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    SECTION 7-A: The Clash Over the Most Disputed Clause in the Recovery Act

    Beulah Amidon

    Survey Graphic, vol. 23, no. 5 (May, 1934), p. 213.

    Employes shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other activities for the purpose of collective bargaining or other mutual aid or protection.—Section 7-a, National Industrial Recovery Act


  1. The law itself has provided for free choice of their own representatives by employes. Those words "free choice" mean just what they say. It is obvious that the government itself not only has the right but also the duty to see, first, that employes may make a choice, and, secondly, that in the making of it they shall be wholly free.—President Roosevelt, speaking to the National Recovery Act Code Authorities, March 5, 1934

  2. THE hearing-room of the National Labor Board is a matter-of-fact place. But when in mid-March the automobile executives marched out of the conference summoned at Washington to forestall a strike of 100,000 of their workers, the dull room was suddenly tense with drama. That gesture of an industry that has successfully resisted unionization was a challenge to curtailment of its authority by Section 7-a, the collective-bargaining clause of the Recovery Act. Behind that issue lies the whole question of the direction of NRA. For it is still to be determined whether our experiment in paralleling political government with an industrial structure will lead toward a genuine participation of workers in control or toward the consolidation of power in the hands of owners and managers. Bound up with that is question whether through our efforts at recovery we strengthen the hold of the few on the wealth of the Machine Age, or whether we shall achieve a wider distribution of income and opportunity.

  3. These questions are voiced in the headlines that shout news of strike threats in steel, textiles, coal, transportation, automobiles. The wage-earner's dissatisfaction is not lessened by recent experience with the national and regional labor boards, created to safeguard rights guaranteed by Section 7-a; nor by the increasingly open resistance of those employers who, no longer feeling themselves on the brink of disaster, are less and less willing to cooperate with a program that cuts across old prejudice and established practice.

  4. This conflict in the viewpoints and purposes of labor and capital came sharply to focus in Washington not only in the automobile hearings before the Labor Board, but also in the hearings on Senator Wagner's Trades Disputes Bill, which was drafted to give increased authority to the Labor Board and make specific labor's reading of Section 7-a.

  5. When the National Industrial Recovery Act was passed, last June, that clause was hailed as "Labor's New Deal" The Act made important concessions to employers in the interests of recovery; notably, the relaxation of the anti-trust laws. It sought to eliminate unfair competition between the conscientious employers and sweatshop proprietors by provisions for maximum-hour and minimum-wage standards, to the advantage of both industry and labor. But the great hope of the workers was in Section 7-a.

  6. "Give us freedom to organize," they said, "and-we'll safeguard hours, wages and working conditions." They relied on Section 7-a as the charter of that freedom.

  7. THE National Labor Board was the agency set up to implement Section 7-a. Its present membership is:

    Chairman, Senator Robert F. Wagner.
    FOR EMPLOYERS:

    Vice-chairman, S. Clay Williams, vice-president, Reynolds Tobacco Company.
    Walter C. Teagle, president, Standard Oil of New Jersey.
    Louis E. Kirstein, manager, Wm. Filene~s Sons, Boston.
    Pierre S. duPont, chairman of the board, duPont Company.
    Ernest Draper, vice-president, Hills Brothers Company.
    Henry S. Dennison, president, Dennison Manufacturing Company.
    FOR LABOR:

    Vice-chairman, Dr. Leon C. Marshall, Johns Hopkins University.
    Leo Wolman, Columbia University; chairman, Labor Advisory Board of NRA.
    William Green, president, American Federation of Labor.
    John L. Lewis, president, United Mine Workers of America.
    George L. Berry, president, International Printing Pressmen's Union.
    Rev. Francis J. Haas, director, National Catholic School of Social Service.

