Some men are better workmen than others, just as some men are better business executives or professional men than others. We believe that they should be paid in proportion to their ability and that they should be paid as well for what they know as for what they do. That is just common sense. Without it there is no incentive

to do better work.

Forty-three percent of the employees are engaged on work under the incentive system. The efficient men are in favor of the incentive system.

This question is so manifestly one of management that the company feels, not only from its own standpoint but for the benefit of the men, that it should be left as a management matter as the only safe way to insure success and enable the men to make more money.

Mr. GRISWOLD. It will be necessary that we adjourn for the day at this time, to meet tomorrow morning at 9:30.

(Thereupon, at 12:30 p. m., Monday, July 29, 1935, the subcommittee adjourned, to meet tomorrow, Tuesday, July 30, 1935, at 9:30 a. m.)

RELATING TO LABOR PRACTICES OF EMPLOYERS OF LABOR IN THE SHIPBUILDING INDUSTRY

TUESDAY, AUGUST 6, 1935

HOUSE OF REPRESENTATIVES, COMMITTEE ON LABOR, Washington, D. C. The subcommittee this day met at 10:30 a. m., Hon. Glenn Griswold presiding, for further consideration of House Joint Resolution 331.

STATEMENT OF HON. HENRY L. ROOSEVELT, THE ASSISTANT SECRETARY OF THE NAVY

Mr. GRISWOLD. The committee will please be in order. Colonel Roosevelt has requested that the committee meet in executive session to hear him this morning, and the committee has assented to his request. Therefore, the room will please be closed.

Colonel Roosevelt, I do not think any preliminaries are necessary. You know what the committee would like to know, I think. Assistant Secretary ROOSEVELT. Yes.

Mr. GRISWOLD. If you can give us a statement, we shall be glad to have it.

Assistant Secretary ROOSEVELT. I have prepared a short statment that I should like to read, giving the background, briefly, of this controversy and giving the position of the Navy Department and what the Department has been trying to do, and my personal interest in the matter. If you care to have me read that statement, I shall be glad to do so.

Mr. GRISWOLD. All right; go ahead.

Assistant Secretary ROOSEVELT. This is regarding the Navy Department's attitude regarding the labor dispute between the New York Shipbuilding Corporation and its employees-the strike which began on May 13, 1935.

On April 1, 1935, Mr. John Green, executive secretary of the Industrial Union of Marine and Shipbuilding Workers, Local No. 1, Camden, N. J., notified the New York Shipbuilding Corporation of its desire to modify certain terms and to add others to the contract or working agreement of May 11, 1934, between the union and the corporation, this agreement being due to expire on May 11, 1935. To this the company replied on April 4, asking for the specific demands and designating its representatives to meet with the negotiating committee of the union.

The Navy Department was apprised of the situation developing, and that the National Recovery Administration was taking cognizance. That was in line with the action of the previous year, when

a strike was commenced at the plant on March 27 and jurisdiction thereof was formally announced on April 10, as follows: "Labor board has jurisdiction of Camden shipyard strike.

At the request of the Industrial Relations Board for the Shipbuilding Industry, the National Labor Board announced today, the Labor Board has taken jurisdiction of the strike of employees of the New York Shipbuilding Co. at Camden, N. J.

The Navy Department considered that jurisdiction in the situation as developed in April 1935 also was properly a matter pertaining to the National Industrial Recovery Administration, particularly in view of action taken by the Assistant Deputy Administrator for the Shipbuilding Code under date of April 24 and the executive secretary, National Industrial Recovery Board, under date of May 1.

With the Navy Department's great interest in having all possible progress made on the ships under contract by the New York Shipbuilding Corporation, it closely followed the developments from day to day; saw representatives both of the company and of the union, and urged both sides to do everything possible to avert a strike, but maintaining a strictly neutral position with reference to the dispute. Relations between the corporation and its employees were regarded as not within the jurisdiction of the Navy Department; the contracts required compliance by the corporation with the provisions of the Code of Fair Competition of the Shipbuilding and Ship-Repairing Industry; and the Department reiterated to all concerned that cognizance of the dispute pertained to the National Industrial Recovery Administration and the Department of Labor.

