agreement covering all, the employer shall be free to deal individually with workers who want to make individual agreements. In this manner the closed union shop is illegalized.

The CHAIRMAN. Who made that interpretation?

Senator WAGNER. The N.R.A.

The CHAIRMAN. I wondered whether it was a legal interpretation by the Attorney General or not.

Senator WAGNER. No. The National Labor Board has rendered a decision very recently which takes the contrary view.

The CHAIRMAN. Pardon the interruption, Senator.

Senator WAGNER. I do not believe that Congress intended to illegalize a device which many experts believe necessary, in some situations, to obtain for labor equality of bargaining power and substantial justice. Congress certainly did not intend to impose upon employees restraints that did not exist before the Recovery Act was passed.

The new bill makes it perfectly clear that the closed union shop is not illegal. It leaves this question of policy open to industry and labor. At the same time, it surrounds nonunion members with safeguards by providing that only those seeking employment may be required to join a union, and that closed shop agreements may be made only with unions to which a majority of the employees belong. The third and most important defect of section 7 (a) is that, while it provides that employees shall be free from interference and restraint in choosing their representatives, it does not prohibit the specific practices which make such freedom impossible. The greatest barrier to freedom is the employer-dominated union, which has grown with amazing rapidity since the passage of the Recovery Act.

The employer-dominated union generally is initiated by the employer. He takes part in the determination of its rules, its procedure, and its policies. He can terminate it at will and he exercises absolute veto power over its suggestions. Certainly there is no real cooperation on an equal footing between employers and employees under such circumstances.

Another feature of such a union is that it arbitrarily restricts employee cooperation to the single employee unit. The standardization and improvement of wage levels is an industrial or State or even national problem, that can hardly be solved if the employees of each plant act separately and are uninformed of what others are doing. No fair-mined employer should want to preserve this disunity among his workers when he is banding with other employers in huge trade associations.

The present bill seeks to prevent employers from dominating labor organizations by influencing their formation, policies, or elections, by subsidizing them, or by discriminating either in favor of or against particular unions by means of wage or hour differentials or other conditions of employment.

Let me make it absolutely clear that the bill does not in any way impair the right of employees to organize on the single employer or company union basis, if that is their desire. It simply forbids employers to force development along such lines alone, and prevents them from dominating their workers when the workers desire a company

union.

It is equally important to note that the bill does not prevent employers from setting up societies or organizations to deal with

problems of group welfare, health, charity, recreation, insurance or benefits. All of these functions can and should be fulfilled by employer-employee organizations. But employers should not dominate organizations which exist for the purposes of collective bargaining in regard to wages, hours, and other conditions of employment.

Now as to the enforcement sections of the bill. The present Labor Board has sought to apply section 7 (a) by relying upon the prestige of its members and by appealing to public sentiment. During the summer these methods met with great success. But in recent months the Board has been confronted by some large employers who ignore public sentiment, who flaunt the clear intent of Congress, and who are a law unto themselves. This is extremely unfair to the vast majority of employers who want to obey the law, and it is disheartening to the millions of working people who see what was held up to them as a new charter being treated as a scrap of paper.

The present bill provides for a permanent Board with adequate enforcement provisions. It defines as unfair labor practices any attempts by employers to dominate labor unions or to fail to recognize the duly chosen representatives of their employees. When complaint is made of an unfair labor practice, the Board is authorized to hold hearings, subpena witnesses and records, and, if the law is violated, issue a restraining order enforceable in the courts.

The Labor Board is empowered to act also as conciliator and mediator. I am confident that this will be its chief function, and that it will continue the good work which has kept over 800,000 people at their jobs during the past 6 months. Most employers, as well as employees, want a peaceful forum and voluntary action.

I have noticed that several criticisms have been levelled against this bill, which I believe are important enough to be answered at the outset.

It has been remarked that the bill is one-sided because it imposes restraints upon employers without attempting to curb unfair or unruly employees. This criticism takes the bill out of the context of the Recovery Act situation. The Recovery Act contains grants and privileges to employers and employees. Employers have not met with any obstacles in their attempts to form trade associations. If they had, I should suggest the removal of these hindrances by legislation. But employees have met with opposition in their attempts at organization, and this should be remedied. It is absurd to characterize this bill as an employee monopoly simply because it seeks to achieve the fairness which the Recovery Act promised.

