An outstanding example of this lack of legal responsibility may be noted. After a strenuous campaign of slugging, maiming, and murder in the effort to reestablish the closed shop had failed, the international officers of the iron workers' union determined upon the use of dynamite. An "organization" fund, of which no reports were to be published, was created and used to bring about over 100 dynamitings upon the work of open-shop employers. One of the side incidents of this dynamiting campaign was the destruction of the Los Angeles Times Building, with the loss of 20 lives. To carry on this nefarious work, over 2,000 pounds of dynamite and between 300 and 400 quarts of nitroglycerin were transported from one end of the country to the other on passenger trains. All of these activities were directed by the international officers and paid for out of the union treasury. The McNamara's pleaded guilty to offenses in California, and for the minor Federal offense of unlawful transportation of explosives 38 members of the union, including its international officers and executive board and many local officers, were convicted. After serving comparatively brief terms ranging from 1 to 6 years, many of them were reelected to office in the union, and some of them are even now international officers of the organization. For all the immense property loss of these dynamitings, there was no legal redress and no way to make the union treasury respond in damages. The possession of power without responsibility not only permits but invites exploitation and misuse. Some indication of the abuses which naturally grew up under an unregulated labor monopoly may be gathered from another editorial dealing with the findings of the Lockwood Committee, in the New York Times of December 21, 1921. It was said: The Lockwood Committee served a warning on upward of 1,000,000 members of labor unions in New York State yesterday that it would expect them to eliminate existing abuses and regulations that limit efficiency, retard production, and violate the law, and that if the reforms are not made voluntarily legislation will be enacted to remedy the abuses. * * "The communication embodies approximately fifty reforms and abuses that the committee hopes to have abolished. While specific suggestions are detailed at great length affecting the building trades, the committee also indicated a group of general reforms which it wishes to be instituted in all unions in this State. These abuses cover restriction of membership, high initiation fees, limitation on the number of apprentices, the issuance of permit cards to nonunion men, the auditing of books by independent chartered accountants and the assumption of power by unions to hale their employers before them and to impose fines on them for infraction of the union rules." It is well known that the conservation of monopoly benefits is the chief consideration of the unions in determining such matters as admission of new members, amount of dues, limitation of apprentices, etc. The maintenance of a desirable scarcity of labor in the controlled trade is always kept in mind. Dues are low, or high, or prohibitive, and books are open or closed to new members in accordance with the requirements of this objective. A fruitful source of revenue has been found in the sale of "permits" to nonunion men, which allow them to work at times when the restricted union membership does not have an available supply of workers to meet the demand. Recently a group of such workers began proceedings against the motion picture operators' union in New York City, pointing out that over a period of a few years they had paid a million and a half dollars of their wages to the union for permits to work and asking that the union be forced to accept them as regular members. An increasing power has been built up by inner rings of labor leaders in their exploitation of the rich and fertile field of labor monopoly. This power is secured by the use of "machine" methods in union politics, often aided by strong-arm tactics, and is strengthened by provisions in union constitutions and bylaws which place autocratic control in the hands of the officers and leave little to be done on the part of the rank and file except to obey orders. One of the results of the increase in power on the part of the inner ring has been the oppression and exploitation of the union man himself. In the decision (March 1932) in the famous "Card Index" case in New Jersey, begun by union ironworkers against their officers and based upon the tyranny and oppression which had resulted from the use of the so-called "card-index" system of employment, the court said: "Perhaps no cause has been heard in this court in recent years which has excited so much public interest or been the subject of as much comment in the press and on the platform as the present suit. "This was due to the exposure of the nefarious practices of the labor leaders acting in cooperation with contractors and employers, some willingly and others by coercion, resulting in the oppression of the workmen almost to the point of serfdom and the mulcting of the public of thousands upon thousands of dollars to pay the price of organized graft and extortion in the guise of fines, commissions and, what is probably a more correct term, tribute. The record is replete with testimony justifying this characterization. * * * "I think it cannot be denied that construction costs on practically all major operations in the building trades, and on general construction work, in northern New Jersey have increased in the past decade beyond all reason as a direct result