The strike was called at the end of the week May 11 and effectively commenced the following Monday, May 13.

Until the Supreme Court decision of May 27, the Department felt that either the industrial relations committee of the shipbuilding code or the National Labor Relations Board, both pertaining to the National Industrial Recovery Administration, was the proper governmental agency in the matter, supplemented by the Department of Labor and the conciliators of that Department.

Following the Supreme Court decision, it appeared that the Department of Labor became the agency for securing a settlement.

Personally, I was away from the Department from May 2 until June 5 on an inspection trip to the Pacific coast and the Hawaiian Islands; however, the strike situation was closely followed by my' office and conferences held with both parties to the dispute.

Throughout June, conferences were continued with both parties to the dispute; with officials of the Camden city government and with representatives of the Department of Labor; the Department of Labor continued to be regarded by the Navy Department as the governmental agency having cognizance.

On July 17, by letter to the corporation, the Department placed on record the importance of the company's progressing with the ship construction, a matter which had repeatedly been stressed orally with the president of the corporation.

On July 23 the company made a definite effort to effect resumption of work, by opening the plant, with no agreement having been reached with the representatives of the strikers. This effort proved unsuccessful.

The conciliation efforts by the officials of the Department of Labor have proved unsuccessful.

On July 27 the Navy Department addressed the president of the corporation, demanding that the corporation make effort to secure resumption of work through arbitration, and stating that unless the corporation could resume operations without further delay, it would become necessary for the Navy Department to take over these vessels in their present state and to build them to completion. To this the company made a contingent reply, and on August 1 a further letter was sent to Mr. Metten, with regard to arbitration, and reiterating that unless arbitration is accepted, the Department must take over the completion of the ships. This letter is now before the company, and reply is expected within a day or two.

I have been in constant telephonic communication with the situation at Camden, and there is to be a meeting of the corporation's board of directors very soon. I have informed the corporation that an answer to our letter must be in the hands of the Navy Department by tomorrow. I cannot venture an opinion as to what the answer will be.

Mr. EVANS. What is the nature of that continent reply?

Assistant Secretary ROOSEVELT. I can read the corporation's letter. Mr. EVANS. Please do so.

Assistant Secretary ROOSEVELT. It says:

Hon. HENRY L. ROOSEVELT,

NEW YORK SHIPBUILDING CORPORATION,

Camden, N. J., July 30, 1935.

Acting Secretary of the Navy, Washington, D. C.

DEAR SIR: Your letter of July 27, 1935, states that the Department of the Navy desires that this company make an effort to secure resumption of work at its Čamden, N. J., plant through the submission of all matters of controversy between the corporation and its employees to an impartial board of arbitration. Also that, unless such an offer is made and operations resumed without further delay, it will be necessary for the Navy Department to take over, in their present state, the naval vessels now under construction in our yards and build them to completion. You have required an answer to your Department by noon of July 31, and this letter constitutes our reply.

With reference to your suggestion that unless arbitration is agreed upon the Navy Department will take over the uncompleted vessels, your attention is directed to the fact that no provision in the contracts between this company and the Department authorizes such action, under existing conditions. Clause 14 does provide that such procedure may be followed where completion or progress of naval work is delayed, but not where the delay is occasioned by causes beyond the contractor's control, such as strikes, which are specifically mentioned in clause 12. Also, in our contracts it is provided that all questions which may arise concerning delays shall be submitted to the Secretary of the Navy for determination, thus vesting in the Secretary of the Navy power to decide reasonably whether a strike which has occasioned delay does or does not entitle the contractor to an extension of the completion date of his contract.