  8. The Board's original mandate was, broadly, "to adjust all industrial disputes whether arising out of the interpretation and operation of the President's reemployment agreement or any duly approved industrial code of fair competition, and to compose all conflicts threatening the industrial peace of the country." As an informal body, not a law-enforcement agency, it hears the evidence and arguments of both sides, attempts to determine facts and define issues, uses its good offices to mediate, conciliate or arbitrate disputes. Where its attempts at settlement fail and its findings indicate law violation, the procedure is to refer the case to the Department of Justice and to the Compliance Board, the NRA agency which deals with code violations. The Compliance Board may deprive a recalcitrant employer of the right to fly the Blue Eagle; The Department of Justice may prosecute for violation of an approved code, the penalty for which is a fine of "not more than $500 for each case"; and it may "institute proceedings in equity to prevent and restrain such violations."

  9. A summary of the work, as reported to the President, showed that from its inception, August 5, to February 1, the National Labor Board and the nineteen regional boards it has established handled 1818 cases, involving some 914,000 workers, of which 69 percent were settled. "Altogether about 650,000 workers have been put back to work or kept at work or had their less acute disputes adjusted." Included in the total were 599 strikes, "of which we have settled 80 percent, besides averting 197 more strikes—a total of 482,504 returned to work or kept at work in strike situations." The report adds, "one half . . . of the settlements have been by agreement, and most agreements promise durable peace." But the report expresses dissatisfaction with this showing:

    The record has a disquieting aspect. Its percentages of settlements are too low, and some settlements have been unsatisfactory. The statistics bear out what the Boards in many regions have been reporting for some time; namely that the willingness to use the Boards, displayed by the majority, is encountering the impediment of a small minority whose desire for industrial peace is not uppermost.

    This impediment is increasing. Certain industrialists' efforts to challenge the Board's authority are symptomatic. Far more significantly is the fact that three quarters of all the disputes involve complaints of denial of the rights of self-organization and collective bargaining contained in Section 7-a of the Recovery Act.

    Clearer understanding and recognition of these rights and of the National Labor Board's authority seem to be the requirements of the present situation as indicated by our six months' experience.

  10. The automobile situation was thus the climax of a series of cases, conspicuous among them being the strikes in the plants of the Weirton Steel Company, near Pittsburgh, of the Budd Manufacturing Company in Philadelphia, makers of automobile wheels, and of the Harriman Hosiery Mills in Tennessee. All three are still unsettled at this writing.

  11. THE Weirton workers, after vain attempts by the Board to secure any concession from management, called off their effective strike on the promise of an election, about two months later, to determine whether the employes preferred the company union or a union affiliated with the AFofL. The chairman of the Labor Board, the union leader and the president of the steel company signed an agreement which the Board was to prescribe the election procedure and supervise the voting. When the time came however, management refused to cooperate with the agents of the Labor Board or to allow them on company premises. After a further delay of two months, the case was turned over to the Department of Justice. The department's application for an injunction "restraining the company from acts in violation of the code of fair competition for the industry" will be argued in the federal court in Delaware on April 30. The department has made no move to prosecute the company for these violations, though labor spokesmen have pointed out that a fine of $500 for each code violation, provided in the Recovery Act, would give pause even to a steel corporation if imposed in the case of each of 5000 employes deprived of rights guaranteed them under Section 7-a, which by law is incorporated in every code.

  12. The Labor Board failed in its long and patient efforts to compose the differences between the Budd Company and its employess. The case was finally turned over to the Compliance Board, and that NRA agency lost the respect of both management and men by its inability to conduct an orderly poll of the workers to determine their union preferences.

  13. The position of the Harriman Hosiery Company was stated by its attorney at a Labor Board hearing: "We are willing to meet with anybody and to make a genuine offer to arrive at a fair solution." But he added, "We will not agree at any time to recognize the union, arbitrate on propositions we are unable to agree upon, or to enter into contracts individually or collectively" with the workers. Employes "fired" for union activities and ordered reinstated were not taken back. Mediation and conciliation failed because the company refused to modify its position. The Labor Board finally laid the case before the Department of Justice and the Compliance Board. There the matter rests. These disputes which have dragged on from early fall till spring without remedy for labor turned on the same issues as were raised by the spokesmen for the automobile workers.

