The bill which we are considering, has as its objective the creation of a National Labor Board, which shall have the power to interpret and administer section 7-A of the National Recovery Act.

Section 7-A of the National Recovery Act is a provision, incorporated into that law, for the employment of certain rights by employees in industry.

The National Recovery Act, briefly stated, is a law passed by the Congress, for the purpose of helping to bring about the recovery of industry, by repealing some of the laws that industry believed were retarding recovery. It was referred to, at the time it was passed, as a partnership between the Government and employers, for the purpose of removing ruthless competition in industry, and for helping industry to get back on a profit-making basis, and to maintain the former high standard of wages and labor conditions that prevailed during the era of prosperity. One of its objectives also was to lessen the hours of labor, so as to spread out employment, and also to maintain a reasonably high wage, in order to maintain the purchasing power of the country, notwithstanding the reduction of hours of labor.

In the National Recovery Act there was incorporated a section known as section 7-A, which, for the first time in a legislative act, declared certain rights in behalf of employees.

The bill now before us is the outcome of this declaration of labor rights in section 7-A. Section 7-A conceded to labor the following rights (abbreviated):

Every code agreed to under the National Recovery Act, shall contain the following abbreviated provisions:

1. That employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from interference or coercion of employers of labor or their agents in the designation of such representatives.

2. That no employee shall be required, as a condition of employment, to join any company union or be restricted from joining organizations or assisting any labor organization of his own choosing—

Quoting from the law. The Labor Board set up by President Roosevelt to give force and effect to this section, namely, section 7-A of the National Recovery Act, has been operating since the passage of this law. It is composed of 11 members, 5 representing labor, 5 representing employers, and Senator Wagner, of New York, is the chairman of this Board.

Many of the members of this Board, particularly the labor members and Senator Wagner, claim to have discovered many alleged defects in the administration of section 7-A. These defects, they claim, are numerous, and it is a result of the defects which they allege were discovered in the administration of section 7-A that this bill was presented to the Congress.

The chief claim made, and perhaps the chief defect asserted, is that there can be no real collective bargaining under section 7-A, unless the law is strengthened. The reason, they urge, is that real collective bargaining is not possible where unions of employees are organized under the direction, through the influence, and with the approval of employers. These unions, called "company unions", have grown up rapidly since the passage of N.R.A. The Labor Board asserts that practically all the labor disputes that have arisen since N.R.A. have been as a result of clashes between employees and

the employers, growing out of the insistence upon the part of employers, in organizing company unions, and thereby denying the employer freedom of organization.

Now, as to the enforcement sections of the bill, the present Labor Board asserts that is has sought to apply section 7-A, by relying upon the prestige of its members, and by appealing to public sentiment. During the summer months, they say these methods met with great success, but in recent months the Board has been confronted by some large employers-of course, presented by members of the Labor Board "who ignore public sentiment, who flaunt the clear intent of Congress, and who are a law unto themselves." These words are Senator Wagner's own words. This, they say, "is extremely unfair to the vast majority of employers, who want to obey the law, and disheartening to the millions of working people who see that which was held up to them as a new charter, being treated as a "scrap of paper."

The bill, presented to the Congress for approval, provides for a permanent board, with adequate enforcement provisions. It defines as unfair labor practice any attempt by employers to dominate labor unions or to fail to recognize the duly chosen representatives of their employees. It also defines several other practices of employees as unfair.

When complaint is made of an unfair labor practice, the Board is authorized to hold meetings, subpena witnesses and records, and if the law is violated, issue a restraining order enforceable in the court. The Labor Board is empowered to act also as conciliator and mediator. Very briefly, this outlines the objective of the bill which is now under consideration by this committee, and I will now ask Mr. Emery, who is the representative and attorney of the National Manufacturers' Association, to address the committee.

Mr. Emery, your full name.

Mr. EMERY. James A. Emery.

The CHAIRMAN. Your residence?

Mr. EMERY. Washington, or Chevy Chase, Md.

The CHAIRMAN. Attorney at law?

Mr. EMERY. Yes, sir.

The CHAIRMAN. Whom do you represent, in appearing this morning before this committee?

Mr. EMERY. I speak for the National Association of Manufacturers, and for some 38 State associations of manufacturers, a list of which I file with the committee.

