until the United States Steel Corporation would face dissolution because under the banking conditions that prevailed at that time it could not borrow any money, and at that time the United States Government was not financing any corporations, and the complete, stark disaster faced America's premier corporation.

Well, with the coming of 1933 and the arrival, sir, of the "new deal", the passage of the National Industrial Recovery Act, the promulgation of a code of fair competition for the steel industry, which, in itself, is one of the most complete documents in American industry, the United States Steel Corporation began to do better, substantially

better.

Senator BORAH. By fixing its own prices?

Mr. LEWIS. Through whatever advantage accrued to the industry through the code, and its losses were reduced to about $41,000,000 or $42,000,000 in 1933, a shrinkage in loss of $40,000,000 to $42,000,000. I will not attempt to quote the exact millions, but it was right in there.

Well, it is facing now what is admittedly better prospects in 1934 than was the case in 1933, and 1933 was $40,000,000 and odd better than 1932. That is certainly a substantial amount of advantage to derive from the code of fair competition in the iron and steel industry.

Senator BORAH. Are you speaking of the code of fair competition? The United States Steel Corporation has plants on the Pacific coast and when it sells its products from the plants on the Pacific coast it makes the buyer of the product pay the freight from Pittsburgh? Mr. LEWIS. I so understand.

Senator BORAH. Do you call that fair competition?

Mr. LEWIS. I do not know, but evidently they have the right to do it under the code which obtains in that industry, and, of course, they were doing it for many years in advance of the enactment of the Industrial Recovery Act or in advance of the approval of the code of fair competion in the industry. It is merely a practice that has existed for many years which has not been eliminated and which cannot, sir, rightly be charged up to the Industrial Recovery Act.

Senator BORAH. It can be charged up to the Industrial Recovery Act if the Industrial Recovery Act does not stop it.

Mr. LEWIS. Well, sir, I think it is merely one of the things that has not yet been stopped or has not been corrected. There are many of them, sir, I have no doubt, and one of them, and more important to me, is this terrible practice of imposing company unions on their employees and prohibiting the exercise of normal individual personal rights in the steel industry by the employees of that industry, and the Wagner bill will free those people.

Senator BORAH. If the steel industry can fix prices and if the steel industry can maintain the Pittsburgh-plus prices, they can make the consumers of this country pay whatever they see fit to charge so long as the traffic will bear it.

Mr. LEWIS. They have been doing that ever since they have been organized. Never at any time since the organization of the United States Steel Corporation, and the throwing together of all those great plants, which were trusts in themselves before the organization of the holding company, never at any time has the United States Steel Corporation failed to do just that thing you have just uttered. It has been testified here before committees of Congress in investigations

of the steel industry throughout the years that the Steel Corporation could make steel anywhere up to $5 a ton cheaper than the independents, but they refrained from selling at cheaper than the independents because of their benevolent policy, they did not want to put the independents out of business, and they took $5 a ton extra profit for not putting them out of business, and Congress year after year under the antitrust laws permitted that condition to prevail in the steel industry.

Senator BORAH. Congress had nothing to do with that, Mr. Lewis. The Congress passed the law and it was the business of the Department of Justice to enforce it.

Mr. LEWIS. Well, Congress did nothing about having the Department of Justice act upon it.

Senator BORAH. Congress had nothing to do with creating the Attorney General.

Mr. LEWIS. Oh, but Congress had the right to memorialize the Department of Justice to start suit against that steel company. Senator BORAH. But it ought not to be necessary for Congress to memorialize a man to do his solemn duty.

Mr. LEWIS. Well, who was President about that time? [Laughter.] Senator BORAH. May I ask you who is President now while it is going on.

Mr. LEWIS. Well, the only difference is that I understand that the man who is now President is in sympathy with every legitimate effort to stop this condition of which we are complaining.

Senator BORAH. Sympathy will not stop it.

Mr. LEWIS. No, but the enactment of this law will.

Senator BORAH. Then if this bill will do it I am for the bill.
Mr. LEWIS. You are talking of prices now?

Senator BORAH. Yes.

Mr. LEWIS. Oh, well

Senator BORAH. I am in entire sympathy with your view with reference to the labor proposition. The American workman has the absolute right to choose where he shall work, whether he shall be in a union or out of it, and corporations have no right whatever to interfere with his voluntary choice; that is all right. But, what I am speaking of are these people who are now doing the same thing that you say they have always been doing.

