STATEMENT OF WILLIAM E. DENNISON, BUSINESS REPRESENTATIVE SOCIETY OF DESIGNING ENGINEERS, DETROIT, MICH.Resumed

Mr. DENNISON. Mr. Chairman, I had left off my testimony this morning at a place where I had started to speak of some of the propaganda by this man named Lund. For your information, this was from the Detroit Times, of Sunday, March 10-it is a part of the previous transcript-in which he is speaking against Government regulation of industry in any way, and makes a number of statements. In one of them he says that this is the best business system the world has ever known, and he seems to feel that unrestricted individual business enterprise is a stimulant to national production. He seems to feel that if industry is regulated in any way, or the Government steps in as a third party between capital and labor, to supervise things, that it will hold back production. We feel just the opposite about it. Being mechanical engineers and being directly involved in the manufacturing and producing end of things, we feel that on the distributing end, as I started to testify, it is mainly a problem of distribution, and that unrestricted private enterprise has several bad social effects. We feel that such a thing as the duplication of similar products, unregulated hours, unregulated wages, there being no one to umpire disputes between capital and labor, competitive wage cutting, competitive price cutting, and all of those things paint a picture of industrial chaos and a picture of continually falling living standards, and worse than that, they cause a number of conditions to be imposed upon the worker which are almost beyond human endurance, such as the speed-up systems used in these shops, and they make possible espionage, spying upon the workers in meeting, they make possible all of this chaotic picture that one can find in the Henderson report on the automobile industry.

The lack of Government regulation, then, I believe, leaves a picture of industrial chaos, and in turning away from that dark picture and looking about us for some possible hope of better industrial relationships, the only place that we have been able to find it is among those industries which are organized, among those industries which have what are generally known as "closed-shop" conditions. For instance, there are newspapers on which are working men who are working under agreements with the companies, signed agreements, signed contracts, labor contracts existing between the employer and the employee, elective contracts in which the rights of the workers are clearly defined, and also the duties of these workers are clearly defined. They have certain rights relative to seniority, relative to hourly pay and to vacation times, and many things enter into these labor contracts that the open-shop industries do not have. I will try to describe the condition briefly. It is a very important thing to be borne in mind in connection with this bill.

In the open-shop industries section 7 (a) has not done us very much good. The psychological effect of its having been written into law for a time did help us. It has finally, however, sifted down to this, that whereas before the enactment of N. R. A. with its section 7 (a), a foreman could discharge a worker for organizing

activities, without any excuse whatsoever, now the foreman is hard pressed to find an excuse sometimes. At other times he just simply blames some condition upon the worker. He says, "I discharged him for losing time", "He was not an efficient man "I discharged him for this, that, or the other cause ", instead of giving the real reason. Section 7 (a) is very difficult to enforce in an open-shop industry as it now stands. One of the difficulties that we have found that Government boards, such as the Wollman Automobile Labor Board, for instance-I will offer that as a typical example, although this is also true of the Detroit Regional Labor Board which has jurisdiction over other industries besides the automobile industry-is that if one of our members has been discharged because he was a member of this organization, or for his organizing activities, the burden of proof is laid on us, and if a code violation has taken place in any way we do not have the right to initiate criminal prosecution. There is a penalty, of course, provided for code violations, but instead of the workers being in a position to force the prosecution of the employer for his violation of the National Industrial Recovery Act, we can only appeal to the Board for a hearing, and they only have the power to ask the manufacturer to come there and meet us, and in many cases they do not even do that.

We had a case of one of our employees against the Hudson Motor Co., which was a very good case in point. This was before the Detroit Regional Labor Board. The employee's name was Paul Horsch. He had worked for the Hudson Motor Co. since January 1929 as a checker. A checker is perhaps one of the best trained of tool designers. He had drawn the top rate that that company had paid for a number of years. He had been retained in preference to most of their employees when there were lay-offs and he had been one of the first ones hired, showing that the company really valued him as a workman.

