board as yet. It
was required as part of the arrangement tinder which the Fresident,
following extended investigation, required a shortening of the work
hours in the cotton garment industry from 40 to 36, effective December 1.
The committee, composed of Judge Joseph N. Ulman of Baltimore,
chairman; Frank Tannenbaum, author and economist, and W. Jett Lauck,
statistician, found that the Frison Labor compact "has not solved the
problem of prison labor and will not solve it permanently and construc-
tively," but "is an indispensable plan for the real solution of the
problem of prison labor."
The compact is an agreement between more than a score of states
operating prison factories and the NRA for production of goods on a
basis that should not put them on the market at a price lower than the
products of private industry. The prison soods are given a distinct
NRA label.
The committee urged that until such time as the system it suggest-
ed is brought about, the Recovery Board "use its food offices through
the Fresident and the Federal Emergency Relief Administration to effect
the purchase from the prisons of prison-made garments, or to utilize
the labor now employed or prison-made garments to make such other gar-
ments as the Federal Emergency Relief Administration may deem prefer-
able."
"The purchase of these garments by the FSRA from the state prisons"
it continued, "should be scheduled on a declining scale, and should
9742
-143-
cease at the end of two years".
The ccmnittee also recommended that prison made garments be
barrel in the public market by withdrawal of the F3A label now used or
by its .modification to read "prisoi made." Lapse of a 15-day period
after publication of the report was recommended before FERA should
take over prison-made clothing.
Another point was that the Frison Labor authority should be
continued and use", as the agency to centralize the proposed program,
and that NEA be empowered oy executive order to require an agreement
between the prison labor authority and the various code authorities in
every instance that prison industries make a change in price. Arbitra-
tion was provided for in case of non-agreement.
A quota system limiting prison production for the open mar-
ket to the volume of output s„ the time the prison compact came into
existence; was advocated, and that all state, county and city institu-
tions now outside the compact be brought into tne new program.
"The only true solution of the prison labor problem," said
the committee in the section of the report devoted to findings, "is
one that will effectually remove the products of prison labor from the
ordinary channels of competitive trade and commerce. This means the
stats use system.***
"The present and potential competition of prison industry
with the Cotton Garment industry hps created a special and acute pro-
blem that calls for immediate attention and relief.
"The testimony we ha"e heard shows that the principal fric-
tion and the most irritating conflicts have arisen between the Frison
Labor Authority and the Cotton Garment Code authority. This is due
neither to accident nor to merely personal differences."
The committee blamed this condition on over expansion of the
cotton garment industry, partiall; caused "oy expectations that the
Hawes-Cooper act would greatly curb prison output.
Declaring that prison competition even as now reduced "act-
ually endangers trie life of tne Cotton G-arment Code,1'' the committee
said :
"The withdrawal of that industry from its own Code would be
a major disaster to labor, spelling a large increase of unemployment
and a return to sweatshop conditions that were a disgrace to American
industry. This must be avoided at almost any cost."
Temporary increase of prison idleness and a higher cost of
prison operation was described as "a price worth paying" to for re-
habilitation of the cotton garment industry, so long as the higher
costs become part of a comprehensive plan for ultimate, realistic
solution of the whole prison labor problem.
9742
-144
No compromise, is held, "would endure beyond the day on which
it was effected," and "no partial alleviation is practicable. The con-
flicts of opinion and interest between the contending groups are so
sharp that no compromise of the issues at stake is feasible, and even
if feasible would not be desirable."
The committee spent a month hearing testimony and reviewing
material from an enormous list of witnesses, 'representing industry,
organized labor and the prisons.
9742
APPENDIX F
NATIONAL RECOVERY ADMINISTRATION
IMMEDIATE RELEASE RELEASE NO. 9078
Dec. 3, 1934
The National Industrial Recovery Board today designated its
chairman, S-. V.erj Williams and Sidney ittllman. member, and Linton Collins,
division adrjinisbraboi to conduct negotiations with FERA to see if the
latter can utilize prison labor garment production in the relief
program, so as to remo/e prison-made clothing from the open market.
This was in pursuance to the recently nubli^hed report on orison
labor competition made Vy a suecial comni fcee under Presidential execu-
tive order, in connection with the shortening of the work weak in the
cotton garment industry,,
The committee reported "orison production was endangering the
status of this industry and the wages of its 185,000 employes.
The hoard put off until it can gather more data, and legal and
other opinions, the committees proposal for a $o0j000:CC0 F.&i. urogram
of reconstructing the r>snal syjtems of the states so as to take the
prison factories finally out of competition with private industry while
furnishing masdnpuu labor and braining to prisoners oy having them
produce goods for state purposes only.
It also deferred, pending further reuorts, action, on the
proposal that the NRA label no'- used by prison plants under the prison
labor compact be taken a^ay or be made to carry the words "prison
made."
Mr. Collins, who h^s administrative charge of the urison compact
and other public-agency agreements of LTR&., was requested to find out
the uossibilities of limi ting all -orison production by a quota
system bas?d on the ouJ:vnt of prison factories at the time the prison
compact was put into efiect.
9742
-146-
APPE1TEIX G
COMiJBFTS OF THE PRISOE LABOR AUTHORITY
OH TIE REPORT OF Till, UL;..Ar COhhlTIEE
The report of the Committee (*) appointed by the National Industrial
Recovery Board to investigate corapetition of the products of tie Cotton
Garment Industry with the products" of Prison Labor, as directed by Exec-
utive Order ho. 118-155, has been the subject of a thorough discussion
by the representatives of the States Signatory to the Prison Labor Compact
of Fair Competition and has also been given earnest consideration by the
members of the Prison Labor -Authority. It was the judgment of all of
those who examined the report that it was prepared by able and thoughtful
men and merits the most serious and careful attention.
The Ulman report evidences the profound interest of the members of
the committee is penological questions and we commend the idealism and
the progressive viewpoint on penal problems expressed in it. Thorough
recognition is given by the Committee to the need of making imprisonment
a constructive measure for the rehabilitation of those confined. He agree
whole-heartedly and, therefore, wish to re- emphasize the statement of
the Committee that "Surely no one will deny that prisoners ought to have
work. "(Page 18). We hope that this principle will be accepted and given
full recognition by all who must pass judgment on this subject.
INQUIRY CURTAILED BY TIME LIMITATION
However, it seems regrettable that the Ulman Committee was so limit-
ed in time to complete and report upon the subject assigned to it because,
in our opinion, it seems to have been unable tc give full consideration
to all of the intricate questions involved. The speed with which the
report was dr?fted probably accounts for the fact that the Committee^
recommendations and the solution it has proposed seem to push aside many
difficulties which to us appear to be substantial. It also seems unfor-
tunate that the Committee occasionally has used language not justified
by any testimony in the record, and sometimes not in strict accord rath
the facts. For instance, prison administrators are accused of lacking
insight, time, money, experience, and even the desire to contrive an
alternative way of governing the prisons. (Page 14). This accusation,
levelled against these public officials, is predicated upon the assumption
that they failed to prepare :or the conditions alleged to flow from the
enactment of the Hawes-Cooper Act. Examination of the reports of the
majority of the prisons of the country would indicate that a 'very large
proportion of the prison administrators were fully aware of the need for a
reconsideration of their prison labor policies. In many instances, they
have been unable to secure the legislative support or appropriations to
enable them to effectuate new policies. Moreover, the Committee's inter-
pretation of the Hawes-Cooper Act does not appear to be in accordance with
the intention of the Authors of this legislation or in conformity with its
plain terns.
(*)"The Committee" referred to throughout this report is the Committee
consisting of Judge Joseph N. Ulman, W. Jett Lauch and Frank
Tennenbaum,
9742
-147-
MISIITTLRPRETATION OF IIAY/LS-COOPLR AC
i
Prison administrators did not fail to adapt prison industries to
the provisions of the Hawes-Cooper Act for the simple reason that the
Act itself declared no affirmrtive policy respecting the sale of prison
goods. This act merely divested such goods of their interstate character.
It left each state free to choose its own method of determining whether
the sale of prison products shotild be regulated or prohibited, It per-
mitted each state to apply to prison goods shipped into it the same
rules prescribed for prison goods made sad sold in that state. Each
state must c'etermine what emp] oyment would" b? provided for its urisoners. ,\
The fact that some states have- parsed no new legislation on this subject
does not mean that these havo failed to carry out any affirmative duty
placed upon them uy the Federal statute. The Hawes-Cooper Act per se
is not mandatory. Its provisions become operative within any state only
through the legislation of that state Legislative silence by any state
means nothing more or less than tha+ such state believes no new policy
or law would be an improvement over its existing policy.
OPPOSITION TO PRISON LABOR
Wfe also must reject the philosophy, which seems to underlie the
report, that somehow prison-made merchandise is inherently vicious and
injurious to the public welfare. The report seems to hold that there
is no possibility of so regulating the sale of prison products in the
open market so that such products can be made acceptaole articles of
commerce. Su sh a philosophy not only fails to be in accord with a number
of court decision?, but would also seem to make impossible a constructive
answer to the prison labor question. This is unthinkable. Some way
out of the' dilemma must be found.
Tie admit the Committee has given ample evidence of the existence of
strong opposition to the sale of prison made goods in the open market.
This is no new phenomenon. Most of this opposition is based on tradition
and springs from abuses which formerly characterized the production and
marketing of goods produced by convict labor. V.*e understand the concern
currently felt by free labor and industry and we realise that the
depression Las strengthened, opposition to any unfair method of competion.
At a time when law-abiding citizens are compelled to forego employment,
it is natural tlr t the cry against prison labor and the sale of prison
goods on the open market should be intensified. But the prison executives
assert that not one scintilla of real evidence was produced before this
Cemmittee to show that goods made under the Compact were competing unfairly.
PHI SOU WORK SOCIALLY IMPERATIVE
The present unemployment condition should be looked upon from a
broad social view. Our concern must include not only free labor,
but the labor of prisoners. Idleness as a factor contributing to
social deterioration of the individual is intensified when the liberty of
the individual to move freely is deniei. Labor in prison is primarily
therapeutic. Its objective is not financial gain and while its results
incidentally contribute to the reduction of the price which taxpayers must „ ; _
pay for the upkeep of prisons, its greatest value is as an instrument-
ality through which prisoners may be rehabilitated. Broad social economy
9742
Ul48i.
demands productive labor for prisoners. Failure to provide such is a
failure of the state to function adequately in the discharge of one of
its duties to itself and to o.ir who2.e social organization. With the
exception of Minnesota- there is not a single prison in the country which
really has productive employment opportunities in industrial pursuits
for more than forty per cent of its p pulation. j^ost American prisons
today are vast idle houres in which criminals, aimlessly milling about,
create a situation which, fron the point of view of the prison adminis-
trator, is fraught with serious con..;eouenees, and, from the point of
view of the average citizen is full cf social danger. Such idleness
renders it impossible to give efiect to the progressive penal philoso-
phy expressed in the Ulman report. Certain it 13 that the country's
general unemployment problem cannot he solved by throwing all prisoners
out of work.
