that come to the National Labor Board should be handled by them in the first instance. There are hundreds of small disputes where a conciliator goes out, and he can settle them without any trouble. But when a big dispute comes along, it is not on the enforcement of the law, it is a dispute over and above the law, you need to have, in that case, the next step after the conciliator fails, because the job is too big. At that point the prestige of a national board, in my judgment, might well be enlarged this way: You have three members, then have the Secretary of Labor and Secretary of Commerce as ex-officio members, because this isn't the Labor Department work, this isn't the Department of Commerce work, it is where the two get together, and this national Board, with its prestige, can have examiners to hear cases, or their own members can act as examiners, or themselves act as conciliating bodies, in the bigger disputes. Now only one thing more in conclusion, and that is with respect to the absolute need for this law, especially the provisions of section 5, having to do with the unfair practices, the absolute need for that in the recovery program, if it is going to succeed. The recovery program gives the right Senator DAVIS. Will you make the first part of your statement again, Doctor? Dr. LEISERSON. All right. In conclusion I want to point out the absolute need for the enactment of this act, especially of section 5, that is the one prohibiting unfair labor practices and while I am on that, there ought to be one more thing: Prohibiting the use of spies in labor disputes. You will find the codes have a provision, many of them, the steel code, particularly, has a provision that no member of the code shall employ anybody to get secrets from a competitor. The Secretary of Labor very properly pointed out at the public hearing on that code that employers will use spies to get business secrets from each other; they will not hesitate to use spies in labor organizations. And there is nothing that causes unrest so much as when I, a workman at my bench, do not know whether the other fellow at the next bench is a spy employed by the employer. That is an unfair practice, whether it is labor or business, and you might well include that with the list of unfair practices. Now the code gives the right to competing employers to get together and make rules of fair competition, which include pricefixing in many cases. Now there are two great dangers. One is that they will have a monopoly, they will make a monopolistic rule. So the law specifically prohibits monopolistic rules with respect to pricing. But when employers get together they also make monopolistic rules with respect to wages, they decide what the wages shall be among themselves, they bind themselves not to pay anything else, and then turn around and say, "We will not recognize an organization of the employees." They say, "They must compete with us individually." And all the cutthroat competition is good when it comes to labor. Now look what the Government does. This is Bulletin No. 7 of the National Recovery Administration Manual for the Adjustment of Complaints, and on page 4 the Government tells the world, "It 46652-34-PT 1——16 is the policy of N.R.A. to build up and strengthen trade associations"; that is, trade unions of employers. If anybody wrote that it is the policy of the Government to build up trade unions, that fellow would lose his job right away. As if there was something wicked about building up a trade union? "It is the policy of the Government to build up and to strengthen trade associations", which means trade unions of employers, "throughout all commerce and industry." In other words, to set up a monopoly like the automobile members say the A. F. of L. is a monopoly, through all commerce and industry, you are going to have trade unions of employers so that they may perform all code administrative functions, they may get together and act as a unit. Now it is well to recall what that canny Scotchman, Adam Smith, said, that "We must never let either employers or laborers combine", he said, "for it is well known that when business men get together, even for merriment and diversion, the conversation soon turns to prices and ends in a conspiracy against the public." I think there is a great deal of truth in that statement. On the other hand, we cannot get along nowadays with that kind of a suspicious attitude, either toward business or toward labor. We cannot have the kind of competition that Adam Smith wanted, the cutthroat, raw, he-man competition that he wanted. We have got to have regulated control of competition, and the Government properly so provides. Then it goes on to say, "A trade association division has been established in N.R.A. to carry out this policy and to advise and assist industry in the performance of these functions." The Government spending the taxpayers' money to help organize trade unions of employers. Now the law specifically contemplates that the Government will do the same for labor, and we seem to forget that there is a section 7 (b) in the National Recovery Act. Senator DAVIS. What is the number of the Government bulletin that you read? Dr. LEISERSON. That is no. 7, Manual for the Adjustment of Complaints, of the N.R.A. Now, section 7 (b) of the National Industrial Recovery Act instructs the President to exert his