The CHAIRMAN. How many manufacturers do these associations represent?

Mr. EMERY. Between forty-five and fifty thousand, roughly speaking.

The CHAIRMAN. What class of manufacturers?

Mr. EMERY. If you will permit me, Mr. Chairman, I will cover that in the statement, if I may go ahead.

The CHAIRMAN. Very well.

Mr. EMERY. Thank you.

The CHAIRMAN. You may proceed, Mr. Emery.

STATEMENT OF JAMES A. EMERY

Mr. EMERY. I am general counsel, National Association of Manufacturers, representing that organization and the below listed State Associations of Manufacturers in opposition to the Wagner bill (S. 2926) before the Senate Committee on Education and Labor, Monday, March 26, 1934, opening the testimony for opponents: Associated Industries of Alabama, California Manufacturers Association, Manufacturers' Association of Connecticut, Associated Industries of Florida, Georgia Manufacturers' Association, Illinois Manufacturers' Association, Indiana Manufacturers' Association, Iowa Manufacturers' Association, Associated Industries of Kansas, Associated Industries of Kentucky, Associated Industries of Maine, Associated Industries of Massachusetts, Michigan Manufacturers' Association, Minnesota Employers' Association, Associated Industries of Missouri, Associated Industries of Montana, Ohio Manufacturers' Association, Associated Industries of Oklahoma, Utah Associated Industries, Associated Industries of Vermont, Virginia Manufacturers Association, Federated Industries of Washington, Wisconsin Manufacturers' Association, Colorado Manufacturers and Merchants' Association, Manufacturers' Association of Wilmington, Louisiana Manufacturers' Association, Nebraska Manufacturers' Association, New Hampshire Manufacturers' Association, Associated Industries of New York State, Inc., Manufacturers & Merchants' Association of Oregon, Pennsylvania Manufacturers Association, Associated Industries of Rhode Island, Manufacturers and Employers' Association of South Dakota, Tennessee Manufacturers Association, Texas State Manufacturers Association, West Virginia Manufacturers' Association, Manufacturers' Association of New Jersey.

The CHAIRMAN. You may proceed, Mr. Emery.

Mr. EMERY. May I say, Mr. Chairman, that the organization for which I speak represents many thousands of manufacturers engaged in every form of industrial production, throughout the various States of the Union. They include every shade of industrial employment, large and small. They represent every form of individual and collective agreement. Some deal exclusively with organized labor. More do not. They number plants regarded by personnel specialists as world models in social equipment and organization.

Let me say, Mr. Chairman, that I trust, in what the chair has said in opening the discussion, he has not indicated, before hearing the case for those who disagree with many features of this measure, a conclusion which I know the committee will build only upon the evidence and arguments submitted.

The CHAIRMAN. May I interrupt you a moment? I would not have made any statement at all, but I thought it was unfair to the public, who have not been following the course of these hearings, to have one introduced who appeared in opposition to the bill, without having any presentation made of what the claim was by those who are defending the bill. I tried to make a fair statement of what I understand to be the proponents' position. I had only about 2 minutes in which to prepare it, because I expected somebody else to go forward and make a statement in favor of the bill. By a brief statement of the claims made for the bill, I thought I was helping to in

form those who were listening on the radio, what the objectives of this bill were.

Mr. EMERY. We are very confident of the Senator's fairness. We only wanted to indicate our confidence in it.

Senator WAGNER. I am sorry that the broadcasting company was not as interested in broadcasting this hearing when those in favor of the bill appeared before the committee.

Mr. EMERY. May I proceed, Mr. Chairman?
The CHAIRMAN. You may proceed.

Mr. EMERY. Referring now to those whom I have the honor to represent, may I continue, that many have builded systems of collective relationships over many years. Others are more recent. Often they were initiated by the management and perfected by the men. Some have brought both groups through these trying years with new faith in each other; their mutual good will tested by reciprocal sacrifice. Yet all that they have done would be abrogated by this bill. We are not here to defend all employers or to condone their misconduct. There are doubtless bad company organizations, just as there are bad unions.