  14. VARIOUS attempts have been made in the past to organize the workers in this great mass-production industry. Some have shattered on the resistance of the employers' some on the mistakes and the weaknesses of labor leadership. The American Federation of Labor has been neither imaginative nor forceful in adapting its techniques to the swift industrial changes of the last two decades. It has clung stubbornly to its old craft structure, which has proved a handicap in the highly mechanized industries and which ignores the great bulk of unskilled and semi-skilled workers. With the adoption of the codes, the American Federation of Labor announced a new drive to organize the auto workers, setting up vertical unions for each plant, covering all the employes in that plant and disregarding the old craft lines. Even in the last convention of the AFofL there was resistance to this type of development, but the organization of the automobile plants has gone ahead.

  15. Repeated attempts by these new "federal unions" to confer with management were unsuccessful. The unions took to the regional labor boards the cases of their members and officers dismissed, the union held, because of organization activities. The employers consistently refused to appear or to be represented before the boards, and discharged employes, ordered reinstated, were seldom taken back.

  16. At a meeting in Lansing on March 5, representatives of the unions sent to the Buick, Hudson and Fisher Body companies, telegrams proposing "mutual machinery between management and your employes, as provided under the National Industrial Recovery Act," and demanding a conference within 48 hours. They threatened a strike on March 7 as the alternative.

  17. The unions were in a strategic position for a show of strength. The "key men," the comparatively small group of highly skilled tool and die workers who could not readily be replaced by strike breakers, had been effectively organized by the Mechanics' Educational Society, which is not affiliated with the AFofL. The automobile plants, after the long depression, were producing at their "prosperity" levels, in response to an active market demand. The strike threat came just before the season reached its height. Within six weeks, both men and management knew, the peak would be well passed. and the usual spring lay-off would commence The workers had chosen the only time for months when the strike would mean a real invasion of the year's profits. Both sides also realized that such a strike would affect not only the auto towns but makers of parts and accessories, and probably the vast raw material industry, steel, as well. Here was menace to the whole recovery program. The National Labor Board stepped in, ordered a hearing for March 14, and the workers, putting their faith in the Board, postponed the strike.

  18. Since the period of its first report, the Labor Board had been made independent of the Recovery administration; its authority had been further strengthened by an Executive Order on February 23, under which its findings of fact cannot be reviewed by any other administrative body. Thus reinforced the Board had functioned successfully in several situations. But where the battle lines were drawn as between employes who insisted on "representatives of their own choosing" and employers who insisted on management-dominated company unions, the National Labor Board had been unable to evolve a workable formula.

  19. The eighty-odd wage earners who made their way from Michigan and Ohio to Washington by bus and day coach to present labor's side of the controversy represented the leadership developed by the new "federal" unions. They were a young group, in their twenties and early thirties, sometimes uncertain in grammar, but convincing in sincerity. There were also representatives of the company unions, and a small Communist group. Officials of General Motors, Hudson and Buick with their lawyers sat at right angles to the workers, close to the rail dividing the raised seats of the Labor Board from the rest of the room.

  20. The procedure is informal. S. Clay Williams, an executive of the Reynolds Tobacco Company, vice-chairman, presided in the absence of Senator Wagner who was attending the hearings on his bill to strengthen the Labor Board and make it a permanent agency.

  21. Let us look at the testimony which gave the workers' side of the controversy. No rebuttal evidence was offered by the employers, and their direct contribution was confined to two brief, formal statements. Though executives of all the companies concerned were present, they did not join in the questions asked by members of the Labor Board to clarify labor's case, and once their own statements were read into the record, they specifically declined to answer questions.