PRISOU EXECUTIVES INITIATE ACTION
Obviously, the situation demands constructive action. That the
prison administrators th^mse'ir.-es have reali :od this is evidenced by
the fact that they did not sit idly by and allow the depression con-
ditions to overwhelm the.n„ They did not challenge the right of the
Federal, Government to interfere with the rights of sovereign states
"by code prcvi.dio.is whioh would curtail the effecti-enes^ of legal in-
strumentalities of uie states for ths treatment; of law offenders.
They freely offered to euoperate with [he Recovery Administration.
For the first time in the hirtory oi the eo^itry, the states on their
own initiative cooperated in the development of apian to meeb the
issues of competition inherent in the marketing of prison lator products.
Prison administrators did net wait for Lhe economy charting "by Congress,
Early in 1933, when it was suggested that action would be considered
looking toward an effort at "planned economy^, representative prison
administrators met in New York and discussed the menace to prison manage-
ment and discipline in certain proposed legislation emanating from a
self-constituted committee. This meeting and o-hsis that followed in
May and July developed and agreed upon four basic principles for the
conduct of prison industries.
HOW THE COMPACT WAS FORMED
Shortly after the establishment of the I.R.A. early in July, 1933,
these principles were submitted to. the Department of Lahor and to the
N.R.A, representatives of the prison administrators contacted the K.R.A.
with 'the srggestion that a separate code to govern prison industries
should he adopted. Without committing themselves, the IJ,R.A0 officials
encouraged this proposal. To make siu-e that the states would have
knowledge of all that was involved in such a proposal, these administra-
tors called a general meeting of representatives selected "by the governor
of each state. Upon one week's notice representatives from 32 states
met in Washington. They decided to present a code. Such a code subscribed
to by 36 states was presented to the 1". R.A. After consideration, the
N.R.A. determined it was impracticable because the II. R.A. was without
power to enforce a code upon sovereign states.
Prison administrators then proposed that the states by agreement
among themselves should do what was proposed to be done under the code
which had been submitted. Accordingly, a compact was agreed to by the
9742
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states and submitted to the N.R.A. Following consideration "by its legal
branch and by several of its boards, certain verbal changes in the pro-
posed compact were mg.de. In this new form it was again submitted to the
states and was agreed to by the signatory states, 30 in number. When
in final form, it was submitted to and was a 'proved by the President,
This is an e lightening and an important record. It is documented
completely in the records of the meetings of prison administrators,
of the reprerents c: ves of the states and in the files of the department
of the United States Government and of the several states consulted and
concerned in its consumur ti on. This record is set forth in some detail
here, as we believe such elucidation necessary at this time, not only
becac.se the Ulman report seems to have accepted as fact some unfounded
statements as to the attitudes of prison administrators of the states,
but also for the reason that the Ulmanieport is such a significant doc-
ument that those who are to consider it as a basis for action by state
and national agencies should have all the facts necessary to a complete
understanding of the matters covered in that report.
The Ulman Committee found that the Compact was the product of a
genuine desire to solve a difficult problem and urged its continuance.
The Committee also found that the prison executives had made earnest
efforts to cooperate with other code authorities, only to be met by
rebuffs and arbitrary attitudes, But despite these set-backs, it is
our opinion that the states will continue to seek a constructive sortition
and, therefore, ue welcome the suggestions of the Ulman Committee.
.DIFFICULTIES I1UIZRE:TT IN STATE-USE SYSTEM
Subject to certain understandins and interpretations, the state-
use S3 stem of prison employment should be a constructive method of solving
the orison employment problem for the reasons so ably stated in the report
of the Ulman- Committee, and its adoption should be facilitated greatly
because labor and industry seem more willing to cooperate upon this, than
upon any other compromise.
But, the state-use system is not a universal panacea. We believe
that the Ulman Committee has failed to consider sufficiently the difficult-
ies inherent in any efforts to make this plan workable and practicable.
First of all, we believe that the Committee's definition of the
state-use s;;stem should be widened. It would aopear from the report
that the Committee regards the state- use system of prison labor as
one under which prisoners are engaged solely in the production of manufact-
ured goods.
We regard the state-use system as one under which prisoners may
engage in any type of work paid for by public monies. We would inclu.de
within, the definition the state-use such labor as that expended on public
roads and other types of public construction, agriculture, mining, soil
erosion projects, reforestation, flood control and similar projects, as
well as the manufacture of articles for consumption by public institutions
and ta.x sup sorted activities.
9742
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Another problem which we fear the Committee has neglected to con-
sider fully is the attitude of the political subdivision of the state
with regard to purchasing products .from state-operated institutions.
It must be remembered tha-t since the beginning of democratic govern-
ment in America, local governmental entities have been jealous of
their rights and have sharply limited grants of power to states and to
Federal Governmental bodies. In the United States, local governmental
unites are particularly insistent upon the administration and the con-
trol-' they exercise over purely local expenditures and the procurement
of articles for local use. It has beens and is, no easy matter to
overturn laws and customs grounded in generations of experience. This
is a fundamental reason wry the state-use system of prison employment
never has been wholly successful in any state, although it has been
tried ~oy some stabes for over half a century.
PUBLIC OPINION AND OTHER STATE FACTORS TO CONSIDER
Another difficulty in providing an effective state-use system
arises from the diverse economic and social conditiono prevailing
in the different states. Predominantly agricultural states present
problems quite different from those found in the more highly industri-
alized sections of the country. It is als** of the utmost importance
to take into consideration the public opinion of the state citizenry
with respect to the various phases of the prison labor problem. In
some instances, for example, a prison labor program including the sale
of prison products on the open market has been approved by a vast maj-
ority of citizens of a state because they sought a means to frustrate
monopolistic or other conditions which they felt were inimical to the
welfare of their state. In other localities, various interest groups
within the state have been so strong that they have been able tc prevent
the establishment of certain kinds of prison industries even though
the products were to be sold only to state institutions and agencies.
That these difficulties cannot be brushed aside is apparent when
it is realized that none of the many states that have tried this system
have talier. full advantage of its opportunities* Pressure groups in many
of the states have been so successful in exempting certain industries from
the provisions of the state-use lav; that prison administrators have heen
deprived of the possibility of utilising the prisoners in the manufacture
of goods of certain types for state-. ise. In the opinion of the Prison
Labor Authority, there is not a single state in the Union which has been
successful in operating the state-use system satisfactorily- It is true
that some of the states committed + o a state-use system have provided a
modicum of employment for their prisoners and may be in a better position
in this respect than other states who have refused to abandon the sale
of prison-made goods on the open market, but nowhere has it really solved
the problem,
THERE MUST BE EVIDENCE OF GOOD FAITH
ilMa brings us to the most persistent obstacle to the adoption of
the Ulman report by representatives of the states signatory to the Compact,
They feel that they have compromised to the utmost and that now they can
make no further concessions because the agreements they have heretofore
9742
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entered into have been repudiated and undermined by interest groups.
The compact itself was a compromise on the part of the prison men
and they believe that honest .s-ad sincere attempts to live up to its
provisions have been frustrated by a minority industrial group which
has shown complete inability end ur.wi] lingness to cooperate with the
Wational Recovery Administration or. v.his \v any other problem, if
the National Recovery Administration could, for example, secure the
adoption of a clause in Industrial codes of fair competition which would
assure the prisons thai their utate--.iFe market:-- would not be infringed
upon, or in some other way evidence the good faith of labor upon, or
in some other way ^evidence the 'good faith of labor and industry to
preserve state markets for the prisons, there would be little diffi-
culty in getting the adoption of the principle of the state-use system
wherever such system couJ d function practically as socn as the funds
necessary to equip the prison industries were available. In a broad
sense, it would become effective in practically every state in the
Union* Some device, such a"- that just suggested, must be found that
wil] give added support to the compulsory purchase clauses which now
appear in the laws of only a few of the states and which must be part
of evwy state-use lav;, for otherwise it may be impossible to secure
the condition which the Ulmar Committee Peport (Page IS) properly
recognizes, viz? chat nAn adequate law require-, that the public market,
i.e., the mar' : -de by all 1: ax- supported institutions, shall be re-
served for the prison industries, n
ACTION SHOULD Bl PREDICATED ON A COMPLETE SURVEY
We are of the opirJ m that the difficulties inherent in the state-
use system are so preplexing and pervasive that it is impossible to put
the recommendation of the committee in this respect into effect in a
hurried fashion* Because each state has its own peculiar problems
we firmly believe that prior to any attempt to carry out the recommend-
ations of the Committee there should oe a full factual research conducted
which will permit the formulation of a law and the establishment of a
system which is adapted to the conditions in each state. There is
obvious need for surveys to be made by competent", trained persons
cooperating with the respective state administrations, for the purpose
of determining and evaluating all of the conditions which must be con-
sidered in the formulation of an adequate prison labor program. When
such a survey has been completed in any particular state, a prison em-
ployment law may then be drafted which will embody so far as it is pos-
sible the state--u.se feature. This problem which has baffled broadminded
men ever since •• imprisonment as a form of punishment was introduced,
cannot be settled hurriedly or by the fiat of some organization of
the central government. N0t one law governing prison labor in all states
should be drafted, but an indefinite number of laws, suited to the con-
ditions of specific state st Should the National Industrial Recovery
Board decide to encourage or foster these surveys, which we believe
absolutely essential, it would be desirable of course to begin work in
those stales which today are the foci of the difficulty. Pending these
surveys the Recovery Administration ought not, it seems to us, attempt,
to exercise authority over prison industries as such action would be
of doubtful legality.
9742
-152-
We infer from the Committee's conclusions recommending the re-
moval of prison-made goods from the open market within a period of
two years that they -assume adequate state legislation can be secured
within this period. The Committee ha,: evidently failed to take into
consideration that all but a few of the states of the Union will meet
in legislative session early in 1935 and that all but four or five
of these states will not meet again until early in 1937, unless ex-
traordinary sessions are called, Fbwor then ten states will meet in
regular session in 193S* Consequently, any state-use law passed upon
adequate research in each state connot possibly be drafted in time
for the 1935 legislatures.
