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Mr. WAGENET. Last fall I was called upon to act as temporary mediator for the National Labor Board in several cases coming before that board. In each of the cases-if you care to, I will name them. The CHAIRMAN. We will be please to have you do that.

Mr. WAGENET. The first was the strike in one of the large plants of the smoking pipe-making industry. The second was the strike in the shipyards industry in New York Harbor. The third was a strike in the shoe industry in Lynn, Mass., and the fourth was the Ford Co. strike at Edgewater, N.J. In each of these cases, if the present Wagner bill had been a law and equalization of bargaining power had been established, and the clarification of section 7 (a) had been established, there would have been no necessity for weeks of struggle, loss of wages, and loss of production to the manufacturers.

In the case of one of the industries, the smoking pipe, the strike lasted approximately 9 weeks. After the first 3 weeks, the employers. in the association called me into conference in New York City, where we spent 6 hours together, at the conclusion of which those employers who had their men still working decided that the way to handle the organization of the industry was to stop all work, in effect create a lock-out that would extend for some weeks. That was done, much against the advice of the mediator. That situation extended for some time, and with great difficulty, and certainly with much hardship, eventually the workers went back under the direction of the Regional Labor Board.

In the case of the shipyards industry, the strike lasted again for several weeks, involving from three to four thousand men, and eventually had to be sent to Washington for settlement. In that case I discussed section 7(a) in detail with the president of one of the largest. shipbuilding companies, and he said, in effect, that he recognized what 7(a) meant, but decided that he would disregard it, which, in my opinion, is a denial of the right that (7a) contains as to collective bargaining.

I believe that the Wagner bill by establishing equalization of bargaining power will mean more stable management for American industry. I think it would mean a better security of work for the workingman. I believe without a doubt that it will reduce the unnecessary cost that goes now to pay for such things as secret service in industry. I think that the bill would set up and encourage a cooperative method of settling disputes, which would continue indefinitely, which would, once and for all, after each industry had set up this method which we might term an impartial machinery, which would once and for all stabilize conditions in the industry.

Insofar as labor management is concerned, I look at this largely as a problem of management. I think until genuine collective agreements providing for the contractual relationships of two independent persons are permitted, we will not reach a condition where we can say that American industry is actually on a stable basis. Without that, there will always be the threat of labor trouble from some angle or another.

I have not had very much to do with company unions, only from the point of view of observing and studying some of them. I say that the company union is not the answer to the collective bargaining problem facing the country today.

The CHAIRMAN. The N.R.A. had, as one of its objectives, the elimination of ruthless competition that the producer found in the sale of his merchandise because of different hours, because in a given industry the hours and wages differed. Now I wonder if you are in accord with my view, that the N.R.A. now leaves the produceremployer subject to ruthless conditions in the rate of wages to be paid. One of the witnesses this morning testified that in certain branches of the jewelry industry the wages are fixed and standardized, but there are employers manufacturing the same product, where there is no organization, nobody to collectively bargain with, and they can arrange their wages and make other arrangements with the employees. Why should this first group of employers subject themselves to bargain and to this disadvantage as against those who do not subject themselves to it? Isn't that one of the results of the N.R.A.?

Mr. WAGENET. That they are at a disadvantage?

The CHAIRMAN. Yes; that they are. The employer who lives up to the spirit of the collective bargaining idea and who recognizes the union and meets the wages simply cannot survive unless all the industry is subjected to collective bargaining.

Mr. WAGENET. No question about it. I can tell you one instance in Massachusetts where that particular point with the shoe industry, would come on to a collective-bargaining basis, where they persuaded that particular employer to deal with the union there.

The CHAIRMAN. Prior to the N.R.A. and previous to the codes there was chiseling by producers and employers in every direction possible in order to outdo the other fellow.

Mr. WAGENET. Certainly.

The CHAIRMAN. That could be eliminated, but the matter of wages won't be eliminated unless there is collective bargaining among all employers and employees in a given industry.