  22. The issues labor raised were, the "right to organize and bargain collectively" under Section 7-a, and discrimination on the part of the automobile companies against employes who tried to exercise that right.

  23. The auto employers, according to their press statements, have regarded the AFofL as an outside organization attempting to come in and "run their business." They hold that in negotiations the Federation rejects anything except recognition in the sense of recognizing it as speaking for all the men, whether members or not. To what lengths the employers have carried this asserted principle in thwarting any independent organization among their men, the testimony showed.

  24. In his opening remarks, William Collins, AFofL organizer in the Detroit area said, "We read the law as it is written in English. We aren't lawyers, but we read the law and we figure it gives us the right to join a union of our own choosing."

  25. To forestall such an effort, the labor witnesses testified, the automobile manufacturers began to set up company unions almost as soon as the automobile code was signed and approved. The accounts of the formation of the company unions, while they varied in detail in the various plants, were singularly alike in the essentials.

  26. Thus Mr. Collins, "When they get up a company union there's a meeting called by the plant superintendent or general manager. He reads off the laws."

  27. Question from the Board: "Where were they drafted?"

  28. Mr. Collins: "That's what we don't know. They're all ready."

  29. The contrast between the organization of the company unions and the new independent locals was drawn by Arthur Greer, who, in reply to a question, said he had worked for seven years in his department at the Hudson Motor plant, and found himself selected to take part in organizing the Hudson Industrial Association. He said the representatives were "hand-picked by the management," two from each department. The meeting of about 100 men lasted two and a half hours, and those attending were paid at their regular hourly rate. "I don't remember we voted on anything.... Our vote wasn't taken. As we saw it, the plan was there and we were to accept it." September 19 was "nomination day," with printed placards and ballots provided by the company. "We never knew anything about them till they were sent to the plant." The election was held six days after the plan for the industrial association was first presented. About 90 percent of the eligible workers voted, and were checked by name and badge number at the ballot boxes. "There was a general feeling that those who didn't vote would be remembered." He stated that the company union was "put over" at a slack time with only about 1500 men on the payrolls, and that dissatisfaction increased as the force, now totalling about 13,000, was built up. He had a hand later in organizing the new federal union, and its members in February directed him to confer with the management.

  30. "I CALLED on Mr. Chapin [president of Hudson] on my own time. He was not in, they said. I would be notified when I could see him to arrange for a conference." A few days later, Mr. Chapin wrote, asking for a list of member of the local, to be checked against the payroll. On March 6, after a membership meeting had been called to take a strike vote, an "interview," not a conference was granted, "but we couldn't come to any decision in an interview." The speaker added, "We've been delayed. We've been waiting for months. We've been very patient. We aren't in a position to wait."

  31. Representing insurgents in the Fisher Body plant in Pontiac, Arthur Law said, "The foremen came around and told us to vote. They lined us up and checked on us. The employers were threatening, 'If you don't leave things the Ivan we want them, we'll move this plant away.' We voted because we had to. We had nothing to protect us except the company's good will."

  32. Charles Schang from Fisher Body No. 2 [Flint] narrated how pamphlets detailing the company union plan were posted and distributed, "and then we were told to vote. The company ran the election.... Through the depression our morale was so low that when we were told to vote we voted. We thought our jobs were at stake."

  33. John A. Bailey read to the Board a poster that appeared in the Buick plant on September 5 which began, "The Company is providing a more effective plan for cooperation between the company and its employes," and was signed Buick Motor Company. The men, he said, were urged to read the printed folder, also provided by the company, describing the proposed association. "Each foreman spent those two days [before the election] going through his division, trying to sell the plan. In my division, 7 out of 150 voted. We were told that if only one vote was cast, the man receiving that vote would be our representative.... We weren't in favor of the plan.... The company placed the ballot boxes and picked the watchers. The men were checked as they voted. Many blanks were cast. The men were scared of losing their jobs if they didn't vote."