We resent the suggestion that the normal conduct of the employers shall be outlawed, and the abnormal conduct of other groups shall be encouraged by law. We therefore oppose the measure before you, because we believe it invalid in law and unsound in policy. We will demonstrate it is not an exercise of the commerce power of Congress, but a deliberate and indefensible invasion of the right to regulate and even compel local employment relations, which the Supreme Court, without exception, has declared are exclusively a subject for State and not Federal control; but, assuming the bill were within the commerce power, the administrative body established, the authority proposed, the manner of its exercise, are arbitrary, destructive of the fundamental rights of the parties, and vest in an administrative body the determination of questions of fact and law, without judicial review, that may be adjudicated only by a court. Without itself being bound by the rules of evidence, the bill undertakes to compel the reviewing court to be bound by the Board's findings of fact. The Board is neither required to give reasonable notice of the character of the complaint nor the time of its hearing. It sets up as offenses a series of acts so vaguely described as to violate the essential requirements of a penal statute. Many of such acts represent the normal and necessary intercourse between employer and employee.

The CHAIRMAN. Mr. Emery, do you mind being interrupted as you proceed, with questions from the committee, or would you like to finish your statement before being interrrogated?

Mr. EMERY. Well, I would like to make a main statement, Mr. Chairman, if I may. Then I will be glad to submit to inquiries.

The CHAIRMAN. Very well. Senator Wagner and members of the committee may want to interrogate you later.

Mr. EMERY. Certainly. The prohibition of such acts would destroy the natural and valid relationship between them. In form and substance, the measure violates elementary principles of justice and fair play.

The policy of the measure would not equalize the bargaining power of the employer and employee, as the title suggests, nor do we believe

it would encourage the amicable settlement of disputes between them. On the contrary, analysis shows it to be so designed as to prevent the employer from exercising the natural circumstance of bargaining, impair its nature and extent, gratuitously presumes that he only exercises coercion in the employment relation, or indulges in unfair practices. This assertion, I may say with marked emphasis, is illuminated by a statement in settlement of a dispute in labor relations, that has attracted the attention of the United States. The President there declared:

The Government makes clear that it favors no particular union or particular form of employee organization or representation. The Government's only duty is to secure absolute and uninfluenced freedom of choice, without coercion, restraint, or intimidation from any source.

To continue, we say, therefore, we do not believe the policy of this measure, as we analyze it, would equalize the bargaining power of employers and employees, as its title suggests, nor encourage the amicable settlement of disputes between them. On the contrary, analysis shows it to be designed to prevent the employer from exercising the natural circumstances of bargaining, impairs its nature and extent, gratuitously presumes that he only exercises coercion in the employment relation, or indulges in unfair practices; makes no effort to define, regulate, or prohibit the equally reprehensible and long-recognized practices and abuses of labor organizations, destructive of the rights of their fellow workers, of employers, and of the public. And I beg to call the committee's attention to the very pertinent remarks of that distinguished Associate Justice of the Supreme Court, Mr. Brandeis, in the latest addition of his work on Business as a Profession, where he says:

The practical immunity of the union from legal liability is deemed by many labor leaders a great advantage. To me, it appears to be just the reverse. It tends to make officers and members reckless and lawless, and thereby to alienate public sympathy and bring failure upon their effort. It creates, on the part of the employers, also, a bitter antagonism, not so much on account of lawless acts as from a deep-rooted sense of injustice, arising from the feeling that while the employer is subject to law, the union holds a position of legal irresponsibility. It has been objected to by some of the labor leaders—

He continues

that incorporation of the unions would expose to loss the funds which have been collected as insurance against sickness, accident, and enforced idleness; that these funds might be reached to satisfy claims made for wrongs alleged to have been committed by the union. I can conceive of no expenditure of money by a union which could bring so large a return as the payment of compensation for some wrong actually committed by it. Any such payment would go far in curbing the officers and members of the union from future transgression of the law, and it would, above all, establish the position of the union as a responsible agent in the community, ready to abide by the law. This would be of immense advantage to the union in all its operations. Again, it has been urged that the incorporation of the union would lead to a multiplication of lawsuits, which would involve the union in great expense; but the expense of conducting such litigation would be insignificant as compared with the benefits which would result to the union from holding a recognized and responsible position in the community. The unions should take the position squarely that they are amenable to law, prepared to take the consequences if they transgress, and thus show that they are in full sympathy with the spirit of our people, whose political system rests upon the proposition that this is a government of law, and not of men.

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