efforts and by the President, of course it means the Administrators under him-to help employers and employees to arrange collective bargains and make agreements. Now, that was the purpose of it. Now, the employers come along and brazenly tell you, "We will not deal with any organization of our employees. We will not recognize their right to an association and to deal with that association as an entity", when the law contemplates it. Now, if you tell them that they are violating the law on that point, they say, "No; there is nothing in here that requires us to negotiate an agreement." Therefore, you have got to have this provision in the act, that they must exert every effort. There is nothing to prevent us from doing these other things, therefore you have to put these lists of unfair, prohibited practices into a law, and if you do not, I think the danger to the whole program of National Recovery is that you will not have industrial self-government. The theory of industrial self-government, as I have tried to explain to employers, is, "You have a right to govern yourselves, but doesn't the law give the employees the same right to govern themselves and make rules of fair competition among themselves?" "Oh, no; the law does not do that", they say. Now, it seems to me, unless you put that in, you are making it possible for the employers of the country to organize nationally into automobile chambers of commerce, into steel institutes, into various organizations, to dictate collectively wages to individuals who must, of necessity, bargain against each other in a cut-throat way; and then they may organize themselves into a national industrial conference board, or chamber of commerce, or anything, and these must be recognized, but they will not stand for the same right to labor. If you want anything more calculated to bring unrest, disorder, discontent, and failure of the whole program than that, I do not know how you can figure anything out better than that. You have the chance here to stop that and make the National Recovery Act operate by explaining that this section 5 of the unfair practices, that section 7 (a) was meant to give the employees exactly the same rights that the employers have. Senator DAVIS. Doctor, what would you think of having a division of conciliation and arbitration for the transportation industry in the Department of Labor, and the Railway Labor Board come under that with the supervision of this particular board that is now in this Wagner bill? Dr. LEISERSON. Well, I haven't given any thought to the matter. It might be desirable to unify those things, I don't know Senator DAVIS. That would mean one board, then. Dr. LEISERSON. It might be too much for one board. It is almost too much for the National Labor Board, as it is, when you have so many industries to deal with. The CHAIRMAN. Have you considered whether or not this bill ought to be restricted to businesses where there is a limited number of employees? Dr. LEISERSON. How do you mean "a limited number"? The CHAIRMAN. One of the criticisms made to the bill was that it applies to a man who has one employee. Senator WAGNER. No; it is 10. Dr. LEISERSON. You cannot have collective bargaining very well where there is only one employee. The CHAIRMAN. Senator Wagner suggests it is 10 employees. Dr. LEISERSON. Well, of course I did not know about that. You might want to make an exception, but I would not except the small plant. We have a notion that the big problems of labor and the meanness of the relation between employer and employee comes only in the large plant, when the small employer knows every man by his first name. Yes; but what names does he call them? In handling labor disputes, you have more difficulty, more serious difficulties in smaller plants where the personalities enter into it, and where you have not the standard labor practices, than in the larger plants. You might want to except a small farmer with a few employees, but you certainly would not want to except him in a situation like the one you have out in the Imperial Valley now, with a great number of people working in agricultural employment. The CHAIRMAN. As the bill is drafted, there is no limitation at all. Dr. LEISERSON. There might be an exception made in certain cases. The CHAIRMAN. Senator Wagner's impression was it was limited to 10. Your answer to my question is you would apply the principles of this bill to the small employer as well as the larger or big employer? Dr. LEISERSON. Yes; but I would say where 1, 3, or 5 employees were employed, perhaps 10, you might take it out, but in the main I would not except the small employer, what is ordinarily known as a small employer. The CHAIRMAN. Thank you for your presentation. Is Mr. Witte here? Mr. WITTE. Yes. The CHAIRMAN. Mr. Witte, could you come tomorrow morning? Mr. WITTE. I will make it very short. STATEMENT OF EDWIN E. WITTE, LABOR EXPERT, PROFESSOR OF ECONOMICS, UNIVERSITY OF WISCONSIN The CHAIRMAN. Will you state your full name, please? Mr. WITTE. Edwin E. Witte, professor of economics at the University of Wisconsin. The CHAIRMAN. You live at Madison, Wis.? Mr. WITTE. I live at Madison, Wis. The CHAIRMAN. How long have you been a professor of economics at the University of Wisconsin? Mr. WITTE. Well, I have been connected with the university since 1920, but I was chief of the Wisconsin Legislative