power. The proof is universal experience and observation. It is not necessary to compare earnings of organized workers with those of the unorganized. Invariably those of the organized are higher. Even in cities where there is only one unionized trade the earnings of the unskilled in those localities are much higher than those of the unskilled in cities where there is no organization at all.

Mr. Chairman, I do not want to appear to be reading a lecture to the committee, and if you feel so inclined to interrupt I would beglad to consider your questions.

The CHAIRMAN. Thank you.

Dr. Haas. What are employers most opposed to and what do workers most want? Employers are by no means opposed to company unions. In fact, they foster and finance them. They are most opposed to unions officered by representatives freely chosen by employees. On the other hand, employees looking to their true interests, want genuine unionism more than anything else. With the exception of workers who have a property interest in pension and beneficiary funds under company unions, workers are emphatically opposed to employer-dominated organizations. The answer, then, to the question: What will best protect the legitimate rights of workers and increase purchasing power, is unhindered, free labor organization. When we have the courage to accept this answer and proceed on the basis of it we will be on the way to industrial peace and permanent prosperity.

I have come now to the provisions set forth in the law-in the bill, the law as I hope it will be.

True collective bargaining has certain essential qualities. Itrequires certain conditions to be met. They are: (1) Freely chosen representatives are to be recognized and dealt with for the purpose of coming to an agreement; (2) representatives of workers are to be chosen free from company domination; (3) no means may be used to undermine the worker's organization; and (4) agreements entered into are to be respected. These conditions are defined and safeguarded by the bill before you for consideration.

(1) Clearly, collective bargaining requires an employer to recognize and deal with representatives of his employees. The bill before you declares refusal to do so an unfair labor practice. Section 5, paragraph 2, meets the most common evasion of section 7 (a) of the N.I.R.A., which has been resorted to during the past 8 months. The section reads:

To refuse to recognize and/or deal with representatives of his employees, or to fail to exert every reasonable effort to make and maintain agreements with such representatives concerning wages, hours, and other conditions of employment.

Again and again cases have come before the National Labor Board in which the employer flagrantly violated section 7 (a) but took refuge in the claim that he observed the language of the statute. He made the defense that he met, received, and conferred with representatives of his employees. In one extreme instance an employer came to the National Labor Board and held that he had observed the law, although it was clear that he has had no intention of coming to an agreement. He had held conversations with the workers' representatives extending over several weeks and climaxed a 2 days' negotiation with them in Washington by throwing them along with their attorney in jail on their return home,

Paragraph 2 of section 5 of the bill is therefore of utmost importance, especially that passage which requires the employer “to exert every reasonable effort to make and maintain agreements" with representatives of employees.

The CHAIRMAN. Doctor, as a member of the Labor Board, I assume you dealt only with cases where there were controversies between employers and employees?

Dr. Haus. That is true.

The CHAIRMAN. Have you had any opportunity to observe the extent to which employers really are striving to carry out the spirit of section 7 (a)?

Dr. Haas. Yes, we have had examples of employers before the National Labor Board who labored under a misunderstanding and through mediation of the Board, after a half-day, or a day, or two days of explanation and conference, they saw the point and signed up the agreement. Outside of the National Labor Board, of course there are many employers who are observing the law.

The CHAIRMAN. Did all kinds of agreement, industrial agreements, come before your Board, or only those where there were controversies?

Dr. Haas. I am not sure that I understand your question, sir.

The CHAIRMAN. Your Board only dealt with controversies that arose between employers and employees?

Dr. Haas. That is correct.

The CHAIRMAN. You did not deal with the incorporation in the agreements of the Codes, the labor provisions? Dr. Hans. The National Labor Board did not. The CHAIRMAN. You did not. So you were continually hearing -Dr. HAAS. Trouble.

The CHAIRMAN. Trouble, yes; misunderstandings and difficulties between employers and employees. Are you able to give us any information as to the extent to which employers are really living up to the spirit of section 7 (a) and cooperating with their employees so that they may enjoy the rights prescribed therein?