  34. As one worker after another told his story and answered the questions of members of the Board, the picture grew of organizations planned and shaped by "the bosses," with the men going through certain gestures of participation.

  35. Side by side with this picture there emerged the efforts of the auto workers to form their own organizations, and to confer with management. Thus, after describing the dissatisfaction with the company union and the way it was formed, Charles Schang said, "Then we decided that under 7-a we could select a committee of our own. We men got the meeting together. No one not employed in the plant could be there. The nominations were from the floor. We voted by ballot. The committee we selected that way represents 90 percent of the plant employes."

  36. AT Fisher Body No. 1, the president of the AFofL union maintained that 88 percent of the 4200 plant employes are members of his organization. Of 17,000 Chevrolet workers, the union affiliated with the AFofL claims 9200 members. There are said to be 1500 workers in the Fisher Body plant in Pontiac, of whom 1396 are "in the union," according to their spokesman. The figures for the Fisher Body plant in Lansing were given as 1400, with 941 union members. In the Buick plant, the union heads stated, 8700 of the 4,000 employes have "joined up," though not all have paid their dues.

  37. When these independent unions asked management to confer with them, they testified that they were sometimes ignored, but more often informed that the employers couldn't meet with "self-styled representatives," that proof must be submitted to show not only the number of employes for whom the union committee spoke, but the actual individuals concerned. In no instance did the union agree to the demand for its membership list. The reason was fear of wholesale dismissal. The ground for that fear was the way in which employers had dealt with leaders who insisted that the words of Section 7-a "mean just what they say."

  38. John A. Bailey, president of the Federal Auto Workers Union in the Buick plant, was called to the superintendent's office two months ago, he told the Labor Board, and warned that it was against the rules to "solicit" during working hours. "I stopped at once, but I went on soliciting during my own time at noon."

  39. QUESTION from the Board: "Is the noon hour your own time?"

  40. Answer: "Sure, I don't get paid for it, do I?"

  41. Later, he was again called to the superintendent's office and told that it was against the rules to "solicit" on company property, even on his own time. Ten days before the hearing, he was "fired for 'insubordination.'" He had been a Buick employe for ten years, as assistant foreman and tool setter. He added that "most of our active shop stewards and other officials in the union were discharged." He said the foremen expressed regret at letting them go, but stated that they themselves were "only employes of the company and had to take orders from above like anyone else."

  42. Bert Harris who has worked at the Fisher Body plant in Cleveland since 1929 testified that he "was called to the office and told to keep my mouth shut." Then I was told, "'You'll have to get the so-and-so union out of your mind.'" He was laid off in September. His dismissal notice offered in evidence, read, "Work—excellent. Attendance—excellent. Safety—fair. Cooperation—poor. STILL TALKING." The final comment was in large letters at the bottom of the card.

  43. Al Cook who had been employed by Fisher Body Number 1, Cleveland, Ohio, since April 1927 reported that he was discharged January 13, and that between March 1 and March 14, 31 others, key men in the union, were "let out." Mr. Cook reported that the regional labor board had found that he was discharged solely as a union leader and on February 26 ordered his reinstatement, "but I'm still out of work." He added, "There was never no complaint against me till I protested against the company union."

  44. An officer of the Buick Company urged James Bower, colored, to be a candidate for representative in the newly installed company union. "They told me there weren't no dues in that union," he said, "and it didn't cost you nothing and you get paid for being representative, and I said sometimes things you don't pay for ain't so good." Later, he was summoned to the office and charged with handing out union application cards. "They give me a week off for it, on orders from the head office."

  45. Representing the Chevrolet plant local, "the biggest paid up AFofL federal labor union in the United States," David H. Lano boasted that he was the first Chevrolet employe to sign up, "and when the lay-offs come I was the first one to get it." Another Chevrolet worker, who had been for some months unemployed, told of reapplying for a job "when things opened up." He offered his union card as identification, "figuring there was no discrimination under NRA, and they told me you don't need never come back."