It has been argued that the unfair labor practices mentioned in this bill are vague, uncertain and unrelated to any practices heretofore characterized as "fraud, deceit and oppression." But this bill is not intended to be merely declaratory of what constituted unfairness in the early English law. It is a direct attempt to meet modern evils with modern remedies. Its specification of unfair practices is much more definite than that of the Federal Trade Commission Act. Nor are the practices to which the bill refers imaginary. They are based upon the studies and disclosures of hundreds of people who have observed the processes by which some employers dominate unions.

It has been urged that the bill places a premium on discord by declaring that none of its provisions shall impair the right to strike.

On the contrary, nothing would do more to alienate employee cooperation and to promote unrest than a law which did not make it clear that employees could refrain from working if that should become their only redress. But this bill will prevent strikes by the only feasible and just method; that is, by insuring fair treatment to all parties and by establishing a powerful and trustworthy agency for the settlement of disputes.

The same critics have claimed that the bill would prevent friendly relations between employers and employees becaues it prevents employers from influencing the rules or policies of labor organizations. Such an interpretation strains beyond all reason the provisions of this bill. Frank and friendly negotiations depend upon the absence of influence exerted by one party over the other. Only those whose minds are deeply rooted to the master-servant relationship in industry look upon employers' dominance as the only means of securing cooperation.

Most confusing of all are the charges that the National Labor Board under this bill would have powers greater than those of any court. Every competent lawyer understands the difference in functions and proceedings between an administrative agency and a court. The very purpose of an administrative tribunal is to provide an informal, flexible procedure designed to get at the heart of complex economic problems with a minimum of hard-and-fast legal rules. The power of the Board to amend complaints, and to allow some variance between the pleadings and proofs, is strictly similar to the procedure of the Federal Trade Commission. Likewise the provisions that the findings of the Board, if supported by evidence, shall be final as to the facts, and that the court proceedings shall be based on testimony taken before the Board, have become such commonplaces of our administrative law that it is amazing to find them open to sincere question. Under the new bill, the orders of the Board are enforceable only through the courts, and any aggrieved party has the right of appeal to the courts. The bill does not take a single new step in outlining the respective scope of courts or administrative bodies.

Finally, some feelings have been expressed that the new Board would interfere with the work of the industrial mediation boards operating under the codes. There is no occasion for this fear. Every dictate of wise practice, and the pressure of business, would incline the Board to refrain from hearing cases until every other available remedy had been exhausted. For example, the United States. Supreme Court has already worked out a well defined body of rules requiring that parties exhaust all other remedies before appearing before it.

I am confident that, when studied carefully, this bill will impress everyone with its moderation, its reasonableness and its imperative necessity. Ordinary dictates of justice and common sense require its speedy passage, and when it is passed we shall have taken the most important step since the Recovery Act toward improving the opportunities and maintaining the welfare of the American people.

The CHAIRMAN. Senator Wagner, the committee appreciates your clear and able presentation. Have any of the members of the committee any questions?

Senator LA FOLLETTE. I would like to ask Senator Wagner, in view of his intimate knowledge of the situation that has grown up since the

Industrial Recovery Act was passed, what his opinion is as to the situation that will develop if this legislation, or legislation seeking these objectives, is not passed at this session of Congress?

Senator WAGNER. In my opinion, failure to pass this legislation will certainly jeopardize the whole recovery program, because we have a situation now where employers under the Recovery Act have been encouraged not only afforded the opportunity, but encouraged to organize trade organizations. They are better organized today, may I say to the Senator, than they have ever been.

On the other hand, the workers, to whom we supposed we had given equal rights of organization, have had their efforts resisted at every turn, particularly by the large manufacturers, who have refused to recognize the men's representatives and have put every obstacle in the way of organization. Now, such an uneven industrial situation cannot continue without a collapse.

Senator LA FOLLETTE. There has been an increased indication of labor difficulties and strikes. What in your opinion is the chief cause of that manifestation?

