On June 12 and 13 nineteen men and women, elected by their fellow employees in mills of this corporation, met in Neenah, at my invitation, with an equal number of management representatives, to discuss a plan under which we may work in harmony with the letter and spirit of the National Industrial Recovery bill. This bill will probably have become law before this reaches you. Among its purposes are two which are of great mutual interest, as stated in my letter of June 5, viz, the spread of employment and the increase in income of employees. In our discussions of the 12th and 13th we thrashed out a revision of our council plan which completely satisfies the requirements of the law and under which satisfactory relations between management and employees of this corporation will not only be safeguarded but advanced.

A copy of the proposed new council plan, as amended and approved by your representatives and by the representatives of the management is attached for your critical study. Under it, genuine legislative responsibilities will be placed upon the representatives whom you elect to serve you. Employees of this corporation and their representatives will, under the plan as now revised, assume joint responsibility for major decisions which affect the welfare of employees, of stockholders, and the future of the corporation itself.

It is my firm belief that Kimberly-Clark employees are ready for and competent to assume these greater responsibilities. We look forward with confidence to your acceptance of this plan upon the date set for the "yes" or "no" vote. We also look forward with pleasure to our closer cooperation together under the plan.

I hope you will be patient with me because I am trying to make the case of the American Federation of Labor here for your information, and I know that the manufacturers are coming in to state their opposition later.

COMPANY UNIONS IN THE STEEL COMPANIES

I have indicated above that many of the company union plans are identical. That is more than a coincident. It is interesting to see how there are certain large families of plans. Take the steel family, for instance. The Bethlehem Steel Co. has had an employee representation plan for 15 years. This is the granddaddy of many later plans. It was taken as a pattern by the steel companies in setting up employee representation plans in June 1933. The plan of the Carnegie Steel Co., widely publicized-the entire constitution printed in the magazine Steel for June 19, 1933-was the Bethlehem plan with the addition of the following paragraphs:

The management of the works and the direction of the working forces, including the right to hire, suspend or discharge for proper cause, or transfer, and the right to relieve employees from duty because of lack of work, or for other legitimate reasons, is vested exclusively in the management; and, except as expressly provided herein, these rights shall not be abridged by anything contained herein.

Where does a discharged employee get a chance under that?

This plan shall be and remain in full force and effect during the term of the National Industrial Recovery Act and thereafter may be terminated by the management or by a majority of the duly elected employees' representatives upon three months' notice.

Hastily set up, conceived in the minds of shrewd business executives to serve as a shadow without substance during the operation of the emergency National Recovery Act, and then to be terminated if they so desire.

During the fall, when the Bethlehem plan celebrated its fifteenth birthday, there was great jubilation that now the N.I.R.A. recognizes the value of such a plan under its provisions for collective bargaining. In Steel for October 2, E. G. Grace, president of Bethlehem Steel, reports:

The principles of our plan have been adopted by all other important steel companies, and by many large organizations in other industries. Meeting the

requirements of the N.I.R.A. our employees' representation plan continues to serve as the medium of representation just as it has in the past.

Apparently that was a premature boast, for during the last 2 months the steel companies have found it necessary to change this timehonored plan. Steel for February 26 recorded that employees of the Carnegie Steel Co., the Jones & Laughlin Steel Corporation and other large producers in the Pittsburgh district voted favorably on February 22 and 23 on proposed changes liberalizing their employee representation plan adopted in June. Steel for March 5 stated: "The pressure for outlawing company unions is being counteracted by a liberalization of the plans already in effect at many steel works." A concession.

A union member out in Ohio sent me a copy of a letter revealing how this change was being made. You will see that according to the interpretations of the N.I.R.A.:

Our present plan has some clauses that make it illegal. The proposed amendment to our plan will meet the requirements of the law and make it acceptable to the Labor Board. The plan as amended has the approval of our company officers and the local management. It also requires the approval of the employees to make it legal. The failure of the employees of Guernsey Works to give this approval would mean that our plant could not be legally operated unless some other plan was found. At present there doesn't seem to be any other plan that would meet the requirements of the law and be acceptable to both the employees and the management.

Let us stop a minute and see what the steel companies have done. Obviously, they have had no change of heart; only a change of tactics. When they found that features of their plans are being interpreted as illegal, did they say to their employees:

Apparently the employee relations plan which we adopted last summer is not legal; we can tell from the decisions in Labor Board cases that certain features of these are contrary to the spirit of the N.I.R.A. It will undoubtedly make trouble to continue these plans. Let us have free discussion as to what kind of plan you want. Let us have an election to vote as you want.

