they are in Great Britain, so that the man himself, whether he be a farmer or whether he be a laborer, should be entitled to the fruits of the mechanization. Secretary WALLACE. With regard to the fruits of mechanization, my general theory is this, that it should be split three ways. Part of it should go to the consumer in terms of lower prices, part should go to the laborer in terms of higher wages, and part should go to management and capital in order to furnish management and capital an incentive continually to improve methods. As to just what the proportion should be going to the three elements, I would not undertake to say, but it is important that there be a split. I certainly would not hold to the idea that none of it goes to labor. Mr. Hook. Which is the proper basis of a good economy. Secretary WALLACE. The three-way split, I think, is a proper basis for a sound economy. Mr. RAMSPECK. We thank you, Mr. Secretary. The committee will take a recess until 10:30 tomorrow morning. (Whereupon a recess was taken, to reconvene on the following day, Wednesday, October 17, 1945, at 10:30 o'clock.) PROPOSED AMENDMENTS TO THE FAIR LABOR STANDARDS ACT WEDNESDAY, OCTOBER 17, 1945 HOUSE OF REPRESENTATIVES, The committee met at 10:30 a. m., the Honorable Robert Ramspeck, of Georgia, presiding. Mr. RAMSPECK. The committee will come to order, please. Our first witness this morning is Mr. Clyde S. Bailey, representing the United States Independent Telephone Association. As I understand from talking to Mr. Bailey, this is an association of telephone companies outside of the Bell System. Is that correct, Mr. Bailey? Mr. BAILEY. That is correct, Mr. Chairman. I shall be glad to describe our organization and the kind of companies that compose it. Mr. RAMSPECK. All right, sir. STATEMENT OF CLYDE S. BAILEY, EXECUTIVE VICE PRESIDENT, UNITED STATES INDEPENDENT TELEPHONE ASSOCIATION Mr. BAILEY. I am the executive vice president of the United States Independent Telephone Association. This association, with headquarters in Washington, D. C., is the trade organization which represents that branch of the telephone industry usually referred to as the "independents." There are approximately 6,200 independent telephone companies which furnish telephone service in 12,000 cities and towns throughout the United States. The Bell System operates in only 7,000 communities, but its companies provide service principally in the large metropolitan centers. The independent telephone companies maintain approximately 63 percent of the telephone exchange offices in the United States. The Bell System companies maintain about 37 percent. Of a total of 24,850,000 telephones in the United States, approximately 4,800,000, or 20 percent, are served by the independents. Independent telephone companies operate principally in the smaller communities and in the rural areas. It has been estimated that these companies serve about 70 percent of the geographical area of the country. They employ approximately 72,000 people. The dotted map placed before you shows the locations of the 12,000 cities and towns our companies operate in. I have also distributed another statement showing by States the number of communities in the States in which our independent companies operate. Number of towns in which independent telephone companies provide telephon Mr. BAILEY. Our association and the independent companies it rep resents are greatly concerned over the provisions of the bills which are the subject of this hearing. For reasons which I shall endeavo to present, the purpose of these bills could very aptly be said to be to produce wholesale increases in telephone rates at most of the telephone exchanges in the cities and towns and the rural areas in which our independents operate. Their purpose could also be said to be to deprive thousands of persons of their jobs in our branch of the telephone industry. This is no mere idle assertion, and I crave your indulgence while I explain the basis for it. Of our 12,000 exchanges, approximately 10,000 have fewer than 500 stations. More than 11,000 have less than 1,000 stations. Thus, our companies are small business in a very real sense. In a news article in the Wall Street Journal some time ago it was stated that the independent telephone industry was the largest small business in the United States. It was alluding, of course, to the large number of small entities. Our companies operate generally in towns having a population under 4,000 in the rural areas. It is true that some of our independents operate also in such places as Rochester, N. Y.; Tallahassee, Fla.; Tampa, Fla.; Santa Monica Calif.; Fort Wayne, Ind.; Jefferson City, Mo.; and other towns. Bu these are the exceptions. In appearing here, while of course solicitous of the interests of our larger exchanges, we are primarily concerned about the smaller ones. Our exchanges are unable out of the revenues they receive to pay wages similar to those which are paid in large cities. A subscribe in a metropolitan area will willingly pay from $3 to $5 a month of Number of towns in which independent telephone companies provide telepho Alabama.. Arizona_ Arkansas.. California. Colorado__ Connecticut.. Delaware.. District of Columbia Florida___ Georgia. Idaho__ Illinois. Indiana-- Iowa-- Kansas-. Kentucky. Louisiana. Maine___ Maryland__- Massachusetts. Michigan-- Minnesota Mississippi-_ service 798 Authority: Telephony's Directory, 1945. Mr. BAILEY. Our association and the independent companies it rep resents are greatly concerned over the provisions of the bills whic are the subject of this hearing. For reasons which I shall endeavo to present, the purpose of these bills could very aptly be said to be t produce wholesale increases in telephone rates at most of the telephon exchanges in the cities and towns and the rural areas in which ou independents operate. Their purpose could also be said to be t deprive thousands of persons of their jobs in our branch of the tele phone industry. This is no mere idle assertion, and I crave your indulgence while explain the basis for it. Of our 12,000 exchanges, approximately 10,000 have fewer than 50 stations. More than 11,000 have less than 1,000 stations. Thus, ou companies are small business in a very real sense. In a news articl in the Wall Street Journal some time ago it was stated that the inde pendent telephone industry was the largest small business in the United States. It was alluding, of course, to the large number o small entities. Our companies operate generally in towns having population under 4,000 in the rural areas. It is true that some of our independents operate also in such place as Rochester, N. Y.; Tallahassee, Fla.; Tampa, Fla.; Santa Monica Calif.; Fort Wayne, Ind.; Jefferson City, Mo.; and other towns. Bu these are the exceptions. In appearing here, while of course solicitou of the interests of our larger exchanges, we are primarily concerne about the smaller ones. Our exchanges are unable out of the revenues they receive to pay wages similar to those which are paid in large cities. A subscribe in a metropolitan area will willingly pay from $3 to $5 a month of |