SUGGESTIONS OF THE PRISON LABOR
AUTHORITY RE RECOhiMENIiyjJlONS OP ULMAN COi.LiITTEE
It is not, however, impc. foible for the Recovery Administration to
cope with this problem, and bring about an improvement in the existing
situation. Many of the recommendations contained in the report might
well be adopted.
RECCLavEHDATION HO. 1
The Committee recommended (l) "that the National Industrial Recovery.
B>«ard use its good offices with the President to set up through the
Public Works Administration a fund of $50^000,000 for the purpose of help-
ing the states to meet ^ho conditions specified in this report, so as com-
pletely to replan and reorganize tlv;ir prison industries, removing
prison-made goods from the open ma.'ket and finally bringing tc an end the
prison 'labor controversy which has burdened America' s Industrial and
political life for so long a time. "
"V/e have attempted to make clear the difficulties facing the general
introduction of exclusive stpte-use laws and to point out the type of in»
quiry and the length of time -which it would take to introduce legislation
which so far as practical would embody the recommendations of the
Committee. It is obvious that the surveys recommended would prove
costly and that there will be need for funds to carry on this work.
We therefore, would favor any plan which would permit the allocation
of Federal funds for the purpose of making the necessary preliminary
studies" and to draft' the appropriate legislation for the consideration
of the' respective state legislatures. Furthermore, the financial condi-
tions of a large number of states would undoubtedly make 'necessary
Federal support in order to put into operation some of the laws which
might be enacted and many states would undoubtedly welcome such support
although we are without information at this time upon which to base an
estimate of the amount v.hich would be necessary for that purpose.
At a meeting of representatives of 28 states- called to consider
these recommendations, not a single voice favored the immediate adopt-
ion of an exclusive state-use system. However, these men and women were
unanimous in their willingness to begin the installation of state-use
industries or to improve existing ones with Federal aid. None was will-
ing to jive up the 'liieans they have of keeping prisoners employed until
something had actually been developed to take its place. On the »ther hand
9742
as one representative expressed it, most of them ivere willing to turn over
one group of inmates after another to an experiment in state-use just as
fast as industries could be established and proved successful.. By such
a program state- use might develop in any state to such a degree that it
will be safe to discard all other systems. This plan was followed in
Massachusetts from 1920 to 1934.
An informal inquiry at the PWA discloses that there is not now
$50,000,000 available and unalloted from the funds at their disposal.
Since it will be desirable to proceed with preliminary surveys in the
several states immediately and develop a program for each state, we
believn funds sufficient for ruch surveys could more likely be qbtained..
As each survey indicated the amount of money needed to establish state-
use industries, additional funds could be assigned. We estimate that
not less that $1,000,000 would be essential at the beginning.
We doubt the wisdom of establishing such a program under the PWA.
The states will need every assurance that the work to be done will be
undertaken by men experienced in prison work as well as in industry.
We believe that either the Prison Labor Authority should be incorpor-
orated as a federal Corporation under Title I of the id dA, to carry
out the state-use program to be adopted or that a separate corporation
should be created for this purpose. In suggesting that the PLA be used
to effectuate the purposes of this program, we are not aiming to per-
petuate that organization, If a corporation, the directors of which
shall be different than those of the PLA, is formed, it should
adequately represent the public, free industry, free labor, and the
prisons. In either case we believe it essential that the agency to
carry out the purposes of this program has the confidence of prison
administrators in the states and be representative of then.
While attention would naturally be paid first to these states where
the problem of competition is most acute, we believe that states, like
Connecticut and Nebraska, which are not nem selling on the open market
but are in need of an adequate prison industry program should be encour-
aged to avail themselves of this aid. Hence, all states now having,
•r which later adopt, an adequate state-use program should be included
under the provisions of the plan.
It is important to define what constitutes an"adequate state-use
law. In discussing this phase of the problem, prison men were emphatic
in their declaration that it must include all tax- supported institutions
and agencies; that it must contain a so-called compulsory purchase
clause requiring all such institution,? and agencies to buy from prison
industries wherever possible unless released from so doing by a prop-
erly designated authority; that public worts and ways including highS
ways aid perhaps even tax-supported relief agencies should be included
under state-use, although it is not likely that prisons would avail
themselves to any great extent of these outlets for obvious reason;
and finally, that no adequate state-use law should, exempt any industry
from being established in any prison,
Finally, the representatives of the states would be opposed to
any Federal grant the conditions of which would impose upon them
either a program or a personnel with which they were not in agreement
9742
-154-
or which was outside their control. The states .will accept any reason-
able conditions provided they are consistent with local needs and statutes.
Unquestionably they will gra?it any lederal agency the right to inspect
audit, or recommit' d, but they do not wish unnecessary and impeding
restrictions^
EECOIvDvDSllI^TIOH HO. 2
"The Committee recommends (,2) that in the interim between the
present and the time when the reorganization of the prison industries
can be effected by the n?e of the funds suggested above, the National
Industrial Recovery Board use its good offices throughtthe President
and the Federal Emergency Relief Administration to effect the purchase
from the prisons of prison- mace ga"ments, or to utilize the labor now
employed on prison-made garms.its as the lederal Emergency Relief Admin-
istration may deem preferable- The purchase of these garments 'by the
Federal Emergency Relief ji.dmiv::'-stra+ion from the state prisons should
be scheduled on a declining scale, and should cease at the end of two
years. "
This recommendation can only be considered in the light of the
facts of the situation. Cotton garments are now being manuf actured
in twelve prison factories - seven of which are operated under the
contract system, three under a modified state-account system similar
to the "cut-ma1'.e--Fni-trJ ra!l system of free industry, and only two are
operated on an out-and- out-s tele-account system. In addition to those
we must consider the potential production of such states as Nebraska,
Kentucky, Connecticut, and possibly others with garment factories
now closed down but which may reopen and produce for sale on the
open market.
The rate of production of the twelve prison factories operating
at the present time is approximately 1200 dozen shirts and 1500
dozen pants per day. The stock on hand probably does not exceed
1,030,000 garments all together. W^ questions the expediency of
requesting the EERA to purchase garments in such quantities from these
prison factories.
It is unlikely that any of the prisons operating under contract
will give up their contracts and go into. State-account operation even
if the EERA were to guarantee to take their entire output for any
specified time. Some could not do so becau.se they do not own the
equipment and such changes would require an outlay of capital which
they do not possess. Others could not change the system without
legislative sanction. For the FERA to purchase from the contractors
would only aggravate the present problem;
On the other hand if an offer is made to purchase all garments
produced under state control and the Compact label is withdrawn sim-
ultaneously, a reaction so disastrous would ensue as to nullify any
constructive results which might c->me from the report of the Committee.
We believe it is essential to consider 'this recommendation in its re-
lation to the development of the whole state-use program and the limit-
ation on sales of prison-made gsods on the open market proposed under
9742
-loa-
the Committee's recommendation iTo. 6 belo1"'. After such limitations have
been agreed upon, the FEEA can then decide what loortion of such goods
thejr might 'be billing to absorb and the "orisons '"'ill welcome their co-
operation.
In other words we doubt the expediency of asking the FEEA to purchase
for relief or state-use, cotton garments made under the -orison contract
system., especially if such garments could be made by employable people
now idle under the FERA work relief program, It nay be that the prisons
should be allowed to produce unoer state-use not only cotton garments but
other products for the unemployable just as they do for the insane, a.nd
other people under the care of the state. Such production should not be
limited to any period of time or to any specified amount.
EECOijIENJATIOH HO. 3
"In addition to the immediate aiortion of the above program, the
Committee further recommends (15) that prison-made garments be barred in
the public market by the withdrawal of the ,Tational Recovery Administration
label now attached to them, or by its modification to read 'prison made1".
After a state-use market for prison-made goods has developed to a
point which would enable the withdrawal of all prison products from the
open market, as we believe to be the intent of this recommendation, we
would see no need for a continuance of the prison compact label or its
modification, "e do deem it necessary . however, to maintain the present
label for goods which cannot immediately be absorbed by tax-supported
agencies. We believe the issuance of labels to any state might well be
contingent on the acceptance by that state of a limitation on the sale of
prison products on the open market as suggested under the Committee's re-
commendation Fo. 6.
In view of the foregoing, we do not need to comment upon the suggestion
that "a maximum of fifteen days after the publication of this report be al-
lowed to elapse before the above proposal for the taking over of prison-
made garments by the Federal Emergency Relief Administration be effected."
KECOKiSIDATIOlT MO. 4
"The Committee recommends (4) that the Prison Labor Authority be con-
tinued and that its offices be used as an agency in cooperation with which
the above program is to he carried out and that loss in funds to the
Prison Labor Authority which may be the result of the withdrawal of the la-
bel or its modification, be supplied from the funds set aside by the Public
Works Administration."
The Prison Labor Authority is anxious to cooperate in every way with
the National Industrial Recovery Board to carry out any program which is
practical and which will put into effect the penal philosophy expressed in
the Committee's report, namely, that each prison shall have labor adequate
for rehabilitative purposes. Undoubtedly there will be a continually, in-
creasing loss in funds to the Authority due to the limitations placed on
the sale of prison products in the open market and the development of
state-use. In time the Authority probably w0uld be unable to function
satisfactorily without securing some additional financial support. In this
9742
-156-
connection ™e roish to point out that the Prison Labor Compact gives to the
Authority no jurisdiction over goods produced for state-use and that unless
the Compact he modified and the modification generally adopted by all the
states, the pow^r of the Authority to cooperate with the program outlined
will remain definitely restricted. Unless the PLA. becomes the agency to •
carry out the suggested program as well as its present functions, or unless
the suggested Corporation should receive from the signatory states the
power and duties of the PLA under the Compact, it will be necessary for
the PLA. to secure .^rom the states jurisdiction over prison products made
for state-use and authority to levy assessments on them for its support.
Such authority can come only from the states signatory to the Compact.