Library; secretary of the industrial commission, before that. The CHAIRMAN. Did you succeed Mr. McCarthy? Mr. WITTE. I did; yes, sir. Because of the lateness of the hour, I will not go into the arguments at all as to why I am appearing in support of this bill. I only want to say that there evidently is a very great misunderstanding of the provisions of the bill. I was approached by a Wisconsin employer on Saturday when I left, in regard to this bill. The impression seems to be that this bill somehow outlaws plant unions. Of course it does. nothing of the kind. The impression seems to be it establishes a compulsory closed shop. It does nothing of the kind. It legalizes voluntary closed shop agreements. Every local of every State in the Union, including even the State of Massachusetts, where the law has been pretty restrictive on activities of labor unions, the voluntary agreement for the closed shop is legal, even in Massachusetts. The CHAIRMAN. But it is comprehensive and broad, it is liberal in its legislation for the improvement of labor conditions generally. Mr. WITTE. I certainly would acknowledge that, Senator. Of course it does not give the American Federation of Labor domination of industry. The very people that make that claim are also calling attention to the fact that only 10 percent of all employees are in the American Federation of Labor, and the situation, as I see it, is much more likely to be a situation in which the American Federation of Labor unions will be unable to function in many of the major industries of the country, unless legislation of this kind is enacted. It means not the domination of the American Federation of Labor, but giving the American Federation of Labor unions a chance. As I see it, the essential provisions of the bill are just three: Recognition of collective bargaining, and the corresponding duty of the employers to try to arrive at agreements; second, the employers are not to interfere with labor in self-organization; and, finally, it sets up machinery for the interpretation and enforcement of these provisions. The employers, as Dr. Leiserson well stated, are insisting on free self-regulation in industry, and yet, illogically, they would not permit self-organization on the part of the employees. I endorce every statement that has been made here by Dr. Leiserson, and wish to be recorded strongly in support of this bill. What I mainly wish to do is to call attention to certain amendments that have not been brought to your attention before, that I I think should be inserted in this bill. The major amendment that I would suggest, I would insert on page 23, section 304, and the purpose of the amendment or suggestion is to prevent the employers who have set up company-dominated unions from barring elections or from claiming that elections are barred. In paragraph (b) you say: Any term of a contract or agreement of any kind which conflicts with the provisions of this Act is hereby abrogated, and every employer who is a party to such contract or agreement shall immediately so notify his employees by appropriate action. I submit that in practically all cases there are no contracts or agreements. That hasn't been what company unionism has meant. Company unionism has not culminated in agreements at all. It certainly is doubtful whether this is effective in barring, what appeared to me to be the plain violation of the intent of section 7 (a), from being now made a permanent bar against labor organizations. I suggest, consequently, an insertion of a new paragraph, something like this: (c) Any election on the adoption of any employee representation plan or for the election of representatives of the employees for purposes of collective bargaining held subsequent to June 16, 1933 I am inserting that date. That is the date of the Industrial Recovery Act, when section 7 became effective and prior to the effective date of this Act in relation to which the employer was guilty of any of the unfair labor practices specified in subsections (3) and (4) of this Act, shall not be binding, but the National Labor Board shall have authority to ascertain the wishes of the employees as to collective bargaining and the selection of representatives as provided in section 207. That is to determine the wishes of employees in the relation of collective bargaining and in the selection of representatives. With the very phenomenal development of the so-called "company" unions since section 7 (a) was enacted, there is grave danger that section 7 (a) will become the greatest travesty on labor that has ever existed, if these arrangements are now, in a sense, validated and no provision is made expressly abrogating them. Next I want to raise another point which to me is very essential, and that relates to the question of whether section 5, as it stands, covers the situation that is most prevalent in this whole field of company unionism, that loose organization, if you can call it an organization, that has no members, no dues, that is merely a method of electing representatives. I call your attention to the fact that in subsection (5) of section 3, the definition of labor organizations, you speak of the term "labor organization" as meaning any organization, labor union, association, corporation or society of any kind, in which the employees participate to any degree whatsoever, which exists for the |