They had this opportunity, but alas, they did not take it. They posted notices or wrote form letters saying: Our plan is illegal, but if we change it thus and so it will meet the letter of the law. Of course you will have to approve it first, but that is a mere matter of form. Vote on the dotted line. As Steel for March 5 makes clear, employees voted on the dotted line. Why not? The new plan was better than the old one, anyhow.

Since the Carnegie Steel plan has served as a model for so many other plans, let us see what sort of plan it is, both before and after these changes. The purpose of the plan is stated as follows:

In order to give the employees of the Carnegie Steel Co. a voice in regard to the conditions under which they labor, and to provide for effective communication and means of contact between the management and employees on matters pertaining to industrial relations, the following plan of employee representation has been adopted.

At least they have not pretended that it gives the employees an equal voice. In fact, they have specifically reserved to the management the last word and the loudest voice, as we have already seen. It is significant that the paragraph that management is vested exclusively in the management in not touched in the amendments. The original plan provides:

1. Employees of 60 days' service vote for representatives.

2. Only employees with a year's service, 21 years of age, and United States citizens can be elected as representatives.

3. These employee representatives meet annually with the representatives appointed by the management, who may equal but not exceed the employee representatives in number. The plan functions currently through a series of committees meeting monthly; every other month the employees' committees are to meet with an equal number of the management representatives. Meanwhile, the management appoints a "management's representative" to "keep the management in touch with the representatives, and represent the management in negotiations with the representatives, their officers, and committees."

4. The company pays for time necessarily lost at actual attendance at regular meetings or at special meetings of conferences jointly approved.

5. A representative shall be deemed to have vacated his office upon termination of employment, transfer from one voting unit to another, or promotion to a position having a right to hire or discharge employees, as well as by recall from his constitutents.

6. The management which started the plan reserves the right to end the plan. The workers have no choice. It does not expect to do so so long as the National Industrial Recovery Act makes machinery for collective bargaining necessary, but after that the plan may be terminated by the management or a majority of the company's representatives on 3 months' notice.

After all the fuss and feathers, the following changes have been made.

1. The age, service, citizenship qualifications for voters and representatives are removed. All employees on the company pay rolls may vote excepting company officials and persons having the right to hire or discharge. And "there shall be no restriction or limitation in the choice of representatives.

2. With the qualifications for election changed, the situations in which a representative shall be deemed to have vacated his office are reduced to "appointment to such a position as would bring him within the meaning of company officials and persons having the right to hire or discharge.

3. The provision for recall of a representative is changed from "approval by the committee on rules of a petition signed by two thirds of the voters in his department" to "a two-thirds majority vote by secret ballot of the voters in his department or unit, following approval by the committee on rules of a petition signed by two thirds of the voters in the unit."

4. Conference of all the employees' representatives of the plant or of these employees' representatives and the representatives of management may be held from time to time as determined by the employees' committee on rules or the joint committee on rules as the case may be. At such conferences negotiations may be carried on between the representatives of the employees and the representatives of management on: Rules, ways and means, safety and prevention of accidents, economy and waste prevention, wages, piecework, and tonnage rates, hours of employment and working conditions, housing and living conditions, health and works sanitation, education and

publications, athletics and recreation, continuity of employment and conditions of industry.

This may mean a change in frequency of meetings, since originally only an annual meeting was scheduled and nothing was indicated concerning the meeting excepting that the joint committee on rules would be in charge of the procedure of the conference.

5. The right of termination of the plan is taken from the management. The announcement in one mill explained, "The plan is now binding on the company unless and until a majority of employees voting at a regular annual election vote to terminate it."

Thus the steel companies' plan, 1934 model, is "liberalized" over the 1933 model, but it is still the steel companies' plan. After the publicity of these changes, we have here an employer-dominated plan.

Now look for a moment at the way this plan has spread. I do not confess to have a complete file of company-union plans. Among those which members of our affiliated unions have sent in are the following like the Bethlehem Steel plan:

Green Bay Drop Forge Co., Pittsburgh Steel Co.

Other older company plans which are similar in many respects are: Swift & Co., Standard Oil of Indiana, Cheney Bros., Goodyear Tire, Youngstown Sheet & Tube, Armour & Co.