of the unlawful conspiracies and racketeering methods of unscrupulous labor leaders." The principal defense offered was that the complainants had no right to resort to legal proceedings until they had exhausted all of their remedies within the union. On this point, the court said: "It should be borne in mind that this is not a controversy between labor and capital. * * * It is a strife within the union, aligned on one side of which are the four complainants representing a considerable portion of the membership, and on the other certain members and officers of that union who are so-called 'labor leaders' and who have the active support of the international officers. * * * The particular section of the international constitution which is invoked is section 2a of article XVII, which reads as follows: "No officer or member of our international association or its local unions shall resort to court proceedings of any description in any matter pertaining to this organization, its local unions, or his membership until all remedies provided for within our international association and local laws have been fully exhausted. Violation of this section shall be sufficient cause for expulsion from membership in this international association and its local unions.'" After a detailed review of the particular sections, the court continued: "A careful reading of the international constitution shows that while broad powers are conferred upon international officers, the executive board, and executive council, few rights except the right to pay dues and obey the will of the international are given to the individual members. The primary design of the constitution of the international seems to have been to confer arbitrary and despotic power upon its officers, and to subjugate the locals and their members to the absolute will of its officers. True, the officers, board, or council may graciously listen to an appeal for justice from a member, but they might just as ungraciously refuse to listen so far as the provisions of the constitution are concerned and the suitor would have no alternative but to submit if he could not appeal to the courts. * * * "In my judgment the international constitution provides no 'remedies of right' which the complainants are obliged to pursue before instituting action in this court." The court further examined the remedies claimed to be provided in the constitutions of the local and of the district council, and said in summary: "I am of the opinion, therefore, that the pursuit of these so-called 'remedies' within the order by these complainants would have been futile, illusory, and vain and that it was not, therefore, necessary for them to exhaust such remedies before appealing to this court." Com This case was not at all unique. Many similar actions by union men against their officers have appeared in the public press during the past few years. menting editorially upon the New Jersey case, the New York World-Telegram of March 30, 1932, said: "Here is another timely court warning for union czars. "Here is further judicial support for oppressed minorities whose rights the World-Telegram has urged in the case of the Sam Kaplan dominated MotionPicture Machine Operator's Union, Local 306, of this city. "A few days ago we drew attention to similar current fights in local 3 of the International Brotherhood of Electrical Workers, local 125 of the Operating Engineers' Union, and 384 (Hudson County, N.J.) of the Theatrical Employes and Motion Picture Machine Operators' International. Today we print on another page an account of yet another court action based on alleged autocracy and intimidation in local 28 of the Sheet Metal Workers' International Association. "Our contention that the higher-ups of organized labor fail in their duty to come to the rescue of oppressed groups in their local unions is borne out by Vice Chancellor Berry. He finds that appeals within the union are 'futile' and provide no remedies. "Again we ask: * * "How much longer can President William Green of the American Federation of Labor and the presidents of the big internationals ignore the growing mass of evidence and court opinions pointing to unchecked despotism in local unions?" It is not intended by implication to criticize Mr. Green. The fact is that neither the American Federation of Labor nor Mr. Green has any such control over the great international organizations as to bring about the correction of abuses. He cannot be held responsible, therefore, for the conditions inherent in the present system. On the other hand, his high character and that of many other of his fellow labor leaders should not obscure the issue. As said before, the issue is not to be settled by pursuit and punishment of individuals or even by a complete change in the personnel of the present union leadership. A system has grown up based upon the false concept of force instead of constructive service and allowed to develop without any responsibility corresponding to the growth of its power and influence. To point out the weaknesses and defects of this system is merely to point out the things which would inevitably develop in any system in which power and proper responsibility were not joined. Certainly it must be clear that organized labor, with its present organization and leadership, is not justified on its record to claim the exclusive right to bargain collectively for the workers of the country. BRIEF OF JEROME LEVY, NEW YORK CITY Senator DAVID A. WALSH, NEW YORK, N.Y., April 6, 1934. Senate Committee on Education and Labor, Washington, D.C. DEAR SIR: Your telegram of April 5, reading as