Mr. WAGENET. Exactly. I was going to make the point, Senator, that without the Wagner bill that competition will continue, in my opinion, and through the Wagner bill, with the equalization of bargaining power, there will be sufficient incentive for the workers and sufficient power given them to standardize the wages throughout the industry for the benefit in the long run of the employers of that industry, and through that will generally bring back the recovery that certainly was the intention of the N.R.A.

The CHAIRMAN. Thank you. Have you any other observations? Mr. WAGENET. Just one more point, and that is this: I think that American industry is largely beset by a fear complex. The employer is afraid-not all, of course-by and large employers are afraid of unions and the workmen are afraid of the employers in the unorganized industries, and I think that has a very bad reaction on people generally. I think if one might compare a well organized industry operating under collective bargaining, with one operating under a company union or operating without any form of collective bargaining, one would see the difference at once, both in the organization of the company, the attitude of the company toward its whole management problem, and in the attitude of the workmen, and I think it is a detrimental attitude for any self-respecting community and country.

I have seen so much of that particular thing and I have been so much impressed with it that I mention it here that we should remove the fear psychology, and here through the Wagner bill is an opportunity to do it.

Thank you.

The CHAIRMAN. Thank you, sir. Mr. Suffern?

STATEMENT OF ARTHUR E. SUFFERN

The CHAIRMAN. Will you state your full name?

Mr. SUFFERN. Arthur E. Suffern.
The CHAIRMAN. Your residence?
Mr. SUFFERN. New York City.

The CHAIRMAN. You are listed here as a member of the Federal Council of Churches, New York City, and professor of economics, New York University. Is that correct?

Mr. SUFFERN. I am not a member of the Federal Council of Churches and I am not a professor in New York University. I come representing myself, primarily as a student of labor problems for the last 25 years.

I happen to be a lecturer on labor problems at New York University. I am not a professor but a lecturer on labor problems, and I am not speaking for New York University. Although I have done some work for the Federal Council of Churches I am not speaking for the Federal Council of Churches. I am speaking for myself as a student of labor problems.

The CHAIRMAN. We will be pleased to hear you.

Mr. SUFFERN. As an economist, I have been engaged in the study of labor problems, as I say, for the last 25 years. I have worked in factories 6 years and know conditions both from the standpoint of the wage earner and that of management.

In two books, Conciliation and Arbitration in the Coal Industry of America, published in 1915, and the Coal Miner's Struggle for Industrial Status, published in 1926, I have tried to present in plain terms the significance of the struggle for status of the workers in the coal industry. This struggle is typical of what has been going on in many industries for over 75 years. It represents the efforts of supposedly free citizens to acquire an economic basis of democracy comparable to the democracy they are entitled to enjoy politically under à representative form of government.

The difficulty has been that the workers have received very little assistance from Government in equalizing the advantages which employers enjoy under the institution of private property and the protections given that institution by the Constitution. The coal industry has been an outstanding illustration of the chaos which can exist when employers own whole communities and the institutions in them as well as the property devoted to mining. The drive among employers for competitive advantage and the autocracy of management possible under the rights of ownership has reduced the workers on many occasions almost to the status of industrial serfs. On the other hand, the pace of competition set by the most unscrupulous has reduced most of the employers at various times to the stage of bankruptcy. Similar conditions can be pointed to in other industries and the results can be attributed for the most part to the same forces which explain the developments in the coal industry.

The full force of these factors was demonstrated widely throughout the economic system during the depression of 1929-33. The cutting of wages in order to cut prices resulted in a creeping paralysis which threw millions out of work and cut off the market for goods, even for those who were most determined to seek competitive advantage. Business and bank failures finally brought the whole economic system to a standstill.

Only then were those most responsible for these conditions willing to consider a new approach for a savior. However, they were among those most clamorous for a savior. The logical outworking of unlimited competition had brought chaos, and they knew no methods of business and finance adequate to meet the situation. They wanted Government to do something for them, and they forgot temporarily their old slogan of less government in business and more business in government.