  46. With the layman's faith in legal documents, one speaker after another submitted affidavits supporting his statement of his own discharge and his account of how groups of fellow-worker were "let out" as soon as their union activities were known.

  47. Spokesmen for the company unions protested that the Works Councils are "truly representative," but under questioning by John L. Lewis, president of the United Mine Workers, as a member of the Board, they admitted that the company paid for the time spent on company-union business even when it included clerical work at home in the evening. It was further brought out that their expenses to Washington were covered by their employers and that they were being paid at their regular wage rates for the time spent.

  48. WHEN the Labor Board turned from the employes to the employers, the first spokesman was W. S. Knudsen, executive vice-president of General Motors, who asked that his formal statement be read by John Thomas Smith, attorney for General Motors. This statement opened with the telegram sent the Buick Company by the representatives of the local union on March, demanding a conference "within 48 hours."

  49. "This was the first intimation the company had of any dissatisfaction of the Buick employes....

  50. "Our position respectfully is as follows: Having signed the Automobile Code which expires September 8, 1934, and confers no advantages whatsoever upon employers, we have conscientiously endeavored to live up to both the letter and the spirit of its obligations. While we were fearful that the interpretation placed by high labor officials on Section 7-a of the NIRA would lead to grave controversies, in the interests of the government's recovery plan, we signed the code containing Section 7-a and the so-called merit clause...."

  51. The attorney then read Section 7-a, and the "merit clause," which found place only in the code of the automobile industry and which reserves to employers "their right to select, retain or advance employes on the basis of individual merit." Then followed six numbered items, stating, in effect, what General Motors would and would not do in regard to Section 7-a. The company professed its unwillingness to have any group of employes, "not even a single employe" coerced into being represented by an individual or group "not of their own choosing." While ready to bargain with "duly accredited representatives of any of our employes" the authority to represent "must be shown."

  52. Item 2 set forth that "we have no right to bargain with the Labor Board in respect to how our employes may choose to be represented and must decline to make any commitment or accept any obligation with respect to any election that may be resorted to." And while the company expressed willingness, "upon proof of the authority of Union No. 18512" to meet with their representatives, "we are not . . . willing to recognize said union as such, nor to enter into any contract with it on behalf of our employes."

  53. The statement concluded "in order to render impossible any misunderstanding, we wish to have it understood that our appearance here is specifically limited to the making of this statement which we feel is due out of respect for this National Labor Board."

  54. At the end of the last stiff, legal phrase, Mr. Smith handed the document to the clerk of the Board, turned and, followed by a score of executives and attorneys left the hearing-room. No one on the Labor Board lifted a voice to stop them as these representatives of capital filed out of the conference. "There go the barons from Runnymead," whispered a newspaperman.

  55. As the doors swung to behind them, Collins was on his feet voicing his protest above murmurs among his fellows: "Are they going to get away with that?" "They didn't answer our points—" "They sidestepped everything—" "The Board ought to ask them questions—" "God, I wish Wagner was here—" In response to Mr. Collins' plea, the Board sent a messenger to tell the group of employers that their presence was requested by the Board. But they had already stepped into a waiting elevator. They did not return.

  56. With the departure of the General Motors group, only three or four employer representatives remained in the conference. E. A. Barit reading a statement for Hudson Motors, held that the company was willing to meet with the union on proof of authority to negotiate. "We do not feel we should be called on to recognize the union as such, or to enter into contract with it."

  57. Question by the Board: "Do you recognize your company union as such?"

  58. Mr. Barit: "I want to leave the statement as filed and make no comments—with all due respect to this Board."

  59. When an employe asked what formalities must be complied with to secure a conference between union and management representatives, the Hudson vice-president turned to Mr. Williams and replied, "Mr. Chairman, with your permission we will make our answer to you. Our position is made clear in our statement. Beyond that we have nothing to say."