But in the fall of 1933 they had been ground down as low as 80 cents an hour, and of course they were very much dissatisfied, so that a committee of the men was elected, and a meeting was held in the meeting hall of these designing engineers of that Hudson group, and a committee was selected to present certain requests to the employer, and in the course of time one of the committee members retired, and this man was appointed as a member of that committee, and a letter was sent to the interested supervisor of the company, the foreman, informing him of his replacement on that committee for someone else, and in that letter we also had something to say about working more than 40 hours a week at that time.

It just happened that he was the first one on that committee that the foreman's eye lighted on that morning while he was reading that letter, and the man stopped to speak to a fellow employee for a couple of minutes, a fellow that had just been taken on, that he had not seen for a couple years, and the man then went on to his work. The foreman used that as an excuse to discharge him.

So we took the matter up with this board, and after presenting the case they found from the evidence that there had been no discrimination.

In a closed-shop industry that would be impossible, because on these newspapers it works something like this. A man who is a new

employee of one of these newspapers works for that newspaper 30 days before he is accepted as a competent worker. At the end of 30 days the newspaper owner is given his choice to declare whether that man is competent or not. After that period, if he has been accepted as a competent workman, he is assigned certain seniority rights and the various rights that come under their labor contract. If, after he has been declared a competent workman, for any reason that newspaper would wish to discharge him, they can only do so with the consent of the shop committee of the employees there. They have to have some good reason for discharging a workman in those particular newspapers.

Another thing I want to point out is that during this depression the wages of these workers in these newspaper plants have not varied. You will remember that table which I read this morning, which shows that in boom times our wages may go up to a certain peak, and in depression times, under the competition of bidding against each other for jobs in the open-labor market, our wages go down, our purchasing power goes down, and our ability to consume goods goes down. The value of everything we touch goes down.

I might digress for just a moment to let you see clearly what I mean by that

Mr. LESINSKI. Before you proceed, speaking of the regional labor board and your troubles in the Hudson Motor Car Co., isn't it a fact that these regional labor boards consist of manufacturers or one of their high officials?

Mr. DENNISON. Yes.

Mr. LESINSKI. Is not Larned, who happens to be the president of a manufacturing concern, the chairman of the regional labor board? Mr. DENNISON. Yes; he is.

Mr. LESINSKI. That is the reason for it, then.

Mr. DENNISON. In this particular case Mr. Larned was not involved, but he is in a position so that if anything comes up which is very vital to the interests of the company-minded people, that do not agree on closed-shop conditions and do not agree on labor having a very great return for its work, he is in a position of strong influence there, and the fact that he is a manufacturer is, in our opinion, very much against his being the chairman of that particular board.

In creating these boards some very difficult problems arose.

I notice in this particular bill here there is a question that I want to touch on when I come to it, and I will touch on that question, Mr. Lesinski. I will be glad to touch on that question. I just want to be sure that I touch on them all.

I am speaking of this condition of industrial chaos and the difference between the open and closed shop. I want to demonstrate the social effect of having stabilized wage standards.

Now, the consuming power, the ability to consume goods of these newspaper workers has not been impaired during the depression because they have not taken many wage cuts. There has been some unemployment among them, a little; but, of course, newspapers run pretty steadily, and as far as the closed-shop industry as a whole is concerned, there has been a good deal of unemployment, but wages have not been noticeably cut. Even in the building trades, as hardpressed as they have been-and no industry has been hit any harder

than the building trades-wages have been pretty well maintained by those that were organized. The result is that if we had had a nation in 1929-I draw this conclusion-of well-organized labor groups where there had been a balance of power maintained between labor and capital, things would have been stabilized to some extent. This depression would not have been aggravated by wage cutting, by the competition between manufacturers to manufacture something cheaper, cheaper, and cheaper.

And I want to say with reference to this distributing system being very good, that it has also caused a great impetus in the manufacture of shoddy merchandise. I don't know whether that has occurred to many people or not-that unregulated, unrestricted competition has a tendency to encourage the manufacture of substitutes for the real article in order that a manufacturer may sell the article cheaper on the market and undersell his competitor who is making a decent,

honest article in trade.