Mr. LEWIS. Well, I think they are, Senator; I think they are doing the same thing now they have always been doing, and they are doing it under a closed-shop arrangement in the steel industry through their code of fair competition. The steel companies have imposed the closed shop in the steel and iron industry

Senator BORAH. I am not censuring the N.R.A. under the National Recovery Act. What I say is that the enforcement of the Sherman. antitrust law will aid the N.R.A. and not hurt it. The N.R.A. alone cannot do this job.

Mr. LEWIS. Well, of course, I am not this morning qualified to enter into a discussion on the enforcement of the antitrust laws. The CHAIRMAN. Are there any other observations, Mr. Lewis? Mr. LEWIS. Just briefly, Senator, I have the following suggestions and amendments to offer:

On page 7, section 201, relating to the composition of the Board, the Board "shall be composed of 7 members," beginning on the third

line, 2 representatives of the employers and 2 of employees, and 3 dissociated with either, may result in subordinated representatives of the employers and employees to the rule of advisers or assisters, I mean the representatives of labor and the representatives of industry who should be charged with the responsibility of decisions.

The policy of the Recovery Act is declared to be:

To induce and maintain unity of action of labor and management under adequate governmental sanctions and supervisions.

I think that the responsibility of these decisions should primarily be placed upon the representatives of industry and representatives of labor on this Board, rather than to put in three members from elsewhere than the ranks of labor and industry, and put labor and industry in as advisers.

Now labor does not want a chance to advise. The representatives of labor do not want to have to come in and hunt up three members of the National Labor Board to see what they think on a certain industrial situation in a certain city of industry. Labor wants a chance to participate on equal terms with industry, and it wants to assume the responsibilities of such participation.

So I would say that from every practical standpoint, from the standpoint of incurring greater confidence in the Board, from the standpoint of its action of administration and operation, a change to make an equally divided number of representatives of industry and labor, with a governmental representative as the chairman, would be preferable to the representation that is now set forth in the act.

The CHAIRMAN. Very well, we will give consideration to that suggestion.

Mr. LEWIS. On page 6, Senator, lines 14 and 15.

Senator WAGNER. That has already been taken care of.

Mr. LEWIS. I will pass that then. Section 206 on page 16, line 10, I think could be amended so as to authorize arbitration only on the joint submission of both parties to a controversy, rather than "any party."

Senator WAGNER. I agree to that. I was going to propose that change

Mr. LEWIS. Thank you, Senator.

The CHAIRMAN. That is acceptable to you, Senator Wagner? Senator WAGNER. Oh, yes; Î was going to suggest that to the

committee.

Mr. LEWIS. On page 9, Senator, section 204, it reads:

The Board may, either by itself or through its agents, offer its services to the parties to any labor dispute as conciliator or mediator in such dispute, and may act as conciliator or mediator for the parties who accept such offer.

I think that is essential and necessary, insofar as the purposes of the Board relating specifically so the basic unfair labor practices are concerned, but I really think that the Board would be sort of overwhelmed and immersed with those duties, when they are taken on a broad scale and applicable throughout industry as a whole, and I really think that in a measure such a volume of mediation and conciliation might detract somewhat from the prestige of the Board and render a little less effective its general supervision over these basic unfair labor practices.

Now, just in connection with that, I have a thought with relation to section 304 (b), on page 23, and in conjunction with counsel for the United Mine Workers have this revised to suggest for the consideration of the committee. It deals with the scope of authority of the Board, and seeks to preserve within industry those tribunals already set up there for their specific functions, without giving them, of course, any rights on the basic authority of the National Board. The proposed amendment is as follows:

SEC. 304 (b). Any term of a contract or agreement of any kind which conflicts with the provisions of this Act is hereby abrogated, and every employer who is a party to such contract or agreement shall immediately so notify his employees by appropriate action: Provided, That nothing in this Act shall be held to impair the right of tribunals established by codes of fair competition approved under the National Industrial Recovery Act or by collective-bargain agreements valid under the provisions of this Act, to hear and determine disputes concerning hours, wages and conditions of employment to the extent provided in such code or agreement, and where such hearing and determination does not involve recognition of any unfair labor practices.

