unions, of enforcing union recognition and of raising the woefully inadequate wages fixed in the codes.

The sole interest of the American Civil Liberties Union in this bill relates to those clauses affecting the rights of labor to organize and strike. That, we submit, is also the primary interest of the organized working classes of this country as a whole. Nothing should be done to curtail such rights, inherent in the proclaimed principles of civil liberty.

The Government has in the last year been so thoroughly committed to a policy of regulating labor relations that we assume it will be written into law in some such form as the bill before you. While we oppose the restrictions on labor's rights inherent in such a set-up, we desire to point out those aspects of the bill which most signally fail to protect the right to organize and strike. Rather than repeat here what will be presented by the International Juridical Association, we desire to say that the analysis of the bill on these points prepared by their attorneys constitutes the most adequate statement of such criticism we have seen. We trust that these criticisms will have the serious attention of your committee.

I submit that to you, sir. It is signed by the officers of the association and myself.

The CHAIRMAN. We appreciate having these views for the record. Mr. GRAY. Thank you, sir.

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

STATEMENT OF JOHN M. CARMODY

The CHAIRMAN. What is your full name?
Mr. CARMODY. John M. Carmody.
The CHAIRMAN. Your residence?

Mr. CARMODY. New York City.

The CHAIRMAN. Will you tell us something of your interest in industrial and labor problems; what your affiliations with those problems have been?

Mr. CARMODY. Yes. Over the years I have been a manager of industrial plants, production manager, and industrial relations manager; a mediator at one time for the National Labor Board.

I have participated in labor negotiations leading up to agreements; have been responsible for the management of a company union, known as the "Rockefeller Union" when I was vice president of the Davis Coal & Coke Co., which had the Rockefeller plant, which was used also in Colorado.

The CHAIRMAN. What is your present occupation?

Mr. CARMODY. I am at present with the Civil Works Administration, chief engineer, having charge of labor relations.

The CHAIRMAN. We will be pleased to have your views respecting this proposed legislation.

Mr. CARMODY. I am interested in this bill particularly because I think we have reached a crisis in our labor relations. My experience as a mediator indicated to me that the people generally have got the impression that when the National Recovery Act was passed, that it gave industry the right to organize, and to arrange its affairs under the codes, to give them rights that they did not previously have, and that, correspondingly, section 7 (a) gave labor the right to organize, and as that right was denied in many places throughout the country, unrest developed.

It strikes me that we have reached the point where we must determine whether the Government has a right and whether Congress has a right to insure people rights that they heretofore have found denied them.

From a practical point of view, it seems perfectly simple to enter into collective bargaining arrangements. It has been done, for instance, for a whole industry since the passage of the National Industrial Recovery Act. I refer to the coal industry, with which I am familiar.

The conditions in that industry were commonly known to have been very bad from every conceivable angle. We were exhausting a national resource at great loss to the owners of that resource, and correspondingly, we had bad labor relations, as was commonly known. Within the past 3 months the industry has begun to make money, peace has settled over the industry in areas that heretofore have not known industrial peace, the operators are not spending as much money for guards and espionage and that sort of thing as they spent before, and by orderly process they have an agreement by which they work out their difficulties and their differences, and conditions are better generally.

I think of that as an industry that heretofore has given a great deal of trouble because men were denied the right to organize.

I suspect the same thing could happen in many other industries. I happen to have been assigned by the National Labor Board to the tool and die strike in Detroit last fall. There was nothing in that situation that could not have been worked out if the manufacturers had felt that section 7 (a) really gave the men the right to collective bargaining, and on an equal basis; in other words, if the same processes had been gone through there to a conclusion that had been gone through in the mining industry, there need not have been this threatened strike at this time.

I had occasion to meet with the gentlemen who are meeting with the President now, the whole group of them, Walter Chrysler, Fisher, Knudson, Roy Chapin, and the rest. This question of whether or not the men had a right to organize came up, the question of whether or not if they made the settlement that I suggested meant the recognition of the union, and I said it did, and our negotiations then broke down at that point because they would not recognize the union.