Fortunately for them and for everybody else the Nation was headed by a man who believed that the best way to help people is to give them an opportunity to help themselves. This would be a "new deal", indeed, if carried far enough to help those most in need of it, as well as those able to help themselves. However, the "new deal" had hardly gotten under way before it became evident that many employers proposed to make all the use they could of their opportunity to organize and act collectively under their codes, but they did not propose to grant employees the right to organize and bargain collectively for wages and working conditions.

At this point the National Labor Board was created to see whether meaning could be put in section 7 of the Recovery Act. One of the vice presidents of the American Federation of Labor has discovered that "the act is not a labor magna charta. It is merely a pious declaration of the right of labor to organize and to bargain collectively. Then it goes on to assure the right of every employer to determine his own course as he will, regardless of the wishes of the workers. It means that the employer can say, "All right boys; come in and we'll talk it over"; hear the demands for higher wages and say, "Sorry we can't pay more.

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If the men object, he can answer: "We've had our collective bargaining. The act doesn't say anything about reaching an agreement."

This view, moreover, is supported by the interpretations of section 7 rendered by the administrator and the chief counsel of the N.R.A. Furthermore, as far as I can see, there is nothing in the law that requires an employer even to confer with employee representatives. With these handicaps, the remarkable thing is that the National Labor Board has succeeded as well as it has in mediating and conciliating industrial disputes.

The question is, however, whether it is not running against a stone wall when it has to deal with employers who do not propose to deal with unions which the employees organize themselves. In other words, these employers refuse to grant to labor the right which they enjoy themselves of organizing and to selecting whomever they wish to represent them. This is a good illustration of how meaningless some rights are in our economic system unless those to whom the rights belong have the economic power to enforce them. It also illus

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trates the fallacy of expecting that the rules of the game will be fair, if those with power and selfish interests at stake are allowed to make them. If Government has any justification in modern civilization it is to be found in its duty to protect the weak against the strong and to define and enforce standards which list the level of human relations.

This bill attempts to meet these requirements. It defines as unfair labor practices certain activities and methods devised to deny labor its right to organize and bargain collectively through representatives of its own choosing. Furthermore, it defines as an unfair labor practice the refusal of an employer to recognize or deal with the representatives of organized labor.

This is the crux of the employer's power to make ineffective labor's right to organize and bargain collectively through self-chosen representatives. Even if an employer voluntarily refrains from interference and coercion in connection with labor's attempts to organize and select representatives or even if he is prohibited from doing these things by section 7 of the Recovery Act, he can nullify largely if not entirely the right of labor to bargain collectively merely by refusing to recognize and deal with its representatives. Furthermore, strikes are frequently ineffective as a means of compelling an employer to deal with representatives of organized labor. The strike is even a less effective weapon for unorganized workers and company unions which have not accumulated funds needed to pay strike benefits and other expenses of conducting such a struggle.

The result is that labor's right to organize and bargain collectively is largely a fiction. On the other hand the employers through corporation organization, trade associations and now under code authorities are able to act as a unit in setting wage rates and establishing working conditions. This disparity in bargaining power frequently results in an exploitation of labor which drives workers down to a subsistence level or below. If workers cannot find employment and earn living wages employers expect the community to come to the aid of those in distress. This leaves employers free to shirk their responsibilities of so managing the economic system as to make it serve its main purpose of providing the population with the best possible living. In an industrial society worthy of the name, owners and employers should be leaders and builders as well as profit takers. Is there any way of holding them to these responsibilities as long as they are free to refuse to deal with their employees on a basis which enables their employees to protect their economic right to employment at the best possible terms?

Assuming that the opponents of this bill as well as its advocates want to save the capitalistic system, can they do better than to give employees a status of partnership in industry? By partnership status I mean something which establishes rights and obligations, attitudes and methods similar to those expected between partners as business men. Enlightened employers in some industries have found this to be "good business." It gives employees the feeling that they have a stake in the business and enlists their cooperation in eliminating wastes, reducing costs, and improving industrial processes. The CHAIRMAN. Is it not true that where there is a failure of cooperation between the employees and employers, it is due in large part to the class of employees which the employer himself has chosen to work for him, to a large extent?

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