follows: "Regrading telegram have completed schedule of assignment for hearings ending Saturday April 7. Will be pleased to have printed in record any short brief you may wish to submit." To hand in response to my telegram of April 2: "Purchasing power of worker cannot be increased by increasing wages. Profits and wages rise and fall together. A 20 percent increase in wages of the working class will result at most in a 3 percent increase in its purchasing power. Mathematics proving the above accepted by Dr. Robinson, president of New York City College, and others. Senator Wagner's bill will not secure desired purpose. harm working class. Would like opportunity to appear to explain.' Will As a result of years of research work in economics I have dervied an equation expressing the mechanics of our existing economic system. The equation has been accepted by Dr. Frederick B. Robinson, president of the College of the City of New York; Mr. L. Seth Schnitman, chief statistician of the F. W. Dodge Corporation; Dr. W. H. Steiner, who, I understand, organized the statistical work for the Federal Reserve System, and others. This equation shows that wages and profits, contrary to popular opinion, do not spring from a common fund, but from different sources. They tend to rise and fall together. Thus reducing wages reduces profits, and vice versa. The ratio between wages and profits is but slightly affected by change in the wage scale. It follows that you cannot appreciably increase the purchasing power of the working class by increasing wages. For example, a 20-percent increase in wages will result in about a 2-percent increase in purchasing power. This will be obvious from the following illustration. Let us assume that there are 100 units of goods produced, and that there is $1,000 available to purchase these goods-$750 representing wages and $250 profits, rent, and interest. Under this assumption, the working class will be able to purchase 75 units of goods and the other economic classes 25 units. Now let us assume that, in order to increase the purchasing power of the working class, wages are raised 20 percent: that is, to $900. If profits, rents, and interest remain constant there would now be $1,150 available to purchase the 100 units of goods, of which labor could buy 900/1,150, or 78 units. It is obvious from the above that a 20-percent increase in wages, assuming the income of the other economic classes remain constant, will only increase the purchasing power of the working class 4 percent. Under the present operation of our economic system, however, profits, rent, and interest usually increase proportionately to wages. As a result, the ratio of the purchasing power of the work ing class to the other economic classes would tend to remain constant even though wages were increased. Thus, in the above example, a wage increase of 20 percent would result in an increase in the workers' purchasing power of less than 4 percent-2 percent would be a reasonable estimate. Under the concept that profits and wages come from a common fund, the increase of $150 in wages would result in a $150 decrease in profits. We would then have in the above example wages $900, profits $100. Under this above concept an increase of 20 percent in wages would result in an increase of 20 percent in purchasing power. If the present concept of our economic system is correct, the position of Senator Wagner is sound. If profits and wages come from a common fund, and the respective share of labor and capital is to be determined by bargaining, obviously each party should be placed upon an equal bargaining basis. Inasmuch, however, as our present concept is incorrect, as can be mathematically demonstrated, the position of Senator Wagner is wrong. His bill, if passed, will not increase the purchasing power of the working class. It will give one group of workers the power to increase its purchasing power at the expense of the other workers of the country. Fortunately it is possible under our economic system not alone to increase the purchasing power of every worker, but also to assure every man a position who is willing to work. This is done by assuring the members of every economic class a return that measures their economic contribution to society and nothing else. You will be surprised to know how simple the solution is. The reason why our various economists have not been able to solve the problem has been due to their approach and not to their inability. Each economist has selected that phenomena which he considers the essential factor in our economic entity and has then developed measures to cure our economic ills based upon this phenomena, instead of trying to determine the conrtibutions of the various economic classes and developing the measures necessary to assure their members a return based upon their respective contributions. In my telegram, I asked for the opportunity to explain this before your committee. I trust that despite your telegram you will find the opportunity to hear me. Yours very truly, JEROME LEVY. BRIEF OF ISADORE POLIER, EXECUTIVE DIRECTOR INTERNATIONAL JURIDICAL ASSOCIATION INTERNATIONAL JURIDICAL ASSOCIATION, SENATE COMMITTEE ON EDUCATION AND LABOR, Senate Office Building, Washington, D.C. GENTLEMEN: This is an association of almost 500 members, who are largely attorneys interested in the rights of labor. We ask to submit the enclosed memorandum on S. 2926, commonly known as the "Labor Disputes Act." Unless amendments are made along the lines suggested in this memorandum to S. 2926, the act will, we believe, prove injurious to the best interests of labor. Yours