I said, on the basis of my experience and some acquaintance with the automobile industry, that they would have the situation back in their laps at the height of the busy season, without having heard any such remarks made by anybody concerned with the organization. The CHAIRMAN. Have you anything further?

Mr. CARMODY. No; I have not.

The CHAIRMAN. Have you any questions, Senator?

Senator WAGNER. You know something about the company unions? Do you know something about the recent organization of the company unions, and the methods pursued?

Mr. CARMODY. Yes; I have seen them being organized as I went about. Let me tell you an experience, if I may, for just a minute. Senator WAGNER. Yes.

Mr. CARMODY. I was sent to Buffalo to adjust the strike in the grain industry that had been on for several weeks, and was getting worse. When I went there I met with the grain elevator owners and managers, and I found that the principal elevator owner in that community had organized a company union, had taken the men to a hotel in the evening, and had organized them, and his plant was not on strike; it was the only elevator that was not on strike at the time.

As we went into negotiations, he became chairman for the owners' committee. He was interested in getting the strike settled, and he said to the rest of the men that they must negotiate an agreement inasmuch as their men were organized and on strike. He told me, however, that his men were not out, they were satisfied, and would not go out, and asked me to meet the committee representing his men that night.

I met the committee, and in the course of the discussion one of the men said, "I wonder what Mr. Grammar would say if we suggested to him that we take our company union organization over into the other union as a body. We have better conditions than anybody else in Buffalo, and if the rest of the elevators had as good conditions as we have, we believe the tone of the whole enterprise would be raised."

I said, "I don't know. You have in the agreement which you made the right to withdraw from the contract you signed with him by giving him proper notice."

They asked Mr. Grammar when he came in, and he said they might do that, they had that right.

Mr. Grammar then said he would ask those fellows to canvass the employees, and he would be guided by my judgment as to whether they should go into the union or not.

They made the canvass, they did not report to me, they reported to him, and the next day the company went into the general union in Buffalo. Mr. Grammar himself dictated the agreement in the presence of all the rest of us, and the presence of the union, and the union finally accepted the agreement. He dictated a closed shop agreement because he told me that inasmuch as his men were going in, he did not want any monkey business about it, he wanted a perfectly straight agreement that would protect the industry.

That is a company union that was organized in order to prevent the men going into a local organization, but within 2 days they went over as a body.

Senator WAGNER. He was an enlightened employer?

Mr. CARMODY. I think he was an enlightened employer. He took the leadership of the industry in Buffalo, and he was given credit for taking leadership. They have had no trouble in that industry, so far as I know since that strike was settled last fall.

Now, those of us who have helped organize company unions, and who have worked with them over the years, as I have done in industry, know that they are innocuous, that they are straw men. That is known. There are cases where they are well-managed after 7 or 8 years of careful nursing and watching, but they are straw men. They are set up in order that they may put into

Senator WAGNER. In other words, so that the employer might control labor?

Mr. CARMODY. Of course. I have helped organize them, and for what other reason would we do it?

Senator WAGNER. That is what I wanted to find out, what other motive would you have except so that you could control them? Mr. CARMODY. Of course.

Senator WAGNER. That is not genuine industrial democracy?
Mr. CARMODY. Oh, no. It is not so considered.

Senator WAGNER. It does not give the men a fair chance?

Mr. CARMODY. It is not intended to do that.

Senator WAGNER. In spite of all these misrepresentations that have been made in the propaganda that has been organized all over the country-we are so familiar with it here that it does not concern me very much-but an attempt has been made to characterize this bill as providing for the imposition of some definite type of union upon the employer. Do you see any such requirement in the act?

Mr. CARMODY. I do not read that into the bill.

Senator WAGNER. Is there anything here beyond giving the worker the right as a free man, if he wishes to organize, to organize? Mr. CARMODY. I do not see anything.

Senator WAGNER. And he can join any kind of an organization he cares to?

Mr. CARMODY. I assumed that.

Senator WAGNER. And if he wants to join a company union he can? Mr. CARMODY. Yes.