It is the position of this company that it has at all times carried on the work under its naval contracts with the utmost vigor and dispatch; that the strike of May 1934, and the present strike of our employees, which latter strike has unfortunately continued for 11 weeks, were due to causes entirely beyond our control and that we have made every reasonable effort to adjust the differences and secure the resumption of work in our plant. Some of the matters of controversy refer to wage rates, hours of labor, and working conditions with respect to which we have every reason to believe the great majority of our employees are satisfied. Any differences, however, as to such matters can be adjusted with fairness to all parties concerned provided the Navy Department will, in equal fairness, recognize that the present contracts were taken on an estimated small margin-of-profit basis which permits of no increase in the present cost and that,

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necessarily, therefore, any increase in costs brought about as a result of an arbitration imposed by the Navy Department should be allowed to the contractor as extra compensation. If such increased costs are imposed without extra compensation under our existing contracts awarded on the basis of cost and labor conditions existing in 1933 and 1934, this company will in fact face inevitable bankrupety and the Navy. Department thereby will lose one of its main sources of supply for naval vessels.

Other matters of controversy, however, raise more fundamental issues, upon the determination of which depend the maintenance of the efficiency of our plant and the morale of our entire organization. We are happy to note that your proposal does not contemplate the substitution of arbitration for management in our yard and, from this, assume that any agreement to arbitrate must becessarily be confined to arbitrable matters of controversy now existing, including the supervision of the election of employees' representatives to negotiate with the management and the determination of rates of pay, hours of employment, and working conditions, but excluding the closed or preferential shop, which is illegal in New Jersey and contrary to the labor policies of the United States Government. Also, that such agreement is not to be taken as a precedent for the solution of any new problems arising in the future, but is to be confined solely to questions at issue now.

Further, it is suggested that if arbitration is agreed upon, the findings of the arbitrators with respect to rates of pay, hours of employment, and working conditions, should govern the entire shipbuilding industry and be applicable alike to Government yards and to private yards building Government vessels, so that in future competitive bidding for new naval contracts no company may have any unfair advantage over its competitors.

Subject to the foregoing conditions, we are disposed to agree that the arbitrable matters of controversy referred to be submitted by this company and its employees to arbitration by a board of not less than five arbitrators, to be designated by the Secretary of the Navy, from among the active officers of the Navy.

Assistant Secretary ROOSEVELT. We would not agree to that. We are not going to do that. We do not want to put the officers of the Navy in a position like that.

Mr. EVANS. That would be dictation by the corporation as to where the arbitrators should come from.

Assistant Secretary ROOSEVELT. Yes.

-The suggestion that the arbitrators be named by the Secretary of the Navy alone is consistent with the provisions of our contracts which vest in him the power and the responsibility reasonably to determine whether delays are due to justifiable causes or to causes wholly beyond the contractor's control. In the exercise of this authority and in the reasonable effort to avoid such causes of delay, it is logical and proper that the Secretary of the Navy act through a board of naval officers appointed by him, and because many of the problems involve technical secrets of the United States Navy, all parties concerned would be greatly restricted in the presentation of their evidence, if membership of the board of arbitrators is not limited to naval officers familiar with the technical problems involved and impressed with the necessity of maintaining inviolate any naval secrets which their investigation may disclose.

Such an arbitration proceeding will be equally fair, both to the industry and its employees. No one can reasonably deny that such arbitration board would be impartially constituted and motivated solely by a spirit of fairness and the protection of the best interest of the United States Navy. Its decision as to wages, hours of employment, and working conditions would, beyond doubt, give to the employees and the industry substantially the same compensation for like efforts they would receive if the Navy Department took over our uncompleted contracts and completed the vessels either in our own plant or in the navy yards. Certainly, if this were done, your Department would not permit outsiders, unfamiliar with your problems, to dictate the dedision of these questions. For the same reasons, this company, while not agreeably generally to the principle of arbitration, will consent to the arbitration hereinbefore proposed only if the arbitrators are naval officers qualified by experience and training to pass upon these problems and selected by and responsible to the Secretary of the Navy. Such a board of arbitrators, it is believed, would meet all of the requirements and conditions mentioned in your letter. Their decision would be fair and im