KKCOMMEIIDATTOU NO, 5
The recommendation (5) that the agreement of the Code Authority af-
fected shall be secured by the PLA "in every instance of change in price
or costs of products sold by prison industries'' is neither practicable nor
just. The policy followed by the PLA in determining such price author-
izations has been approved by the iffiA sua. full information has been filed
with the Cole Authority affected and opportunity given to the Code Authority
to protest or appeal; therefore the rec-ona endation appears to be wholly
unnecessary. In addition the burden imposed upon the PLA in securing an
agreement as to price changes in every instance would prove so cumbersome
as to defeat the need for action. Such changes ofren cannot wait on the
calling of joint conferences and the reaching o.f agreements, especially
where the conflict of interests is so strong. Sales are made or lost
often in the space of a few hours. No industry could function under such
an arrangement. The suggestion that an impartial chairman be especially
designated to arbitrate disputes as to price changes is already nrovided by
Section V of the Compact which authorises the President or his representa-
tive to review any decision of the Prison Labor Authority, Until the re-
medies provided by the Compact are availed of and experience demonstrates
these to be inadequate we cannot admit that the system now provided needs
modification.
KECCiflffiflDATTPN IIP. 6
The Committee recommended (6) "that, by cooperation between the
National Industrial Re every Board, the Prison Labor Authority, and the
Code Authorities affected, a quota system by established for all prison
industries limiting thsir production for the open market at a point no
greater than that which existed at the time the Prison Compact came into
existence".
Most prison men win agree to a. limitation of their sales on the open
market provided other means are provided of caring for their idle prisoners.
Indeed the acceptance of such limitation might be a condition of the grant
made to set up state-use industries with the aid of Federal funds. Pro-
vision for limitation of output of prison industries "in fair proportion
to the industry affected" and prohibition of "the expansion of anv existing
prison industry which bears a disproportionate share of competition" are
provided for in the Compact. The PLA has approved such action and appoint-
ed a committee to assist in working out this policy. They have offered to
meet in joint conference with the Cotton Garment Code Authority to discuss
the application of this principle to the cotton garment industry. They
9742
-157-
have discussed it with the Binder Twine Agency of the Binder Twine and
Cordage Code Authority. In fact approval of reasonable limitations in
both these industries was expressed by the representatives of the states
affected at the recent meeting of the Association of States Signatory.
Naturally such limitations will necessarily be based on a separation
of intranstate and interstate markets, and conform to local statutes and
conditions in each state. The suggest 021 of the Committee that "production
for the open market (be established) at a point no greater than that which
existed at the time the Prison Compact came into existence", may be used
as a point c.f reference, but such quotas must necessarily depend on the
constantly changing state of the free market as well' as on other factors
already mentioned, What may be proper in 1934 might be unwise in 1935, or
again the production of hosiery for srile on the open market in April, 1934,
might be a satisfactory limit for the industry but the production of binder
twine at that time might be unsatisfactory to the cordage industry. Each
quota must be worked out in the light of the needs of its o"m industry and
the states affected.
The Committee has expressed the hope that their recommendations
"might get at last a system of penal administration that would become a
constructive rather than a destructive influence in tne lives of men in
prison". rre might further this aim and provide for idle prisoners if the
FERA would establish for unemployed doctors, dentists, nurses, teachers,
occupational therapists, case-workers, psychologists, welfare workers, re-
creation directors, and parole officers "work pre /iects" in prisons cooperat-
ing under the proposed program. SurJ,* activities should materially reduce
the number cf idle inmaies> help solve difficult disciplinary problems, and
promote a rehabilitation program for which the average warden now has only
one answer, viz: - a constantly diminishing industrial program.
EECOiMEEDATIOr IIP. 7
The Committee's recommendation (7) that "the remaining state, county
and city institutions now producing for the open market be brought under
the prison Compact" is in accord with action already taken by the PLA.
It awaits only the approval of the iJBA and the local institutions affected.
9742
-158-
APPEITDIX H
A PLAN THEREBY THE FEDERAL (&yERNMENT MAY ASSIST
THE SEVERAL STATES TO ABOLIoH UNFAIR COMPETITION
IN PRISON INDUSTRIES.
1. In the uain the purposes sought to he accomplished hy the re-
ports of the so-called Ulman Connittee and the Prison Lahor Authority
to the national Recovery Ad.miuistra.tion and approved hy the National
Industrial Recovery Board for the solution of the problem of nrison lahor
in the States, have my approval.
2. Any State which hy legislation or otherwise shall permanently
adopt an adequate State-use -orison lahor system, or shall give reliahle
assu.rance of its .imnediale intention so to do, msy apoly for a grant from
the Eederal Emergency Administration of Public Works under clause "G-" of
Section 1 of the Emergency Relief Appropriation Act of 1935.
3. After., an adequate snrveyl end subject to the provisions of Ian
and the fundamental principles established under Executive Order 7034,
and upon conf orm-' ty with other regulations of the Eederal Emergenc3r Admin-
istration of Public Works, a grant may he made of a sum sufficient to pro-
vide for the nee e ssary expense of changing the existing prison lahor sys-
tem in any given State ever to the State-use system.
4. During the transition, period and for not to exceed two years,
the Eederal Emergency Relief Administration and other government agencies
may purchase garments and textile goods from State penal institutions,
provided the sale of these goods is withdrawn from the open market.
5. The Executive Director of the Eederal Emergency Administration
of Public Works shall consider in each case whether such grant shall he
made availahle upon application of the State governments and shall deter-
mine whether the fundamental principi^n are heing follcaed and what
amounts, if any, should he advanced hy the Eederal Government.
6. The Executive Director of the Eederal Emergency Administration
of Puhlic Works in order to determine whether the applying State has met
the special conditions laid down in paragraph two of this memorandum may
appoint an advisory coLitlttee to inquire into the facts in each case and
advise him whether or not such State has substantially conformed its
prison lahor system to the State-use principle. Such advisory committee
might consist of — one memher appointed hy the National Recovery Adminis-
tration, one hy the Prison Lahor Authority, one appointed hy the American
Federation of Lahor, one appointed hy the United States Chamber of Com-
merce and one hy the Department of Justice.
9742
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7. This memorandum is intended merely to give general approval to
the principle of assisting State governments xrho desire to do so to in-
stall State-use prison industry systems and is not intended to give
approval to any particular project.
^t ;'« ^e Jjc ^ ^« % :£ v si' * * * * *
Such su.rvey may provide employment for a considerable number of "uhite
collar" TTorherc ,
2ffb.il e it is understood that State Governments are to initiate such
projects, the Prison Labor Authority or Bureau of Prisons might con-
veniently serve as a coordinating or standard setting agency.
9742
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APPE:n)i:t i
July 23, 1935.
To Prentiss Coonley
From Linton M. Collins
For over a hundred years, there has been an aggressive warfare
against production of goods for the open market o-j prison labor. There
is a realization and universal admission that prisoners must work.
However, the feeling has: generally teen that the ooher man's fields
shall! "be reserved where there is to he any competition "between prison
labor ana free labor. In the c?iiemma with which -orison officials have
been confronted, there has of necessity, been a resort to manufacturing
operations and this has chiefly been done by contractors who have ex-
ploited -orison labor. The industry most affected by this has been the
cotton garment. Their organized warfare has been more intense than
that of any other industry bordering, at times, on guerilla tactics.
After the passage of the National Industrial Recovery Act, the
cotton garment industry thought thaJ they had found an opportunity to
sound the deathknell to theii great bag-a-boo, and than henceforth
the codes should out lav: any production by forced labor. In spite of
the demand of the cotton garment interests for control of this problem, and
the threat that ih%-would not submit to a code unless the orisons did
also, it was recognized that the stats prisons could not be subjected
to a code* However, a provision was incorporated in the Cotton Garment
Code affecting orison laoor and more particularly in the Code of Fair
Competition for the Retail Trp.de which was approved prior to the Cotton
Garment Code as follows:
"Pending the formulation of a compact or code between the
several states of the United States to insure the manufacture and
sale of prison-made goods on a fair competitive basis with goods
not so produced, the following provisions of this Section will be
stayed for ninety (90) days, or further at the discretion of the
Administrator:
"(l) \/here any penal, reformatory or correctional institu-
tion, either by subscribing to the code or compact hereinbefore
referred to, or by a binding agreement of any other nature, sat-
isfies the Administrator that merchandise produced in such insti-
tution or by the inmates thereof will not be sold except upon a
fair competitive basis with similar merchandise produced in such
institution or by the inmates thereof will not be sold except
upon a fair competitive basis with similar merchandise not so
produced, the provisions of paragraph (2) hereof shall not apply
9742
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to anv merchandise produced in such manner in the institutions
covered by such agreement.
"(2) Exceot fs orovided in the foregoing oaragra.oh, no re-
tailer shall '"nowinglv ouy or contract to buy any merchandise pro-
duced in whole or in _oart in a penal, reformatory or correctional
institution. After Hay 31, 1934, no retailer shall knowingly
sell or offer for sale such merchandise, i'othing in this Section,
however, shall affect contracts, which the retailer does not have
the ootion to cancel, made with resoect to such merchandise before
the amiroval of this contract by the President of the United States.
The prison interests were not derelict in a desire to meet this.
As early as July, 1933, the American Prison Association called a meet-
ing to which renresentatives of the penal institutions or ooards of a
number of states went, and at which tine they adopted a resolution
that for their manufacture , they oresent a Code of Fair Coraoetition.
Even though these interests were alert, it was determined that legally
the states could not be subjected to a code and after many conferences
a voluntary agreement was decided uoon which resolved itself into the
Conroact of Fair Comoetition for the Prison Industries of the United
States of America. This was approved by the President on Anril 19,
1934 and a Prison Labor Authority, consisting of three presidential
members representing respectively, labor, industry and consumer, and
six representatives of the orisons, selected from their own grouo was
apoointed. This Prison Labor Authority organized immediately after its
approval and elected Samuel Lewisohn, Chairman, John J. Hannan, Vice-
Chairman and James V. 3ennett, Executive Secretary. Thereafter, Howard
B. G-ill was chosen as Executive Officer and Economic Adviser.
First efforts on the part of the Prison Laoor Authority were to
secure permission to use a.n "IRA. label that they might be able to market
prison labor goods in accordance with the Comoact and meet the prices
set oy the Cotton Garment Code and the Hetail Code. Administrative
Order V-2 was aoioroved and later amended oy Administrative Order V-3
which granted then a label under date of June 12, 1934. Strict rules
and regulations were reauired for' the issuance of these labels. Com-
olaints arising as to misuse were few -^nd^vere' general'!?/ coJrectecL.upon
reouest of this Administration. There ',?ere issued under the two orders
from May 15, 1934 to June 1, 1935, a total of 2,815,000 labels for
work shirts and a total of 2,195,600 for work oants. So far as we
know the only shirts manufactured and olaced upon the open market with-
out labels in violation of the Comoact were some made in Florida and
in Indiana.