A much larger number are like the Carnegie Steel plan, a 1933 version of the older Bethlehem plan:

Alan Wood Steel Co., American Rolling Mills Co. (slightly more liberal in details), American Steel & Wire Co., Illinois Steel Co., Inland Steel Co. (this plan provides specifically that officials of labor organizations are not eligible as representatives).

United States Pipe & Foundry Co. (this plan has its own merit clause, as follows:

It is clearly understood and agreed that nothing contained herein shall impair constitutional rights of employee to bargain collectively nor to operate an open shop * * Nothing contained herein is intended to prevent the selection, retention, and advance of employees on their individual merit without regard to their affiliation or nonaffiliation with any labor organization.

Weirton Steel, other industries following the same plan are: Lyon Metal Products Co., Inc., Continental Can, Michigan Limestone & Chemical Co., Philipps Packing Co., Pittsburgh Plate Glass Co.

Many other plans differ in a few details. Among those which we have observed are the following:

American Steel Foundries Co., E. I. duPont de Nemours & Co., General Cable Co., Hoode Co., Newport Rolling Mills Co., Standard Sanitary Manufacturing Co., Viscose Co.

Notice that the Carnegie Steel plan is printed in a little graycovered pamphlet. This is not significant at all. But it is interesting that there are so many gray-covered black-bordered pamphlets sent in from employees in other steel companies, many with the same square underneath the name of the company and the same provisions inside excepting for a change of date or place or number of representatives. Bethlehem and a few other steel mills have used a tancovered pamphlet. Other companies following the content of these booklets have used a variety of sizes, shapes and colors.

Now, then, I want to refer just briefly to company unions in the automobile industry.

As examples of how employers have initiated plans through which they sought to influence the operations of the company unions, take the situation in the automobile industry. Here there were no company unions when the National Recovery Act was passed. They started at scratch.

They were aided and abetted by their trade paper, Automotive Industries. They ran an amazing series of articles.

July 15, "Is the Open Shop in Jeopardy?" by L. W. Moffett. July 22, "Works Council Plan Won't Work as Negative or Defensive Expedient," by Norman G. Shidle.

September 30, "Works Councils for Automotive Workers?" by Norman G. Shidle.

October 21, "The Employee Representative Plan for Which Chrysler Workers Voted 5 to 1" (including the Constitution).

December 2, 1933, "A Critical Look at Article 7 (a) from the Employer's Viewpoint," by Joseph_Geschelin.

December 9, "Have Employee Representation Plans a Place in the New Deal?" by Joseph Geschelin.

December 23, 'meeting N.I.R.A. Requirements in Employee Representations Plans," by Joseph Geschelin.

The last article is, in many ways, the most interesting, for the author suggests how to make a company union plan legal, in these words:

It is evident after listening to the experience of those who have experimented in this field that while a successful employee representation plan primarily must meet the immediate practical needs of the situation, it must also be skillfully drafted so as to comply with the legal aspects of the plan as a contract between the employer and his employees. Of course, so far as to legality is concerned, it is recognized that under present conditions the employer is the only responsible contracting party and is the only one rigidly bound by its provisions. Nevertheless from a strictly practical point of view if the plan is drawn up so as to meet certain interpretations of article 7A of the N.I.R.A., the employer at least has the semblance of right on his side and is placed in a better strategical position in his dealings with regional labor boards or the National Labor Board. The following additional suggestions are given:

In the light of interpretations of article 7A of the N.I.R.A., some experts in this field recommend the following guiding principles in the drafting of any new plan:

1. That the plan must first be sold to the employees.

2. That employees must be given time to study and consider a tentative draft of a plan before it is adopted by the company. Moreover, the employees should be given the opportunity to make suggestions and recommendations as to changes.

3. That it would be advisable to set up a constitutional convention to ratify the draft of the final plan and then submit the plan to a vote of all eligible employees.

4. That the plan should provide definite machinery for collective bargaining and make provision for a final decision on questions brought up before the conference. This definitely demands machinery for arbitration.

5. Restrictions on the qualification of employee representative should be very limited to avoid discontent.

Qualifications such as a long period of service, American citizenship, and so forth, may meet with considerable resistance.

After observing that there is no unanimity among personnel men as to the preferred type of plan, he states:

It is thought to be bad policy to permit employee representatives to meet privately since there is no control over the issues that they bring up and, also, because the group forms a majority opinion on any given issue, which is hard to change in subsequent arbitration.

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