When I say that the value of everything that a certain labor group touches is also benefited along with the wage rate I would demonstrate it this way. If this building were built for sale, and it had been built by labor that in 1929 cost $1.50 an hour, and if in 1933 the hourly rate of that labor had been reduced to 75 cents an hour, and if the labor that dug this raw material from the ground and moved it from the forest, the wooden parts, or processed it from the mines, on the steel and metal parts-if that labor also had been deflated the same amount, and so forth, this building would only be worth half what it cost in 1929 if the amount of deflation had been from $1.50 to 75 cents, because it could be duplicated then for practically half of its former cost. And if you were a building owner, whether it were a residence, an office building, or the owner of any commodity, such as a screw machine, a lathe, or an automobile, and that product a year later should be duplicated for half of the cost, the value of that property would be deflated by half.

So wage cutting in 1929 became a form of deflation, and it became the worst form of deflation, because I have this picture in my mind. I will leave this little sketch. Do you accept sketches here?

The CHAIRMAN. We cannot put a sketch in the record.

Mr. DENNISON. I will describe it verbally this way. If we had a platform erected here, and upon that platform were setting a market basket, a building, an automobile, and a factory, and if there were three legs that held that table up, upon which these commodities were resting, and if we called the level of the top of the table the level of value of these commodities, the three legs of that table upon which the value of the commodities rests would be the cost of the raw materials, the cost of labor, measured by the rate in dollars per hour, and also the profits or rents or interest that went into the retail market value of those commodities. In other words, a commodity is composed, as far as value is concerned, of three things-the raw material, the cost of which is largely labor, the hourly rate of labor, and whatever profit has been made between the producer and the

consumer.

Now, currency inflation enters into the picture, of course. Since currency is just a means of allowing two people to exchange two values, it is possible, by changing the value of currency to bring

about a certain kind of inflation-but I want to point this out in passing, that since your bill would inflate the labor base upon which commodities rest, it would be a better thing than to tamper with currency inflation. I believe that your 30-hour bill would do this. This would support a certain standard level of living, a certain commodity price level. From 1929 until now the hourly rate of wages has been tremendously deflated, with the result that property values have also been deflated. If the labor rate were inflated, the hourly labor rate, it would be the kind of inflation that would bring up these commodity price values to their former levels, and it would also keep purchasing power ahead of the increase of commodity prices.

If we inflate the currency, it has this effect: The cost of commodities goes up in advance of the cost of labor, and during that period in which commodity prices are rising, and in which the working class, in order to meet these rising commodity prices, must receive an increased wage in order to buy even the necessities of life, there is sure to be industrial friction, industrial warfare, strikes, and so forth.

So I am in favor of your bill, for the reason that by inflating labor rates first we have a different picture: We have the hourly rates of labor rising ahead of the rise in commodity costs.

Then I had started to say, when we recessed for lunch, something about factories making for unsteady and spasmodic employment on account of unregulated hours. Since the beginning of the N. R. A. and since the codes have been adopted, some slight amount of improvement has been made, but in 1932, 60 percent of the designers were unemployed, and the ones who were employed worked as many as 75 to 80 hours per week. That was quite common. This was during the extremely low spot of the depression.

We had hoped that the N. R. A. would give to our people the regulated hours that had been given to some industries under some of the codes, but under the automobile code we have found there are various loopholes by which the various manufacturers are now working their designing engineers, in some cases, as much as 70 hours a week while others are unemployed. However, the practice is not quite as common as in 1928 and 1929, but it still is done, because there are loopholes in these codes that exempt the skilled worker in many instances, and the manufacturer has managed to take advantage of every little loophole there is.

One of the devices by which it is done is to pay the men $35 a week in salary, which exempts them from code provisions. It may have been that when the administration allowed such a provision to become a part of the code, they were thinking of that class of worker who is steadily employed the year around, and it may be that the administration is under the impression that $35 a week constitutes a fair living wage. However, it seems that in this industry and among this group of men our average member does not work even as much as 5 months in the year, not much more than that, so you can see that even $35 a week salary means nothing, if a man only works 5 months in the year.

One of the factors contributing to spasmodic employment, et cetera, in this industry, the automobile industry is the determination of the manufacturers to keep a surplus of labor available, by work