The Prison Labor Authority's first urogram was to diversify in-
dustries in the prisons of the country. The results of this can easily
be seen in the manufacture of cotton garments. Prior to the National
Recovery Administration, there were eighteen states oroducing cotton
garments for the ooen market. luring the Calendar year of 1932, there
were 21,850,876 work shirts and 8,096,947 work oants manufactured in
9742
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prisons and sold on the ooen market. Since the Compact of Fair Com-
petition this has been narrowed down to ten states, of which Delaware,
Florida, Indiana, T laryland , iiichigan, Missouri, Oklahoma, Tennessee
and 'est Virginia manufacture work shirts and work -cants and South
Carolina manufactures underwear, During 1934 there were produced in the
prisons of the above-mentioned states 2,311,172 work shirts and 3,247,
620 work pants. In the free market, and under the Cotton Garment Code
Authority, there were produced in 1934 59.657,000 work shirts. The
prison production of 2, oil, 172 is 4, 5 i of the total production for the
United States, This contrasts with an estimated oroduction in prisons
during 19Z2 of 25fo, Under the Cotton C-arment Code Authority, there
were produced in 1934 74, 392 t 000 work pants. The prison production
for 1934 of 3,247,620 ir 4.2'j of the total production for the open
market. These decreases evidence the present competition as oeing de-
cidedly in the decline. In 1932 there were 13,948 prisoners used by
the eighteen states in manufacturing cctt.on garments for the, open
market. The total number of prisoners now being used on cotton garments
in the ten states mentioned above is 3.049.
In the fall of 1954, the President imposed a thirty-six hour week
upon the cotton garment industry. Immediately, the Prison Labor Auth-
ority advised all orisons manufacturing cotton garments that in .ac-
cordance with Article II of the Compact, each prison must not operate
its cotton garment industries in excess of thirty-six hours. So far as
^e know this was met by every -orison in the country, nevertheless,
the cotton g-rment industry continued to complain about the intolerable
burden imposed uoon them by co.Toetition from the Prison industries.
The Hotchkiss Committee ,?as appointed to make investigations, as to
whether or not the industry could stand the thirty-six hour week. This
Committee recommended that the President appoint a committee to make
a very definite study of the competition of products of the cotton
garment industry with products of prison labor.
In accordance therewith, the President on October 12, 1934, ap-
pointed the Ulman Committee, composed of Judge Joseph II. Ulman, as
Chairman, Frank Tannenbaum and ',/. Jett Lauck. Mr. Lauck was a member
of the Hotchkiss Committee. The sum and substance of the recommendations
of the Ulman Committee are that fifty million dollars be set aside for
the purpose of helping the states to reolan and reorganize their prison
industries, remove prison made goods from the open market and bring to
an end the prison labor controversy which has burdened American indus-
trial and political life for over a century, '.-hile this program was
being developed, after adequate surveys were made, it was recommended
that the Federal Emergency Relief Administration purchase and use such
prison made garments as were then being made in prisons and immediately
relieve the open market of this competition. Several conferences were
held with the FEPA officials and it was tentatively agreed that such a
program could be developed as far r. s that end of the program wa.s con-
cerned.
nevertheless, the prison group answered the recommendations of
the Ulman Committee, urging, first, that adeauate state use laws be
made compulsory eefore any relief or aid be granted to the respective
9742
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states and that a corporation "be set ui to make an adeouate survey of
the needs of the respective states oefore any permanent program was
undertaken and that in the meantime it oe a condition precedent to the
granting of federal aid that limitations be set for the sale of pro-
ducts on tne open market, by -orisons and that a certain program be
worked out through the FERA, using ur employed and preventing other
idleness to penitentiaries.
The -orisons of this countiy are engaged in some sixty industries,
a list of which is attached, hut the competition is negligible except
in the cotton garment field which um;er the Connect has been reduced
to an almost negligible figure, and in the binder twine industry,
the furniture industry, and the marking device industry and the farm
machinery industry.
Thirty-one st-tes and the District of Columbia have signed the
Conroact. Coo-oeration of the part of the orison officials was much
grea.ter than was anticipated.
The National Industrial Recovery Board on Hay 27 adopted the
following resolution in connection with the -orison program.
"i. The desirability of utilizing at> proximately
$50,000,000 of the relief fund to enable tne states completely
to renlan and reorganize their "orison industries and prison
welfare activities, remove piison-nade goods from the o_oen
market through diversification for state use, and finally
bring to an end the "orison labor controversy which ha.s
so long burdened American industrial and political life.
To this end it will at once suggest to the President.
"(a) The desirability of establishing an agency,
-oro-oerly representative of the interests^ concerned, to
coordinate and supervise this work.
"(b) The desirability of at once placing the Divi-
sion of Research and Planning of N.R.A. in charge of
the necessary survey. (The survey should be under
way within a week).
"2. The desirability in the interim between the present
and the tine when the reorganization of the -orison industries
can be effected it~j the use of the fund suggested above of
having the Federal Emerge ncv Relief Administration effect
the purchase frpm the prisons of prison-made garments and
other products or arrange for the labor now employed on
prison-made garments to be utilized to made other garments .
for such". purchase. The purchase of these garments by ...
the Federal Emergence Relief Administration from the state
prisons should be scheduled on a declining scale, and should
ceas at the end of two years. ■ •
9742
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"3. The desirability of establishing "by cooperation
jetween the. Hat ional Industrial Pecover^ Board, the Prison
Labor Authority, and the Code Authorities affected, a
quota system for, all orison industries,
"4. In the meantime the question of an appropriate
label for an"- gouds going in to the open market will be
reexamined bv the N.R.A. "
The next steos to be taken in this matter are "oresentation of
the Board's action to the President and an ascertainment from him
as to whetner or not he desires this urogram to be pushed. If so,
it will be necessary to set iro an agency to carry out this program.
While this is being done, it is felt certain that the relief of the
cotton garment industry can be obtained through relief with the FERA.
It has been estimated that such a program cculd utilize at least 420
white collar relief workers in malting the necessary surveys, and based
on estimates b~? the U-xian Committee', if the various projects anticipated
are approved in the thirty or forty states now manufacturing -orison
products, they should, by the spring of 1936, provide work for ap-
proximately 7,000 workmen making materials and equipments and for 7,500
construction workmen in the rebuilding of orisons and the setting up
of adequate machinery for the purpose of meeting the contemplated pro-
fram for the diversification of industry. In other words, the $50,000,
000 to be allotted as follows; $35,000,000 to be used for equipment,
materials, representing the labor of 5,000 industrial workers and $25,
030,000 to be used for construction, of which $15,000,000 represents
labor for 7,500 workmen and $10,000,000 represents the material for
2,000 industrial workers. Altogether, this program can provide work
for at least one year for approximately 2,000 white collar workers and
15,000 construction workers and set in operation the means of reorgan-
izing the prison program in line with the Report of the Ulraan Committee.
It is estimated that if the Prison Industries Reorganization Administra-
tion is set up that possible $1,000,000 can cover the expense of the
surveys and the Administration.
There is attached a copy of the Compact of Fair Competition for
the Prison Industries of the United States of America, the> Report of
the Committee on Competition of. Products of Cotton Garment Industry with
Products of Prison Labor as Directed by Executive Order Ha. 118-135 of
October 12, 1934, better known as the Ulman Committee Report, the Comments
of the Prison Labor Authority on the Report of the Ulman Committee, a
copy of the Prepared Statement on the Prison Labor Compact prepared for
the Senate Finance Committee, a copy of the memorandum on the history
of prison products prepared for Mr. Hamilton by Mr. Jajnes Porter Davis,
a cop-'- of the memorandum of May 29 with a copy of the Executive Order
creating the Prison Industries Reorganization Administration, which was
forwarded to you, a copy of the memorandum of April 18 sent to Dr.
Marshall, and a copy of a Plan to Effectuate the Recommendations of the
Ulman Committee He Prison Competition.
I should appreciate your returning these memorandums after you
have read them, so that we may have them in our file.
9742 LI1IT0H !". COLLIIIS
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APPENDIX J
EXECUTIVE OBDEB ¥0. 7194
"ESTABLISHMENT OF THE PRISON INDUSTRIES REORGANIZATION
"ADMINISTRATION
"By virtue of and pursuant to the authority vested in me "by the
Emergency Belief Appropriation Act of 19o55 approved April 8, 1935
(public Resolution No. 11, 71th Congress), I hereby establish an
agency within the Government to he known as the ^prison Industries
Reorganization Administration' .
"The .governing bod.} of said Prison Industries Beorganization
Administration shall be a priron Industries Beorganization Board
consisting of five members to be hereafter appointed by the president
and to hold office at nis pleasure. The Prison Industries Beorganiza-
tion Board is hereby authorized to prescribe such rules and regulations
and to delegate to its agents and representatives such powers as, in
its discretion, it shall deem necessary and proper for the performance
of the duties and functions of the Prison Industries Beorganization
Administration and for effectuating 1,he purposes of this Order.
"I hereby prescribe the following duties and functions of the
said Prison Industries Beorganization Administration:
"(1) In cooperation with the proper authorities -of the several
States and the political subdivisions thereof and the District of
Columbia:
"(a) To conduct surveys, studies, and investigations of the
industrial operations and allied activities carried on by
the several penal and correctional institutions of the
States and political subdivisions thereof and the District
of Columbia, and the actual and potential markets for
products of such industrial operations and activities.
"(b) To initiate, formulate, and recommend for approval of
the President a program of projects with respect to
replanning and reorganizing the existing prison industries
systems and allied prison activities of the several State
and political subdivisions thereof and the District of
Columbia to the end that the industrial operations and
activities of such institutions may be so reorganized as
to relieve private industry and labor of any undue burden
of competition between the products of private industry
with the products of such institutions; and to eliminate
idleness and to provide an adequate and humane system of
rehabilitation for the inmates of such institutions.
9742
\
'\ -166-
"(2) To recommend for the approval of the President loans or
grants, or "both, to the several States and political subdivisions
thereof and the District of Columbia necessary to accomplish the
purposes of this Order, and to administer and supervise the
program of projects approved by the President.
"In the performance of such duties and functions the Prison
Industries reorganization Board is hereby authorized to employ
the services and U'eans mentioned in subdivision (a) of section 3
of the said Emergency Relief Appropriation Act of 1935, to the
extent therein provided, and, within the limitations prescribed
by said section, to exercise the authority with respect to
personnel conferred by subdivision (b) thereof.