I merely submit that for such consideration as the committee might want to give to it, as a matter of simplification.

The CHAIRMAN. We will appreciate that, Mr. Lewis. Does that finish your suggestions, Mr. Lewis?

Mr. LEWIS. I have nothing further except I do think this Board should not be attached to any governmental department. I think it should be an independent agency acting under the authority of the President, by appointment of the President.

Senator LA FOLLETTE. Mr. Lewis, I have just one question. What do you think will be the effect and the outcome of the failure of Congress to enact this legislation?

Mr. LEWIS. Well, I think it will be considered by industry as almost a validation of the company union, and I think it would, perhaps, increase their efforts to impose company unions in industry, and that resistance on the part of the workers would be rapidly crystallized and would flare up in a way that would be productive of a great deal of labor unrest by means of strikes of wide-spread nature. It would be detrimental in every sense of the word. The CHAIRMAN. Thank you, Mr. Lewis.

Mr. LEWIS. Thank you, gentlemen.

The CHAIRMAN. I see Mr. Frank P. Walsh in the room. Mr. Walsh, will you come forward?

STATEMENT OF FRANK P. WALSH, CHAIRMAN NEW YORK POWER AUTHORITY, NEW YORK CITY

The CHAIRMAN. Will you give your full name for the record?
Mr. WALSH. Frank P. Walsh.

The CHAIRMAN. New York City?

Mr. WALSH. New York City.

The CHAIRMAN. You are chairman of the New York Power Authority?

Mr. WALSH. Yes.

The CHAIRMAN. Recite your activities in connection with labor problems, beginning with the war, your service during the war.

Senator LA FOLLETTE. Prior to the war, you were chairman of the Industrial Relations Board?

46652-34-PT 1-11

Mr. WALSH. I will try to go along, if I may, Mr. Chairman, and gentlemen.

The CHAIRMAN. Yes.

Mr. WALSH. I am not going to undertake, of course, to make an analysis of this law. I am not going to do it, first, for the reason that I do not feel as competent to do it as others who have been here, or as you gentlemen who are sitting here, who have been the target of all sorts of argument and all sorts of propaganda, some of you, during this entire generation, I might say.

I am not going to analyze it for another reason. I am in favor of it from beginning to end, because I think it is the evolutionary outgrowth of enlightened education over my time and over the time practically of every gentlemen sitting upon this committee. I believe that it is another step forward, a great step forward in the realization of economic freedom, which I believe is as important, if not more important, than political freedom.

I am not going to analyze it for the reason that I think it contains all the principles which are great factors in bringing about industrial justice, and because, as a piece of bill drafting, I think it is most excellent.

I think, perhaps, I might make some contribution here today by recalling, perhaps, more than stating, refreshing your minds, if I may do so, on the evolution of which I have spoken. My attention to these questions was specifically directed 20 years ago in the act that was passed which bore the name of Senator Borah, and I do not recall the name of the Member of the House of Representatives, which created the Commission on Industrial Relations of the United States Government. There was $500,000 appropriated and spent on that investigation. I say this because I read in the papers within the last few days, that there are certain organizations in this country who think that an investigation ought to be made before this bill is passed. Upon that board there were 5 members representing the employers of this country that came from the National Industrial Conference and the Manufacturers' Association, 5 representing the employers drawn from the American Federation of Labor, and 3 representing the public. I happened to be the chairman of that commission.

I can speak with freedom about the accomplishment, if any, it made, because the report that has become the report of that Commission was designated, and properly designated, as the "Staff Report." We were required to bring to our assistance those in the United States that had made special studies of this subject, and we drew upon those acquainted with economics in all of the leading universities of this country.

We were required at that time, also, to hold public hearings so that the public mind might become educated upon the situation existing in industry and the cause of industrial unrest. In many respects the situation in this country was paralleled by the situation today. We were under the stress of no war, or threatened war. Efforts had been made for years and years, beginning in a very small and weak way, to educate the people along the lines of collective bargaining, and to bring about better conditions, or a more equal distribution of the fruits of industry, than had existed theretofore. Great friction had arisen in some parts of the country. We were almost in a state of armed industrial war. One of the largest railroads in this country