  60. When Mr. Barit ended his formal statement the few remaining representatives of management one by one drifted out of the room, and did not take part in the proceedings.

  61. Mr. Collins again protested, "They insist we must file a list of members. But in view of the testimony in regard to discrimination we have refused to give such a list. We have offered to submit a list to the Regional Labor Board to be checked against the payrolls. If it's found we have authority to represent those we claim, then they should confer. We haven't been able to get a conference.... Now they tell you they are here informally, that they respect the board, but they are not taking orders. It seems to me something that's got to be settled. The employers should hear our rebuttal. The Board should ask them questions. We want the law to function.... You must decide now whether you are letting them go with only a statement that your action entails nothing on them." He added, "We were invited here to lay a tense situation before you.... Our discharged members are walking the streets. The board is our last resort. The companies . . . always say they respect the government and then they refuse everything.... We simply cannot go back to our men and say we had a roundtable conference and got nowhere. It's a pretty tough proposition."

  62. But none of the manufacturers put in a further appearance, and even the shadow of "conferring" vanished. The employes presented their "rebuttal" to the Board, and the hearing adjourned sine die. That evening the union representatives, in fighting mood, boarded busses and trains to return to the automobile towns. Only the Communists were jubilant.

  63. "We told you so," they said. "How long are you going to keep playing the bosses' game—letting them steer you into their inferences and filling you up with talk? Now maybe you'll ten to us—"?

  64. The National Labor Board went into executive session as soon the hearing adjourned. It has not published findings or decision. Before that stormy day ended General Johnson took charge of the automobile case, probably on his own initiative, though it was also reported that he was requested to do so by the employer members the Board. This transferred it from the Labor Board, where employers and labor are equally represented, to the NRA, where labor is merely advisory.

  65. FOR several days, a conference between the NRA chief and members of the code authority started and stalled in a New York hotel room. The code authority for the industry is the National Automobile Chamber of Commerce, with neither labor nor consumer represented. The men had set Wednesday, March 21, as the new strike date. Just before the deadline, a direct request from President Roosevelt to the union leaders again postponed the strike. Once more representatives of the unions and of the employers foregathered in Washington. This time it was not "done in the goldfish bowl." From behind the closed doors of a White House conference room came occasional echoes of General Johnson's fist the table, the impatience of the workers, the firm stand of the employers, the finesse of corporation counsel, the President's magic with men.

  66. As announced from the White House, the terms of the settlement are:

    (1) Employers agree to bargain collectively with the freely chosen representatives of employes' groups and not to discriminate against any employe because of union affiliations.

    (2) If there be more than one group, each bargaining committee shall have total membership pro rata to the number of men each member represents.

    (3) The NRA is to set up within twenty-four hours a board of three members, one representing labor, one the employers and the third a neutral. This board, to be responsible to the President of the United States, is to have access to all pay rolls and all lists of "claimed employe representation." . . .

    (4) The Government "makes it clear that it favors no particular union or particular form of employe organization or representation," but pledges "absolute and uninfluenced freedom of choice."

    (5) In reductions or increases in the industry's working force "such human relationships as married men with families shall come first and then seniority, individual skill and efficient service." After these factors are considered no greater proportion of outside union employes shall be laid off than of other employes.

  67. The effect of the five-point settlement is not clear at this writing. William Green, president of the American Federation of Labor, hails it as "a great step forward," because "the right to organize is conceded and collective bargaining through representatives of labor's choosing is assured." But the right to organize and bargain collectively was guaranteed labor under Section 7-a, embodied in the code which had been accepted by the industry.

  68. The "proportional representation" provided in the second clause of the settlement makes it possible for either an independent union or a company union, if it succeeds in organizing and holding a majority of the employes, to gain control of the bargaining committee.