"The acquisition of articles, materials, and supplies for use in
carrying out any project authorized by this Executive Order
shall be subject to the provisions of Title III of the Treasury
and Post Office Appropriation Act, fiscal year 1934 (47 Stat,
1489, 1520).
"For administrative expenses of the Prison Industries
Reorganisation Administration there is hereby allocated to the
Administration from the appropriation made by the Emergency
Relief Appropriation Act of 1935 the sum of $100,000. Separate
allocations will be made hereafter for each of the authorized
activities as may be needed.
FRANKLIN D. ROOSEVELT"
TEE UHITE HOUSE,
September 26, 1935.
974-2
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APFELIDIX K
NPA Tuesday1
Legal Division December 4, 1934
MEMOEAHDUM
TO: Jack Garrett Scott, Associate Counsel
FROM: Peter Seitz, Assistant Counsel
SUBJECT: Prison Lai) or Connect
The discussion in this report relates to the three
recommendations contained in the eiccent from the agend? of the
Board, dated December 3, 1334, and marked respectively (c), (d)
and (f).
I . As to recommendation "(c)" .
The Prison Labor Authority is not created by a
code of fair competition. It owes its existence to
the ^revisions of a Prison Labor Contact. With
resnect I o the Pxuson L^bor Corrnact the following
observations must be made.
(A) C0HGH3SS HAS HOT CONSENTED TO THE COMPACT.
Article I, Section 10, Clause 3 of the Con-
stitution reads in "part as follows:
"No State shall, without the consent of Congress,
**** enter into any Agreement or Compact with
another State, or, with a foreign Power ****."
(S) IT IS DOUBTFUL WH3TH3S COHGEESS ,AY DELEGATE ITS
POWEH TO SO C0HSE1TT. The Supreme Court has upheld
delegations of power by C ong r 3 s s to the Executive
to m±ke rules and regul •lions in furtherance of
congressional legislation enacted under certain
general powers given to Congress, such as those
contained in the Commerce Clause. I know of no
theory or precedent which would support. a delega-
tion of authority to the President to consent to
State Compacts. In holding delegation of legislative
power valid, the Courts lean heavily upon the theory
that the necessities of the case require that
legislative details be filled in by administrative
officers (J. W. Hampton & Co., vs. U. S. 276, U.S. 394).
This reasoning would not obtain in ? situation where
the simple consent of Congress is required.
9742
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(C) THE 1TIHA DOSS HOT COITTAIIT A DELEGATION OF POWERS
TO GIVE CONGRESSIONAL CONSENT TO A STATU COMPACT.
The President's Order approving the Prison Labor
Compact refers to the National Recovery Act as
authority for so doing. Assuming (without conceding)
that a delegation of authority to assent to State
Compacts may "be made to the President "by Congress,
it has not "been made under the National Industrial
Recovery Administration. Section 4-a of Title I of
the NIRA provides that:
"The President is authorized to ******* approve
voluntary agreements "between and among, persons
engaged in a trade or industry, la"bor organiza-
tions, and trade or industrial organizations,
associations, or groups relating to any trade
or industry, *****».
Let us assume further that the States engaged in
Prison industries are persons or groups within
that meaning of Section 4-a; but is the Compact
an agreement within that Section? Section 7-a
reads as follows:
"Every code of Fair Competition, agreement and
license approved, prescribed, or issued under this
title shall contain the following conditions: (l)
That employees shall have the right to organize
and bargain collectively ******". etc.
Obviously a compact relating to the regulation
of Prison industries cannot contain the pro-
visions set forth in Section 8-a, required in all
agreements which may be approved under Title I of
the Act. In my opinion this Section must be read
in connection with and as a limitation upon Section
4-a. In other words the agreements, which the
President may approve under Section 4-a, are those
which contain provisions set out in Section 7-2. The
present compact contains no such provisions. The con-
clusion must follow that the 1TIRA cannot be relied
upon as a basis for the authority of the President
(delegated by Congress) to approve the Compact.
(D) THE PRISOH LABOR COMPACT LAY HOT IAVE BEEN PROPERLY
EXECUTED AHD IS THEREFORE HOT BINDING UP01T ALL OF
THE STATES SIGNATORY THERETO. In my opinion a State
would not be bound to a compact signed by
9742
-169-
State officers ■unless the Constitution of such
State contained a clause authorizing such a sig-
nature or there were sU^portin^, and ratifying
State legislation. The Prison Labor Compact
was, in most instances, signed by State Com-
missioners of Prisons, Wardens and Chairmen
of Prison Boards. In some instances the Governor
signed for the State. In some cases the Governor
approved the signature of the Warden of the Prison
Board. In only one case (Kentucky) has there been
State legislation ratifying the compact.
There has been no survey made of the Laws of each
signatory State, but until such a study is made,
it should be borne in rind that the signatures
to the compacts were probably made without the
authority, and may not be binding upon the several
States.
Conslusion as to "I".
The Prison Labor Compact as a legal instrument is -unenforce-
able in the Courts. It represents merely a declaration of vol-
untary cooperation by the State prisons with the Federal Government's
Recovery Program. This is not meant to mean that a valid compact
could not be made covering the subject matter dealt with by the
Prison Labor Compact.
The Prison Labor Authority exists by virtue of Article VII
of the Compact in the same manner as code authorities exist
by virtue of the provisions of codes of fair competition which
deal with administrative machinery. If, as is argued herein,
the Compact has no legal validity, the Prison Labor Authority,
likewise, has no legal basis for existence. Its only powers
are those contained in Article VII of the Compact.
II . As to recommendation .(d/.
The recommendation has two aspects: Legal and Economic.
(A) The Legal Aspect.
The Kational Industrial Recovery Board cannot "require
an agreement" between the Prison Labor Authority and the
respective free industry code authorities. Tne National
Industrial Recovery Board only has those powers delegated
to it by Executive Orders of the President under the
National Industrial Recover:' Act or otherwise whore such
power exists in the President. It has already been
indicated that the NIRA. is inapplicable to the Prison Labor
9742
-170-
situation. I do not know of any provisions in
the Constitution or any other statutory authority
vesting the President with the -ower to legislate
concerning the manner in which sovereign states
may conduct their orison industries.
The Prison Labor Authority, moreover, has no
■)ov»er to change the connect., Article V and Article
VII, section 1 (d) of the Compact set forth the
price practices and terms which shall constitute
the fair competitive standards required of ~>risons.
Any departure from these provisions would require an
amendment to the Compact which, of necessity, would
require the consent of each individual signatory State
thereto.
Assuming that this can be and will he done, the -iroblem
of enforcement will still be unanswered. If a State
refuses to enter into an agreement such as recommended
by the Committee concerning a change of price, or if
it violates the provisions of the Compact in any other
particular, the only legal recourse would be a suit in
the Supreme Court by another State for breach of the
Compact. It is unlikely that such a suit would ever
be maintained inasmuch as the States, in the operation
of their prison industries, are very closely bound
together in mutual self-interest against the free in-
dustry groups which they believe are hostile to them.
A suit could not be maintained by any individual or free
industry Code Authority against the State because of the
provisions of the eleventh Amendment to the Constitution. .
It is respectfully submitted that in the absence of
adequate enforcement machinery no purpose would be served
^oy agreements such as recommended by the Committee.
(B) The Economic Aspect.
It has been represented to me iy representatives of the
Prison Labor Authority and others that the motivating
purpose behind the actions of the several states in sign-
ing the compact was the use of the NBA label. The use
of such label was considered to legitimatize an industry
which has been subject to social boycott and industrial
attack over a "-eriod of .years, and became necessary be-
cause of the boycott provisions of Article IX, Section 3
of the Retail Trade Code. The recommendations of the
Committee include a recommendation that the label be denied
prison industries or be modified so as to indicate that
the product was manufactured in a prison. The latter al-
ternative of modification is unacceptable to the prisons
because it enables free industries to carry on what they
9742
Ill
IV.
=171-
deem to be an unjustified boycott against its products. The
removal of the label, in my opinion, would eliminate any
reason for the prison industries restricting themselves further
by the irovisions of the unenforceable compact. The quid ;;ro quo
will have 'oeen removed. Bather than limit tnemselves to prices
established by such agreements as the Committee suggest, it is
my guess that they will utilise their large capital investment
in machinery to produce, sell and distribute at their will and
pleasure, free of the restrictions of standards of fair competi-
tion thereby creating an enforcement and compliance -problem
which may be beyond the power of the Administration to control.
As to recommendation "(?)".
The Prison Labor Authority has informed Division 8 that
numerous prisons desire to avail themselves of the 'benefits
of the Prison Labor Com act (The use of labels) and to subject
themselves to the restrictions thereof, but are unable to do so
because of one of the following reasons: (a) The State in which
the orison is located has not signed the compect because of some
legal obstacle; or (b) the State in which the prison is located
has signed the compact but such nrisons are not subject to the
control or under the supervision of the State.
It is desired to extend the benefits of the compact only
where the prison concerned competed upon a fair basis with free
industries, and u on the terms set forth in the compact. Indivi-
duals- cannot sign the com ct, but they can sign pledges agreeing
to conform to the competitive standards established in the compact
in the same manner as sheltered workshops nay sign pledges
agreeing to conform with blie provisions of the code covering the
industry in which they are e c and thereby entitle themselves
to labels.
A proposed Administrative Order was returned oy the Review
Division with the comment that an 3xecutive Order would be more
appropriate. It was deemed wisest to defer further action upon
the application until the decisions of the Board unon the general
subject of Prison Labor and the retention of the Prison Connact
was announced. If the Prison Labor Compact is continued in its
>resent form, the proposed Order, in my opinion, should be ^re-
pared, submitted ?n£ signed.
General Conclusions.
I trust that I am not too presmmtious in advancing these
conclusions, without which I o not feel this re- ort is complete.
9742
•172-
A. The compact is unenforceable legelly, but it is most
desirable that it be retained u)on a voluntary basis
because it is the only means of inducing prison in-
dustries to compete with free industries upon a fair
basis. The only consideration which will induce the
prison industries to compete upon such a basis is per-
mission "oy the Administration to use the 1TBA, label.
If this permission is denied the States will not allow
their manufacturing plants to remain idle but will employ
them upon a competitive basis with free industries,
thereby aggravating and augmenting compliance problems,
especially in the Retail Trade.