Dr. Haas. Well, if I were to speak only as a member of the National Labor Board, from that standpoint, apart from my experience outside of the National Labor Board, I should say that in numbers the majority of employers want to observe the law. I say that from the standpoint of number of employers, because some employers employ very many more workers than others, and consequently the number of employers is not so important. I dislike to make this comment, but I am entirely convinced by the facts before me, that the important, the powerful employers of the United States are not complying with or showing a proper attitude toward the labor provisions of the National Industrial Recovery Act.

The CHAIRMAN. That sentiment seems to coincide with that of other members of your Board who have testified.

Dr. HAAS. (2) To make collective bargaining adequate, workers must be free to choose their representatives. This is so elementary that it requires no proof. Surely no one would say that a trade association may not choose whatever representatives they wish, either members of the association or persons outside the association. This is all that workers ask for in asking freedom to choose whatever representatives they wish.

The commonest restriction on workers' freedom to choose their representatives is that practiced by the company union. The impropriety of the company union system is clear when it is remembered that the typical company union scheme requires workers to choose as their bargainers persons who are paid, in whole or in part, by the employer with whom the workers' case is being bargained. In a Fecent case before the National Labor Board involving over 4,000 employees, the labor adjuster and the two attorneys for the workersthat is, representing the welfare or the company union scheme, on its property, these persons received half of their compensation from the company and half from the employees.

Incidentally, this particular welfare company union plan is regarded in the community as a very successful and proper arrangement between employers and employees. I do not want to take your time going into the other defects and injustices involved in the company union plan. I mention this point only, that is, that the bargainers for the workers are paid by the man with whom the workers' case is being settled. The ineffectiveness of such representatives in bargaining for workers is apparent. The need of freedom from employer domination is patent and this freedom the bill before you seeks to guarantee.

(3) Collective bargaining to have any real meaning requires the employer to refrain from all discriminatory practices which would undermine organization. The most effective weapon which the employer possesses to disrupt a union is of course dismissal. Others of a more subtle character include discrimination as to wage or hour differentials, advancement, demotion, hire, tenure, reinstatement, division of available work. All these, the bill declares to be labor practices which are unfair, and provides means for their prevention.

(4) Collective bargaining requires that a contract entered into should be carried out. This statement may sound like a truism, but within it lurks a slightly controversial question. It is the matter of the union shop. The bill provides, and in my opinion very properly, that when a union contract is agreed upon between the employer and a union, this contract with necessary safeguards, is to be regarded as a lawful contract.

So much for the purposes of the bill. But it does not stop with a recitation of purposes. It sets up machinery to carry them out. There is provision for new powers to be conferred on the several District Courts of the United States. On these there is little need to dwell. The main consideration here is the establishment of a national industrial tribunal, to be known as the National Labor Board.

The National Labor Board as proposed is necessary to make collective bargaining an actuality. Only such a Governmental agency can prevent unfair labor practices and maintain equality of bargaining power in the wage contract.

The functions of the proposed board are two: conciliation and mediation, and limited arbitration. The first is of utmost importance. The parties to an industrial dispute can come to the board, and with the advice and experience of trained conciliators, have their respective rights clarified and composed and thereby avoid what may result in costly industrial warfare. Moreover, title III of the bill creates in the Department of Labor the United States Conciliation Service, The object of this title is to strengthen the existing services in that Department, which since last August has been of tremendous assistance to the National Labor Board created by Executive order on August 6, 1933.

The second function is arbitration. It is to be indicated that the Board is given no compulsory arbitration power, but one rather of a voluntary character. It will be competent to act as arbitrator in labor disputes only when the parties submit their controversy to the Board, and when the Board accepts their submission. The bill in no way abolishes or curtails the right to strike.

Another function of the Board is one that is nowhere provided for in the bill, but one that it will exercise with uncalculable benefit to the public interest. It is the silent preventive work that the Board will do in the way of educating disputants to settle their differences between themselves rather than go to the expense and inconvenience of appearing before the Board. Moreover, in the course of time, the Board will develop a body of precedents and these will act as guiding principles in effectuating mutual agreements.