very truly, ISADORE POLIER, Executive Director. MEMORANDUM SUGGESTING CERTAIN AMENDMENTS PREPARED BY THE INTER NATIONAL JURIDICAL ASSOCIATION I. Unless directly elected by employees and employers, respectively, all members of the national labor board should be designated as representatives of the Government and none of them designated as representing any other particular group. II. The enforcement of the provisions of the act outlawing unfair labor practices should not rest entirely with the national labor board. Employees should be granted the right to secure injunctive relief against violations of the act and the right to appeal decisions of the board to the courts. III. The right to strike and/or picket should be more explicitly protected from any abridgment by this act, the N.I.R.A., or any code, license, or agreement adopted thereunder. IV. The act now prohibits agreements whereby employment is conditioned upon membership in a labor organization of less than a majority of employees. It should also provide for the representation of substantial minorities by prohibiting closed-shop contracts where such minorities wish representation by another labor organization. In no case should such a contract be permitted between an employer and a labor organization which is or has been fostered by unfair labor practices. The act should not sanction discrimination as to wages and working conditions between different groups of employees. V. Provision should be made for the representation of substantial minority groups. VI. Existing labor agreements procured by unfair labor practices as well as agreements in conflict with the act should be abrogated. VII. The unfair labor practices enumerated in the act should be expanded to include the use of espionage and blacklists. VIII. A number of miscellaneous provisions should be made and amendments added to clarify the act and to conform it to the preceding points. I. Unless directly elected by employees and employers respectively, all members of the National Labor Board should be designated as representatives of the Government and none of them designated as representing any other particular group. Section 201 of the act provides that of the 7 members of the National Labor Board 2 shall be designated as representatives of employer, 2 as representatives of employees and 3 as representatives of the general public. The divergent views within both employer and employee groups make the democratic election of representatives essential to any sound representative plan. If the "representatives of employers or employees" are not to be chosen by the groups they are declared to represent, they should not be designated as representative. In these circumstances the Government should be held entirely responsible for the conduct of the Board II. The enforcement of the provisions of the act outlawing unfair labor practices should not rest entirely with the National Labor Board. Employees should be granted the rights to secure injunctive relief against violations of the act and the right to appeal decisions of the Board to the courts. Under section 6 direct court action to enjoin unfair labor practices is limited to suits instituted in the Federal courts by district attorneys whose duty it is to take action "solely at the request of the National Labor Board.' In order to create an effective legal sanction against unfair labor practices listed in the bill, the right to obtain injunctive relief in any court of competent jurisdiction, State or Federal, must be granted. If the Labor Board proves to be an effective forum for the redress of employee grievances the creation of this additional sanction will not detract from the power, distinction, or effectiveness of the Board. Labor has learned to be wary of the courts. So long as the reputation of the Board is good, the existence of this alternate remedy will be advantageous to it; it will diminish the possibility of adverse criticism by supplying the ready answer, that dissatisfied groups have a direct judicial remedy. In the event that the Board should prove to be a disadvantageous forum-a more disadvantageous forum even than the courtsthe justification for the provision is obvious. Moreover, in grave emergencies immediate action may be necessary of a type which only a local court has the power to take. The right to take direct court action should not be limited to the Federal courts since it requires extensive traveling to reach such a court in many parts of the country. The statute can create a Federal right to an injunction which State courts of general jurisdiction may enforce very much as the Federal Employers' Liability Act creates a right to damages enforceable in either State or Federal courts. Provision is made in section 205 (e) for judicial review by "any person aggrieved by an order of the Board. While section 205 (e) may be intended to confer upon an employee group which files a complaint with the Board the right to obtain a review of any decision of the Board, we believe that subsection (e) will be interpreted to deny judicial review of negative orders of the Board; that is, all orders denying affirmative relief. This has been the interpretation of the Interstate Commerce Act (see Piedmont & N. R. Co. v. United States, 280 U.S. 469; Procter & Gamble Co. v. United States, 225 U.S. 282), and the considerations which led to that interpretation apply with equal force here. Thus employee groups will be required to resort to the Board to benefit from the provisions of section 5 and will have no method of securing review of a Board decision which refuses to 46652-34-PT 3-24 |