B. As far as I can determine the only com- laints made
against the compact to date were on the ground of in-
effective administration. If this be so, it would
be wise to retain the compact and make its adminis-
trative and enforcement machinery more effective. The
alternative, which is scrapning the Compact, me?ns
uncontrolled competition.
Peter Seit^
Assistant Counsel
9742
-1 73-
SUPPLEMENT TO APPENDIX K
NRA December 7, 1934
Legal Division
■'•MEMORANDUM
TO: Jack Garrett Scott, Associate Counsel
FROM: Peter Seitz, Assistant Counsel
SUBJECT: Prison Labor
I believe the following observations should be made
to supplement my memorandum to you dated December 4, 1934*
I. My previous memorandum dealt solely with the existing
situation in the prison industry field as controlled by
(a) the Prison Labor Compact'
(b) the Hawes-Cooper Act (Copy of the Act ex-
tracted from the United States Code Annotated
is annexed)
II. In determining the final solution of the prison-free
industry competition problem, we should consider the possibility of
Federal control- of the sale of prison ^ade goods through new Federal
legislation.
A. Under the Hawes-Cooper Act divesting -orison made
goods of thp.ir interstate character no administrative
control of the situation is possible without new
legislation because
(1) The NIFA is general in application; the
Hawes-Cooper Act is specific in its treatment of
prison made goods. Hence rules of statutory con-
struction would favor th'fi Hawes- Cooper Act as
paramount in the field.
(2) The Hawes-Cooper Act has the effect of nullify-
ing the Commerce Clause of the Constitution insofar as
prison made goods are concerned. It constitutes a
revesting of jurisdiction over this subject in the
States. If there is no interstate commerce in prison
mada^ goods, there is no basis for the exercise of
Federal jurisdiction. I know of no other clause in
9742
-174-
the Constitution upon which Federal power can be
predicted. The recommendations of the Ulman Com-
mittee must he considered with this in mind.
B. New legislation having the effect of cancelling the
Hawes-Cooper Act and of revesting the Federal Government
with jurisdiction over interstate commerce in prison made
goods may form a "basis for the solution of the problem
along the following lines.
(l) The activity of States in selling prison made goods
in interstate markets in competition with free manufacturers
in other States, for profit, may. be considered to be a pro-
prietary function of the State as distinguished from a gov-
ernmental function, TThere a State engages in a proprietary
function her armor of sovereignty is no protection to the
exercise of federal power. See Ohio vs. Helverinp: (1934)
54 Sup. Ct. 725, as to Federal exercise of the tax power
\7hen a State through its agency goes into the business of
selling liquor. The Court said
"If a State chooses to go into a business of
buying and selling commodities its right to
do so may be conceded so far as the Federal
. Constitution is concerned; but the exercise
of the right is not the performance of a
governmental function,***. IThen a State
enters the market place seeking customers,
it divests itself of its quasi sovereignty pro
tanto, and takes on the character of a trader,
so far at least as the taxing power of the
Federal Government is concerned."
lBhat Is true of the Taxing Power must be true of the
Commerce Power, and the Federal Government should be able
to s"cipervise interstate commerce in prison made goods if
the Hawes-Cooper Act is repealed.
C. The political possibility of obtaining legislation to
supplant the Hawes-Cooper Act is doubtful in my opinion
and should be carefully explored.
Peter Seitz
Assistant Counsel
9742
-175-
APPENDIX L
Information Re:- Stumers - Ashurst Act with States
The following points have "been raised by various prison officials
and others in re the new Federal Act relative to prison industries,
and the conclusions set forth appear to "be in line with the general
concensus of opinion relative to the Act.
(l) The shipper rill he liable under the Act if he ships
any prison -oroducts into any of the following 23 states except
as indicated:
Arizona
Except farm products
California
Except jute and hemp hags
Colorado
I dali o
Illinois
Except agricultural limestone
Kansas
Except tags or markers, trine,
farm products
liaine
lias s ach us e 1 1 s
Michigan
Except hinder trine, rope and
cordage. Effective Nov. 22, 1935.
Hon tana
Except certain repair parts for
farm machinery.
Nebraska
Except farm supplies, machin-
ery and equipment. Effec-
tive September 1, 1935.
New Hampshire
New Jersey
New York
North Carolina
Except farm products, coal
and chert.
Ohio
Oregon
Except flax
Pennsylvania
Rhode Island
Texas
Utah
Virginia
Washington
When shi-oping any of the exceptions noted under (l) into another
state, the shipner must be governed by the provisions set forth in (2).
■ (2) The shipper rill be liable rhen shipping prison products
into the following states unless he marks the package containing
prison products with name and address of (a) shipper; (b) con-
signee; (c) prison where made; and (d) nature of contents.
Alabama
Alaska
Arkansas
Connecticut
Delaware
District
Florida
Georgia
Hawaii
Indiana
of
Iowa
Kentucky
Louisiana
Maryland
Minnesota
Columbia Mississippi
Missouri
Nevada
New Mexico
Oklahoma
North Dakota
Philippine Islands
Porto Pico
South Carolina
South Dakota
Tennessee
Vermont
Virgin Islands
West Virginia
Wisconsin
Wyoming
9742
-176-
(3) The shipper will be liable unless he also labels each
article of prison products as required when making shipments
into the following states:
California Iowa South Dakota
Indiana. Kentucky Wisconsin
Georgia New Mexico Minnesota
OPEN MARKET SALE OF PR I SOI! PRODUCTS PROHIBITED
The following states prohibit the sale of prison-made products
within their borders except as indicated.
ARIZONA NEBRASKA
Except farm products Except farm supplies, nachin-
CALIEORNIA ery and equipment. Effective
Except jute, and henra bags September 1, 1935.
COLORADO NEW HAMPSHIRE
IDAHO *NEW JERSEY
ILLI170IS . NEW YORK
Except agricultural limestone NORTH CAROLINA
KANSAS Except farm products, coal
Except tags or markers, twine and chert
farm products
"MAINE OHIO
MASSACHUSETTS OREGON
MICHIGAN Except flax
Except binder twine, rope and PENNSYLVANIA
cordage. Effective Nov. 22, 1935. RHODE ISLAND "
MONTANA TEXAS
Except certain repair parts for UTAH
farm machinery. * VIRGINIA
WASHINGTON
* New Jersey, Virginia and Maine prohibit the sale of prison prod-
ucts of other states on the open market but permit the sale of prison
products made in their own states within their own borders. It is a
question whether such laws are constitutional and hence enforceable. A
recent Wisconsin court decision appears to support this view (See Wis. v.
Whitfield 257 N.W. 601).
In Georgia and the District of Columbia the manufacture of prison
products is confined to state-use, but there are no laws restricting
the sale of prison products on the open market in either. The same is
true in Nevada and New Mexico where very small amounts of prison prod-
ucts, if any, are made for sale on the open market.
9742
■177-
LAjELS bzxssbed on p:lisoit products
California, and Kentucky have laws which require labels, etc. on
prison products from other states, but as these laws do not appl3r to
prison products made in California and Kentucky, they are probably
unconstitutional and unenforceable.
Indiana, Iowa, New Jersey, New Mexico, South Dakota, Georgia,
Minnesota and Wisconsin require prison products to be labeled
"Convict-Made". Iowa, Minnesota and New Jersey require the year and
name of prison and Wisconsin the name of prison only to be added.
Indiana requires a license fee of $500 and a bond of $5000 from vendors
of prison products.
9742
-178-
APPEITDIX M
u.-s. depart: s't oe labor
Bureau of Labor Statistics
Washington
December 5, 1935
i.Ir, Clark,
national Recovery Administration,
Room 4023, Commerce Building
Washington, D. C.
Dear Mr. Clark:
In accordance with your telephonic request, I an
listing below the States which, have, up to December 4th,
accepted provisions of the Hawes-Cooper Act.
Arizona
Arkansas
California
Colorado
Idaho
Illinois
Indiana
Iowa
Kansas
Maine
Massachusetts
Michigan
Minnesota
Mississippi
Montana
Nebraska
New Hampshire
New Jersey
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Dakota
Texas
Utah
Virginia
Washington
Very truly yours,
(S)
Herman B. Byer
Herman 3, Byer, Chief,
Division of Construction & Public Employment
9742
OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION
THE DIVISION OF REVIEW
THE WORK OF THE DIVISION OF REVIEW
Executive Order No. 7075, dated June 15, 1935, established the Division of Review of the
National Recovery Administration. The pertinent part of the Executive Order reads thus:
The Division of Review shall assemble, analyze, and report upon the statistical
information and records of experience of the operations of the various trades and
industries heretofore subject to codes of fair competition, shall study the ef-
fects of such codes upon trade, industrial and labor conditions in general, and
other related matters, shall make available for the protection and promotion of
the public interest an adequate review of the effects of the Administration of
Title I of the National Industrial Recovery Act, and the principles and policies
put into effect thereunder, and shall otherwise aid the President in carrying out
his functions under the said Title. I hereby appoint Leon C. Marshall, Director of
the Division of Review.
The study sections set up in the Division of Review covered these areas: industry
studies, foreign trade studies, labor studies, trade practice studies, statistical studies,
legal studies, administration studies, miscellaneous studies, and the writing of code his-
tories. The materials which were produced by these sections are indicated below.
Except for the Code Histories, all items mentioned below are scheduled to be in mimeo-
graphed form by April 1, 1936.
THE CODE HISTORIES
The Code Histories are documented accounts of the formation and administration of the
codes. They contain the definition of the industry and the principal products thereof; the
classes of members in the industry; the history of code formation including an account of the
sponsoring organizations, the conferences, negotiations and hearings which were held, and
the activities in connection with obtaining approval of the code; the history of the ad-
ministration of the code, covering the organization and operation of the code authority.
the difficulties encountered in administration, the extent of compliance or non-compliance,
and the general success or lack of success of the code; and an analysis of the operation of
code provisions dealing with wages, hours, trade practices, and other provisions. These
and other matters are canvassed not only in terms of the materials to be found in the files,
out also in terms of the experiences of the deputies and others concerned with code formation
and administration.
The Code Histories, (including histories of certain NRA units or agencies) are not
mimeographed. They are to be turned over to the Department of Commerce in typewritten form.
All told, approximately eight hundred and fifty (850) histories will be completed. This
number includes all of the approved codes and some of the unapproved codes. (In Work
Materials No 18, Contents of Code Histries, will be found the outline which governed
the preparation of Code Histories.)
