This page contains LabelTest.class (developed using IBM Visual Age) and LabelTest2.class (modified to color the objects). They should both display 4 lines of text. (The first one does when displayed using Visual Age.)
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The 2 applets above are basically the same, except that the second one contains code similar to

     ivjLabel1.setBackground(Color.blue);
so that you can see what is happening. It is obvious that the red label is rendered behind the blue label.