  69. Clause 5 for the first time puts human considerations above all other considerations, even efficiency, in an industry that is based on high speed and machine-like precision. Under this clause, the married man with dependents would be kept on, even though it meant laying off the man of higher "individual skill and efficient service." The provision, however, also makes it very easy to get rid of a young and vigorous labor leader. The same clause recognizes the principle of seniority in reducing or increasing the labor force which, a labor spokesman points out, "is even more important than 'married men,' for it lays the foundation for a job security' the lack of which has been one of the great curses of the industry.

  70. The new board, responsible directly to the President, was commissioned to hear and decide "all questions of representation, discharge and discrimination." Leo Wolman, chairman of the Labor Advisory Committee of the NRA, was made chairman and representative of the public. Dr. Wolman was formerly director of research for the Amalgamated Clothing Workers of America, which, until last year, was not affiliated with the AFofL. Nicholas Kelley, counsel for the Chrysler Motor Car Corporation but also the son of Mrs. Florence Kelley and chairman of the board of the National Consumers' League, represents the employers. The labor representative is Richard Byrd of the General Motors Truck plant in Pontiac, one of the young leaders developed by the federal unions, who has had a varied career as soldier, miner and Olympic athlete.

  71. Labor immediately accepted the settlement and the employers thus gained the two points most important to them. They secured peace for the few weeks remaining before the end of the busy season, the beginning of the spring lay-off. The National Automobile Chamber of Commerce announced, in a statement from Detroit while the settlement was pending, that "the industry does not intend to recognize the American Federation of Labor as such, nor to enter into any contract with it on behalf of its employes." Nothing in the new agreement modifies that position. On the other hand, by the terms of the settlement, labor is forced to "recognize" the company unions, and these organizations, initiated and largely financed and controlled by management are put on a level with the independent unions.

  72. THE affect of the automobile case on the Labor Board itself is not clear. The conduct of the hearings has in some quarters heightened the impression that the Board is divided in its counsels, and certainly the action of General Johnson in summarily taking over the case has weakened its authority. The terms of the settlement overturned some of its rulings, notably that laid down in the settlement of the Denver Tramway dispute where the Board held that the representatives of the majority of the workers bargain for all.

  73. Meanwhile the hearings largely affected the prospects of the bill introduced by Senator Wagner to reorganize the Labor Board as a permanent governmental agency, broadening its power, strengthening its authority and "putting teeth in Section 7-a." The chief objection by business and industry has been to these "teeth"—two sub-divisions of the section defining it as "unfair labor practice for an employer":

    To initiate, participate in, supervise, or influence the formation, constitution, bylaws, other governing rules, operations, policies or elections of any labor organization.

    To contribute financial or other material support to any labor organization, by compensating anyone for services performed in behalf of any labor organization, or by any other means whatsoever.

  74. These provisions, if enacted, would virtually outlaw the company union. Senator Wagner subsequently announced that they would be modified to conform to the terms of the President's auto agreement, stating that he is opposed to "company-dominated unions," not to "company unions."

  75. Just where the truce leaves the automobile unions is also in doubt at this writing. Certainly for better or for worse labor agreed to sheathe its one weapon, the strike, until its use will not be effective for many months to come. The company union emerges with improved status and new strength. How the new board will function remains to be seen. It has the advantage of small size, flexible program, and complete independence from the Recovery Administration and the Code Authority for the industry. On the other hand, such an agency may operate for delay and delay, as in this case, is most always to the advantage of the employer.

  76. Labor, which has most to lose in the controversies over Section 7-a also has most to learn. The March crisis in the automobile Industry afforded plenty of evidence that "big business" has not been won over to an organization of labor that would parallel the powerful and authoritative trade associations, and still believes the clear intent of the collective-bargaining provisions of NRA can be evaded. But more important is the obvious fact, underscored by these events, that our economic structure has been adverse to voluntary cooperation between employer and employe, to "partnership" between industry, labor and government. These hearings show the resistance on the part of great employers to change in that situation. To wrest from capital a degree of industrial control and thus gain an increasing share in national income and opportunity workers have to depend on their united strength, and on that alone.