(In the case of all approved codes and also in the case of some codes not carried to
final approval, there are in NRA files further materials on industries. Particularly worthy
of mention are the Volumes I, II and III which constitute the material officially submitted
to the President in support of the recommendation for approval of each code. These volumes
9768—1.
-ii-
set forth the origination of the code, the sponsoring group, the evidence advanced to sup-
port the proposal, the report of the Division of Research and Planning on the industry, the
recommendations of the various Advisory Boards, certain types of official correspondence,
the transcript of the formal hearing, and other pertinent matter. There is also much offi-
cial information relating to amendments, interpretations, exemptions, and other rulings. The
materials mentioned in this paragraph were of course not a part of the work of the Division
of Review. )
THE WORK MATERIALS SERIES
In the work of the Division of Review a considerable number of studies and compilations
of data (other than those noted below in the Evidence Studies Series and the Statistical
Material Series) have been made. These are listed below, grouped according to the char-
acter of the material. (In Work Materials No. 17, Tentative Outlines and Summaries of
Studies in Process, these materials are fully described).
Industry Studies
Automobile Industry, An Economic Survey of
Bituminous Coal Industry under Free Competition and Code Regulation, Economic Survey of
Electrical Manufacturing Industry, The
Fertilizer Industry, The
Fishery Industry and the Fishery Codes
Fishermen and Fishing Craft, Earnings of
Foreign Trade under the National Industrial Recovery Act
Part A - Competitive Position of the United States in International Trade 1927-29 through
1934.
Part B - Section 3 (e) of NIRA and its administration.
Part C - Imports and Importing under NRA Codes.
Part D - Exports and Exporting under NRA Codes.
Forest Products Industries, Foreign Trade Study of the
Iron and Steel Industry, The
Knitting Industries, The
Leather and Shoe Industries, The
number and Timber Products Industry, Economic Problems of the
Men's Clothing Industry, The
Millinery Industry, The
Motion Picture Industry, The
Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State,
1926 to 1934
National Labor Income by Months, 1929-35
Paper Industry, The
Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans-
portation, January 1923, to date
Retail Trades Study, The
Rubber Industry Study, The
Textile Industry in the United Kingdom, France, Germany, Italy, and Japan
Textile Yarns and Fabrics
Tobacco Industry, The
Wholesale Trades Study, The
Women's Neckwear and Scerf Industry, Financial and Labor Data on
9768—2
Women's Apparel Industry, Some Aspects of the
Trade Practice Studies
Commodities, Information Concerning: A Study of NRA and Related Experiences in Control
Distribution, Manufacturers' Control of: Trade Practice Provisions in Selected NRA Codes
Distributive Relations in the Asbestos Industry
Design Piracy: The Problem and Its Treatment Under NRA Codes
Electrical Mfg. Industry: Price Filing Study
Fertilizer Industry: Price Filing Study
Geographical Price Relations Under Codes of Fair Competition, Control of
Minimum Price Regulation Under Codes of Fair Competition
Multiple Basing Point System in the Lime Industry: Operation of the
Price Control in the Coffee Industry
Price Filing Under NRA Codes
Production Control in the Ice Industry
Production Control, Case Studies in
Resale Price Maintenance Legislation in the United States
Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry.
Trade Practice Rules of The Federal Trade Commission (1914-1936): A classification for
comparison with Trade Practice Provisions of NRA Codes.
Labor Studies
Cap and Cloth Hat Industry, Commission Report on Wage Differentials in
Earnings in Selected Manufacturing Industries, by States, 1933-35
Employment, Payrolls, Hours, and Wages in 115 Selected Code Industries 1933-35
Fur Manufacturing, Commission Report on Wages and Hours in
Hours and Wages in American Industry
Labor Program Under the National Industrial Recovery Act, The
Part A. Introduction
Part B. Control of Hours and Reemployment
Part C. Control of Wages
Part D. Control of Other Conditions of Employment
Part E. Section 7(a) of the Recovery Act
Materials in the Field of Industrial Relations
PRA Census of Employment, June, October, 1933
Puerto Rico Needlework, Homeworkers Survey
Administrative Studies
Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Con-
ditional Orders of Approval
Administrative Interpretations of NRA Codes
Administrative Law and Procedure under the NIRA
Agreements Under Sections 4(a) and 7(b) of the NIRA
Approve Codes in Industry Groups, Classification of
Basic Code, the — (Administrative Order X-61)
Code Authorities and Their Part in the Administration of the NIRA
Part A. Introduction
Part B. Nature, Composition and Organization of Code Authorities
9768—2.
Part C. Activities of the Code Authorities
Part D. Code Authority Finances
Part E. Summary and Evaluation
Code Compliance Activities of the NRA
Code Making Program of the NRA in the Territories, The
Code Provisions and Related Subjects, Policy Statements Concerning
Content of NIRA Administrative Legislation
Part A. Executive and Administrative Orders
Part B. Labor Provisions in the Codes
Part C. Trade Practice Provisions in the Codes
Part D. Administrative Provisions in the Codes
Part E. Agreements under Sections 4(a) and 7(b)
Part F. A Type Case: The Cotton Textile Code
Labels Under NRA, A Study of
Model Code and Model Provisions for Codes, Development of
National Recovery Administration, The: A Review of its Organization and Activities
NRA Insignia
President's Reemployment Agreement, The
President's Reemployment Agreement, Substitutions in Connection with the
Prison Labor Problem under NRA and the Prison Compact, The
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades,
Multiple Code Coverage, Classifying Individual Members of Industries and Trades
Relationship of NRA to Government Contracts and Contracts Involving the Use of Gcvernmeal
Funds
Relationship of NRA with States and Municipalities
Sheltered Workshops Under NRA
Uncodified Industries: A Study of Factors Limiting the Code Making Frogram
Legal Studies
Anti-Trust Laws and Unfair Competition
Collective Bargaining Agreements, the Right of Individual Employees to Enforce
Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the
Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial
Regulatory Legislation
Enforcement, Extra-Judicial Methods of
Federal Regulation through the Joint Employment of the Power of Taxation and the Spending
Power
Government Contract Provisions as a Means ;f Establishing Proper Economic Standards, Legal
Memorandum on Possibility of
Industrial Relations in Australia, Regulation of
Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com-
merce Clause, Cases on
Legislative Possibilities of the State Constitutions
Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula-
tion?
State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis
Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility cf Variation in
Trade Practices and the Anti-Trust Laws
Treaty Making Power of the United States
War Power, Can it be Used as a Means of Federal Regulation of Child Labor?
9768—4.
THE EVIDENCE STUDIES SERIES
The Evidence Studies were originally undertaken to gather material for pending court
cases. After the Schechter decision the project was continued in order to assemble data for
use in connection with the studies of the Division of Review. The data are particularly
concerned with the nature, size and operations of the industry; and with the relation of the
industry to interstate commerce. The industries covered by the Evidence Studies account for
more than one-half of the total number of workers under codes. The list of those studies
follows:
Automobile Manufacturing Industry
Automotive Parts and Equipment Industry
Baking Industry
Boot and Shoe Manufacturing Industry
Bottled Soft Drink Industry
Builders' Supplies Industry
Canning Industry
Chemical Manufacturing Industry
Cigar Manufacturing Industry
Coat and Suit Industry
Construction Industry
Cotton Garment Industry
Dress Manufacturing Industry
Electrical Contracting Industry
Electrical Manufacturing Industry
Fabricated Metal Products Mfg. and Metal Fin-
ishing and Metal Coating Industry
Fishery Industry
Furniture Manufacturing Industry
General Contractors Industry
Graphic Arts Industry
Gray Iron Foundry Industry
Hosiery Industry
Infant's and Children's Wear Industry
Iron and Steel Industry
Leather Industry
Lumber and Timber Products Industry
Mason Contractors Industry
Men's Clothing Industry
Motion Picture Industry
Motor Vehicle Retailing Trade
Needlework Industry of Puerto Rico
Painting and Paperhanging Industry
Photo Engraving Industry
Plumbing Contracting Industry
Retail Lumber Industry
Retail Trade Industry
Retail Tire and Battery Trade Industry
Rubber Manufacturing Industry
Rubber Tire Manufacturing Industry
Shipbuilding Industry
Silk Textile Industry
Structural Clay Products Industry
Throwing Industry
Trucking Industry
Waste Materials Industry
Wholesale and Retail Food Industry
Wholesale Fresh Fruit and Vegetable Indus-
try
Wool Textile Industry
THE STATISTICAL MATERIALS SERIES
This series is supplementary to the Evidence Studies Series. The reports include data
on establishments, firms, employment. Payrolls, wages, hours, production capacities, ship-
ments, sales, consumption, stocks, prices, material costs, failures, exports and imports.
They also include notes on the principal qualifications that should be observed in using the
data, the technical methods employed, and the applicability of the material to the study of
the industries concerned. The following numbers appear in the series:
9768—5.
- vi -
Asphalt Shingle and Roofing Industry Fertilizer Industry
Business Furniture Funeral Supply Industry
Candy Manufacturing Industry Glass Container Industry
Carpet and Rug Industry Ice Manufacturing Industry
Cement Industry Knitted Outerwear Industry
Cleaning and Dyeing Trade Paint, Varnish, and Lacquer, Mfg. Industry
Coffee Industry Plumbing Fixtures Industry
Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry
Cotton Textile Industry Salt Producing Industry
Electrical Manufacturing Industry
THE COVERAGE
The original, and approved, plan of the Division of Review contemplated resources suf-
ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con-
solidate and index the NRA files containing some 40,000,000 pieces, (c) to engage in ex-
tensive field work, (d) to secure much aid from established statistical agencies of govern-
ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct
approximately 25% more studies than are listed above, and (g) to prepare a comprehensive
summary report.
Because of reductions made in personnel and in use of outside experts, limitation of
access to field work and research agencies, and lack of jurisdiction over files, the pro-
jected plan was necessarily curtailed. The most serious curtailments were the omission of
the comprehensive summary report; the dropping of certain studies and the reduction in the
coverage of other studies; and the abandonment of the consolidation and indexing of the
files. Fortunately, there is reason to hope that the files may yet be cared for under other
auspices.
Notwithstanding these limitations, if the files are ultimately consolidated and in-
dexed the exploration of the NRA materials will have been sufficient to make them accessible
and highly useful. They constitute the largest and richest single body of information
concerning the problems and operations of industry ever assembled in any nation.
L. C. Marshall,
Director, Division of Review.
9768—6.
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