In the immediate present and perhaps for some time to come, two important problems must be met. One is the matter of bringing collective bargaining negotiations to a conclusion. The other is the determination of workers' representatives. The National Labor Board is necessary to meet both.

As already indicated, since last June not a few employers have, by unduly protracting negotiations and even by refusing to do anything more than talk with employees' spokesmen, clearly violated the National Industrial Recovery Act. Manifestly, this is an unfair labor practice and should be dealt with accordingly. The National Labor Board is necessary to correct and prevent this evil.

Again, the question of the identity of workers' representatives, who they are, and what authority they have is full of complications and large with strife and controversy. The common-sense expedient is to settle such questions through the medium of the secret ballot. The National Labor Board has in the brief period of its existence held more than 97 elections for such purposes. Identical powers are to be vested in the Board provided for in the present bill.

In conclusion, therefore, the bill before your Honorable Committee should be enacted into law because its ultimate effect is to increase purchasing power both in the present emergency and in the future, and because it establishes the means to effectuate these necessary results.

The Chairman. Thank you, Doctor, very much. I appreciate your assistance in this matter. We will try to hear Mr. Hotchkiss, Mr. Ogburn, and the present witness, Mr. Hillman. The others are excused until tomorrow morning.



The CHAIRMAN. State your full name for the record, Mr. Hillman.

Mr. HILLMAN. Sidney Hillman, president of the Amalgamated Clothing Workers of America, and member of the Labor Advisory Board.

The CHAIRMAN. How many workers are there among the Amalgamated Clothing Workers?

Mr. HILLMAN. About 135,000.
The CHAIRMAN. How long has that organization been in existence?
Mr. HILLMAN. Since 1914, as a national organization.
The CHAIRMAN. How many branch unions have you?
Mr. HILLMAN. Probably about 120 local unions.
The CHAIRMAN. Affiliated with the American Federation of Labor?

Mr. Hillman. Yes; affiliated with the American Federation of Labor.

The CHAIRMAN. You may proceed.
Mr. HILLMAN. Mr. Chairman, and members of the committee.

Senator WAGNER. I think before you begin, Mr. Hillman, if it does not take too long, I would like to have you explain to the chairman some of your social activities outside of the ones you have indicated.

Mr. HILLMAN. I am director of 2 labor banks, 1 in New York and 1 in Chicago. Off the record, we have not applied to the R.F.C. for any assistance all during the depression. I am also associated with the Amalgamated Housing Corporation, which comprises cooperative housing in the city of New York for close to 1,000 families, and also, so far, we have met all our obligations and there is no receivership in sight.

The CHAIRMAN. How large are the banks that you referred to? What is the number of depositors and what is the amount of deposits?

Mr. HILLMAN. We had at one time in the New York bank over 120,000 depositors.

The CHAIRMAN. That is larger than the Chicago bank? Mr. HILLMAN. Yes; that is larger than the Chicago bank. The CHAIRMAN. We would be very glad to have your views on this bill.

Mr. Hillman. I will be brief. The splendid presentation by Mr. Green, president of the American Federation of Labor, really covers the ground as far as the factual case is concerned in reference to the need of this additional legislation.

I am wholeheartedly in support of the bill, because this bill, when enacted into law, will give section 7 (a) reality. Section 7 (a) of the National Industrial Recovery Act, in my judgment, is the very heart of the whole National Iudustrial Recovery Act. The purpose of the National Industrial Recovery Act is to increase the purchasing power and give a more equal distribution of income among the large masses of the people. It is my judgment that if not the whole reason for the depression, at least the major part of it is caused by the low level of wages that has prevailed even during the time of prosperity.

As a member of the Labor Advisory Board, sitting in on the hearings for the promulgation of Codes of Fair Practice for industries, I have found that wages have gone down as low, in many industries, as 5 cents an hour. We found in some cases they went down as low as 2 cents an hour.

The CHAIRMAN. Was that prior to 1929?
Mr. HILLMAN. No; this is since the N.R.A.

The CHAIRMAN. I do not follow you to the extent of your observation that the depression was caused by low wages.

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