497 Opinion of the Court. coverage. A similar defense is presented through the claim that the respondents were not independent contractors but were agencies of the United States, representing and binding the United States as their principal in the employment of petitioners. In each contract, there was a provision comparable to the following quoted from the contract in the Powell case: "Article I-E-Authority of the Contractor. "In carrying out the work under this Title I the Contractor is authorized to do all things necessary or convenient in and about the operating and closing down of the Plant, or any part thereof, including (but not limited to) the employment of all persons engaged in the work hereunder, (who shall be subject to the control and constitute employees of the Contractor), . (Emphasis supplied.) . Each contract is replete with references to the persons employed as the "employees of the Contractor" or "persons employed by the Contractor." The contract in the Powell case contained the following additional clause: "Article III-A-Status of Contractor. "It is expressly understood and agreed by the Contractor and the Government that in the performance of the work provided for in this contract, the Contractor is an independent contractor and in no wise an agent of the Government." (Emphasis supplied.) 7 "SEC. 3. As used in this Act "(d) 'Employer' includes any person acting directly or indirectly in the interest of an employer in relation to an employee but shall not include the United States or any State or political subdivision of a State, .... "(e) 'Employee' includes any individual employed by an employer." (Emphasis supplied.) 52 Stat. 1060, 29 U. S. C. § 203 (d) and (e). Opinion of the Court. 339 U.S. Such provisions are persuasive that the petitioners should be recognized here as employees of the respective respondents and the respondents as independent contractors. The respondents argue, however, that the context of the times, other provisions of the contracts and the practice under the contracts deprive these statements of their ordinary meaning. We find, on the contrary, that each of these sources supplies additional evidence that these provisions correctly state the true relationship between the petitioners and respondents. For example, we find in these contracts a reflection of the fundamental policy of the Government to refrain, as much as possible, from doing its own manufacturing and to use, as much as possible (in the production of munitions), the experience in mass production and the genius for organization that had made American industry outstanding in the world. The essence of this policy called for private, rather than public, operation of war production plants. This purpose shines through the following clause in the contract in the Powell case: "Whereas, The Government desires to have the Contractor, as an independent contractor on a costplus-a-fixed-fee basis, make all necessary preparations for the operation of said plant, including the training of operating personnel . . . but excluding the procurement and supervision of the installation of manufacturing facilities [to be done, under a like contract, by the contractor's parent corporation, Western Cartridge Company]; and operate said plant; . . . ." (Emphasis supplied.) It would have been simple for the Government to have ordered all of this production to be done under gov 8 For a review of the development of the war production program and its reliance on private industry, see Lichter v. United States, 334 U. S. 742, 758-766. 497 Opinion of the Court. ernmental operation as well as under governmental ownership. To do so, however, might have weakened our system of free enterprise. We relied upon that system as the foundation of the general industrial supremacy upon which ultimate victory might depend. In this light, the Government deliberately sought to insure private operation of its new munitions plants. In these great projects built for and owned by the Government, it was almost inevitable that the new equipment and materials would be supplied largely by the Government and that the products would be owned and used by the Government. It was essential that the Government supervise closely the expenditures made and the specifications and standards established by it. These incidents of the program did not, however, prevent the placing of managerial responsibility upon independent contractors. The relationship of employee and employer between the worker and the contractor appears not only in the express terminology that has been quoted. It appears in the substantial obligation of the respondent-contractors to train their working forces, make job assignments, fix salaries, meet payrolls, comply with state workmen's compensation laws and Social Security requirements and "to do all things necessary or convenient in and about the operating and closing down of the Plant, 99 "If the workers were employees of the United States, state workmen's compensation laws and other comparable laws would be inapplicable. In the St. Louis and Arkansas Ordnance plants the contractor, in order to explain the relationships being established, issued a booklet to each new employee. The manual thus used at the St. Louis plant is entitled "Your Job with the St. Louis Ordnance Plant." It opens with the statement "Every prospective employee of United States Cartridge Company should read this booklet describing the Company's policy and procedure." (Emphasis supplied.) It describes the relationship between the United States Government, the company and "Our Employees." For example, it says "The Com Opinion of the Court. 339 U.S. The insertion in each of these contracts of the representations and specifications that are set forth in the Walsh-Healey Act was, in itself, a recognition by the Secretary of War of the independent contractor status of the respondents. The petitioner-employees and the Government expressly disavow, in their briefs, any employment relationship between them. The managerial duties imposed upon the respondents were the duties of employers. That such duties be performed by private contractors was a vital part of the Government's general production policy. In the light of these considerations, we conclude that the respective respondents, in form. and in substance, were the employers of these petitioners within the meaning of the Fair Labor Standards Act.10 pany is responsible to the United States Government for ammunition production, to the City of St. Louis in maintaining a successful civic enterprise, and to our employees, for the establishment of working conditions conducive to the health and happiness of each man and woman employed in the plant." It explains the financial basis of its cost-plus contract of management as follows: "In the final analysis, your wages come from the United States Government, whose only source of income is taxes collected from you and all other citizens. The United States Cartridge Company is merely managing the plant for the Federal Government." It adds that "When production demands require a longer work day, or longer work week, the Company will pay the legal overtime rate as provided under the Walsh-Healey Act, and the Fair Labor Standards Act." 1o See the dissenting opinion of Circuit Judge Hutcheson in Kennedy v. Silas Mason Co., 164 F. 2d 1016, 1019-1920 (C. A. 5th Cir.), the reasoning of which is in accord with our decision: "Here the whole elaborate system was designed and operated so that the United States should not be the employer." Id. at p. 1020. Cf. Curry v. United States, 314 U. S. 14, and Alabama v. King & Boozer, 314 U. S. 1. Those cases held that the contractors, under Government cost-plus-afixed-fee contracts, were, as such, subject to state use taxes and state sales taxes. 497 Opinion of the Court. II. PETITIONERS WERE ENGAGED IN THE PRODUCTION OF GOODS FOR COMMERCE WITHIN THE MEANING OF THE FAIR LABOR STANDARDS ACT. Before discussing the definitions assigned by the Act. to the words "commerce" and "goods," it is helpful to examine the Act as a whole in the light of the time of its adoption. It was adopted in 1938, during an industrial depression. It expressly stated its purposes." This Court has further expounded them." In this Act, the 11"SEC. 2. (a) The Congress hereby finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce. "(b) It is hereby declared to be the policy of this Act, through the exercise by Congress of its power to regulate commerce among the several States, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power." (Emphasis supplied.) 52 Stat. 1060, 29 U. S. C. § 202. 12 While one major means of spreading substandard labor conditions was recognized to be through the lowering of prices for goods produced under substandard conditions, there has been no attempt in the Act, or in this Court's discussion of the Act, to limit its coverage to employees engaged in producing goods solely for competitive markets. An announced purpose of the Act was to raise living standards and to eliminate "labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers . (§ 2 (a), see note 11, supra.) That purpose was concerned directly with any widespread existence of substandard wages, hours or working conditions. That such conditions could be reached by Congress through its regulation of inter |