Senator WAGNER. He can join any kind of an organization, so that all the bill does is to make him as free as the employer?

Mr. CARMODY. Yes.

Senator WAGNER. Yet we have this propaganda which has aroused some people

Mr. CARMODY. As a matter of fact, I have said over the years, to scientific bodies, to engineering bodies, and to personnel associations whom I have been asked to address, that I think one of the worst elements in our American industry is fear, fear on the part of the man that they may not use their own discretion with reference to their associations, because of espionage, as has been mentioned hereI am trying not to go over ground that I know has been gone over many times it is common practice in many industries to have espionage arrangements. I have personally come into contact with it as a manager. I have had these organizations come to me and ask me to engage them. I have also had friends of mine tip people off around the plant who were being watched, officials to whom reports were coming about people, and their activities, and it gave me an opportunity to tell them. I just have had that experience, and there is no argument about it at all.

The CHAIRMAN. It is fear of dictatorial and what employees believe to be unfair demands on the part of labor leaders that are not under their direct control? Is that not one of the fears that is common?

Mr. CARMODY. Fear on the part of the employer?

The CHAIRMAN. Yes.

Mr. CARMODY. Yes; I suspect that is one of the fears on the part of the employer. He lacks the courage that men have acquired, for instance, with the coal industry, when they get on the firing line and negotiate their own agreement without special counsel.

As a matter of fact, when we talk about agitators who would agitate men to organize, we ought to remember that there are many agitators who are making their living by keeping employers blind to some of the newer things that they may accomplish themselves by direct negotiation with their people. I refer to these organizations that supply information that keep manufacturers really from doing the things that they themselves would do, that common sense and good business practices would dictate their doing.

The CHAIRMAN. You made some reference to the Rockefeller plan in your earlier testimony?

Mr. CARMODY. Yes.

The CHAIRMAN. Just what is that?

Mr. CARMODY. That was a company union that was developed largely by McKenzie King and sold to John D. Rockefeller to put into operation in the Colorado Fuel & Iron Co. plants after the disastrous strike out there some 9 or 10 years ago.

The CHAIRMAN. With what success did it seem to meet?

Mr. CARMODY. For a good many years it operated, but it has since been abandoned. Following the strike of 1927, I believe, when Josephine Roche organized her own arrangements at the Rocky Mountain Fuel Co., the Rockefeller plan broke down that throughout the field, because the men themselves recognized that it gave them fewer rights than they could get through a straight trade-union agreement.

The CHAIRMAN. Was the Rockefeller plan constructed along the line of a company union?

Mr. CARMODY. Oh, yes; it was a company union, with the men having the right to elect pit committeemen; in fact, it went a step farther than most of the company union plans in operation today, in that these men had the right to engage their own commissioner on a salary, and that commissioner represented the men in negotiation with the company.

I was for a period not only vice president in charge of industrial relations, but the company commissioner dealing with the commissioners elected by the men. It was very difficult to keep the company from arranging to have the right commissioner chosen by the men. Senator WAGNER. Is that mine organized now by outside unions? Mr. CARMODY. Yes; all of these mines are now under the Appalachian and the District Agreement.

Senator WAGNER. Did that improve conditions?

Mr. CARMODY. I am told that it improved them. I have not been back to those properties, but I have talked to the men in touch with those properties on both sides, operators and men.

Senator WAGNER. This does not prohibit, of course; it leaves the men free, and they may organize a company union so long as it is not dominated by the employer?

Mr. CARMODY. Yes.

Senator WAGNER. They may decide to have a union or an organization within the plant only. The only question is that the men themselves should determine it.

Mr. CARMODY. On the whole, I should say that this Rockefeller plan, which really was the result of McKenzie King, came nearer to the ordinary trade-union arrangement than any other company-union plan I know of, but still, when the men, having the right under section 7 (a), and having the backing of a strong union, abandoned it and took another agreement, that is to me one of the best evidences that it had weaknesses from their point of view that we did not recognize.

Senator WAGNER. But so long as that union was not dominated by the employer, it could exist under this form?

Mr. CARMODY. If the men chose to have it.