Senator WAGNER. The very thing I said, failure to recognize the representatives that the workers had chosen. That has been the controversy in 70 percent of the cases before the Labor Board-an extraordinary thing. I might say also that there is a concerted anti-union effort among at least some employers, for since the Recovery Act there has been an extraordinary growth of company-dominated organizations.

Senator LA FOLLETTE. If legislation of this character is not passed at this session, what is your view as to the probability of increasing or decreasing labor difficulties and strikes during the balance of this year?

Senator WAGNER. I am afraid we shall have tremendous difficulties. I was going to say, almost so much that we shall not be able to cope with them. I do not want to make any such pessimistic prediction, but I sat all day yesterday at a Labor Board hearing which involved the question of recognition, and all that the workers asked in that case, and in a similar case today--perhaps we have today the most important case in the history of the Board-was an opportunity to elect their representatives. There is resistance to that request, and this has threatened to throw 100,000 on strike if the difficulties are not composed.

Senator LA FOLLETTE. Is it a fair deduction, from your answer, Senator, that you view with grave alarm the situation so far as strikes and labor difficulties are concerned in the near future unless legislation of this kind is passed?

Senator WAGNER. I am terribly concerned.

The CHAIRMAN. Senator, there is no provision in this bill that denies the right to organize company unions?

Senator WAGNER. Oh, no.

The CHAIRMAN. The majority of the employees in any industry can organize a company union if they choose to?

Senator WAGNER. Of course, what we are preventing is only dominsation by employers.

The CHAIRMAN. From your experience, I judge there has been a tendency on the part of employers, particularly large employers, to ffcreate company unions with the ides that they could dominate how more easily than they could independent labor organizations?

Senator WAGNER. Exactly, and when I speak of the company union, the objectionable company union, I mean the one dominated or influenced by the employer.

The CHAIRMAN. How are you going to prevent an aggressive, dominating employer from getting control of 51 percent of his employees in order to control his company union?

Senator WAGNER. The only way is to prohibit, as we attempt to do in this legislation, the specific acts which experience has shown are the acts by which they influence the action of an organization.

Senator LA FOLLETTE. Right on that point, Senator, what has been the experience of the Board in plants where employers have contended that there was no sentiment for an independent labor organization and where the Board has been able to provide for a vote on the part of the workers where they felt that their identity was not to be disclosed and they would be protected from any reprisal?

Senator WAGNER. I can give the Senator an instance that happened only last week in a very large factory in a Southern State where there were over 3,000 employees. A substantial number of them requested our board to order an election. They had a so-called "representation plan" under which they became very restive because they felt it was simply an employer-dominated organization. After some efforts we' finally persuaded the employer to consent to such an election. We were told at the time that it was a useless procedure, that the workers all wanted this representative plan, and that we were inconveniencing the employers for no good purpose.

An election was held and the company union was defeated by the outside union by a vote of 20 to 1. This is what happened when employees had a free choice, and were able to cast their ballots without any interference, intimidation, or coercion.

The CHAIRMAN. Is this bill the result of the experience of those who have been associated with you on the Labor Board trying to find a solution for the evils or barriers that were experienced in the handling of this problem?

Senator WAGNER. I cannot speak for all members of the board, but it certainly reflects the experience of some of us. It reflects my own experience. As to this legislation, I alone am responsible for it, and I do not want to hold anyone else responsible.

The CHAIRMAN. For the record, Senator, will you tell us just how the Labor Board is constituted and what are its functions?

Senator WAGNER. Well, it is a body of citizens appointed by the President, really not holding any public office at all. We take no oath nor do we receive compensation

The CHAIRMAN. How many members?

Senator WAGNER. Eleven.

The CHAIRMAN. And what do they represent in the private affairs of life?

Senator WAGNER. Five are representatives of the workers and five represent industry. If you will exclude myself, I think they are very eminent members, all very well known in their respective fields. The CHAIRMAN. And are you the 11th member?

Senator WAGNER. I am the impartial chairman.

The CHAIRMAN. Just what problems are delegated to you? Senator WAGNER. Simply to compose labor disputes, for which purpose we have outlined our own procedure.

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