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Mr. FRANKENSTEEN. No; I think not. In many instances it is personal selfishness and a desire to protect themselves.

I would say that one-third are of that opinion and that two-thirds would stay in industry where they felt they could do the most service.

Mr. Clason. Do you think it is necessary to bring into this country these laborers from Mexico and the Bahamas and other islands in order to man the country properly for war?

Mr. FRANKENSTEEN. I do not think that is necessary at this time. If an over-all planning job is done I think it might become necessary, but it certainly is not necessary at this time. Too many of them are being used and are being brought in now to be used for nonessential things so far as the war is concerned, for cotton and so forth.

Mr. COSTELLO. How about the situation in California where they are trying to get Mexican labor for the farms?

Mr. FRANKENSTEEN. It might become necessary, yes; I say, in my opinion, if an over-all planning job is done and if there are places where too much manpower is at the present time when the work could be handled if a more proper job and over-all planning of materials and the allocation of contracts was done on a national basis. Then I think perhaps at least we ought to find out whether or not the manpower existent would not be able to solve the problem and for that reason I feel that Mexican labor and Bahaman labor might have to be brought in but I do not think it is necessary now.

Mr: CLASON. Suppose the Austin-Wadsworth bill is passed and becomes a law and we have this compulsion, on what basis do you think it would be fair for some persons, men or women, to be placed in factories at fairly high rates of wages and to have fine working conditions and others who would have to go on the farm where perhaps both the hours would be long and the wages less and the labor more difficult and the living conditions not as satisfactory? How would you work out a condition like that even in wartime?

Mr. FRANKENSTEEN. Well, you see, I think you have to go back even to peacetime. First of all, the farmer was never able to pay the same wages to the farm laborer as the factory employer was able to pay to the laborer in the factory, and why in the name of reason the farmers today feel that they can compete with the higher wage schedule that he was not able to do before is beyond me. You also have to realize the fact that there was a certain degree of security, a greater degree of security, on the farm. The farm laborer working on the farm does so perhaps because he thinks it is healthier to be on the outside and he chooses to be on the outside. Or perhaps he had a family and his home relationships there or perhaps he owns his property there, and all of those things, plus the permanency-he knew he had something to eat. I do not think we are going to make a utopia out of the war situation so that people can better their conditions. The farmer never had that same wage as the industrial worker and I do not think that now is the time to seek that.

Mr. CLASON. Suppose the Government steps in and starts putting certain persons on the farm. It is going to be temporary until the boys come home, but on what basis do you say the Government ought to put these people out on the farms in less desirable occupations in comparison to those put into factories? Should they be paid on the same basis?

Mr. FRANKENSTEEN. Of course your question assumes that I agree with compulsory placement.

Mr. Clason. Suppose the law is passed and you have no control over it; on what basis do you say people ought to be compelled to go to different occupations so far as the wages question is concerned?

Mr. FRANKENSTEEN. That raises a tremendously broad question which I do not feel qualified to answer. I would like to submit an answer to that question with proper opportunity to study it.

Mr. CLASON. I wish you would.
The CHAIRMAN. Mr. Durham?

Mr. DURHAM. Mr. Frankensteen, a few minutes ago we were on this question of incentive payment. Can you define the difference between incentive payment and bonuses?

Mr. FRANKENSTEEN. Yes.

Mr. Durham. The manufacturers at the end of this year were prohibited by the War Labor Board from paying bonuses throughout the country and you said that incentive payments would not have any effect on inflation and at that time their contention was that bonuses would have that effect.

Mr. FRANKENSTEEN. There is some tie-in between bonuses and incentive. But an incentive is payment for extra production. For instance, you have a base rate, everybody is guaranteed a base rate. An incentive means a payment for extra production and the base rate is the payment for standard production, a mean of production, let us say of 80 pieces, or whatever it might be. The man through his extra energy or through the group, let us say, we learn to facilitate our activity and we turn out more production and put in more sweat, in other words, so as to increase the production from 80 pieces to 100 pieces. That is not inflationary. The extra money paid for extra production, even though more is paid, is not inflationary, because only so much money is paid for so much produced. That is the answer to the inflation question raised by people here. There is no more money going into circulation when you pay the extra amount for the 20 pieces which I produce because you are only paying at a rate that the 20 pieces would be paid for when the same personnel are doing it, but you are alleviating the manpower situation.

Mr. Durham. You are already manufacturing during a 12-month period and then you cut it off.

Mr. FRANKENSTEEN. Oh, well, on that there must be planning and there must be sufficient materials sent into the plant where priorities exist. Now, it is understood I think by everyone here, they recognize that airplanes are the No. 1 need in this country, even more so than ships at the present time, I am told.

Mr. DURHAM. Every person in the country has told us that excess spending power of course produces inflation.

Mr. FRANKENSTEEN. Excessive spending money in terms of ultimate production, that is true, but that does not create excess spending power. It does not put any more money in circulation. Let us say, instead of paying for 80 pieces at the base rate that you raise the base rate and you pay for that an equivalent amount of money it would take to produce 100 pieces.

MR. DURHAM. I see your point there. That might be considered as an inflationary spiral because they are increasing the price of the commodity without producing any more of the commodity.

Mr. SHERIDAN. Mr. Frankensteen says that it would not be inflation money, but if you increased the volume of money available for the purchasing power, say during the month of April some of it might have to run into May and then you would have an inflation period in April.

Mr. FRANKENSTEEN. No; inflation is based on production units. Inflation comes about when there is no greater output of material and more money is put in circulation. When you increase the product it does not make any difference whether it is May or June. The workers are producing goods and the money is paid for the goods. Unit cost is the answer.

Mr. PHILBIN. That is true in normal times but now when they are producing war goods that would not be true.

Mr. FRANKENSTEEN. I think it would.

Mr. PHILBIN. They are producing war goods and there is more money to buy ordinary goods.

The CHAIRMAN. That is, consumer goods.

Mr. FRANKENSTEEN. No. As to consumer goods and also the other goods so much money is going to be spent for war material.

Mr. PhilBIN. I think it would produce inflation. Your argument would be perfectly true in ordinary times that increased productivity should go along with increased earnings but these are abnormal times because they are producing not consumer goods but war goods and it would have an inflationary effect.

Mr. FRANKENSTEEN. Even so, let me point out that you must have more production that has got to be turned out and it has got to be turned out as quickly as possible. We cannot balance our economy at the expense of budgeting our output.

Mr. DURHAM. You can say the same thing, of course, with reference to the production of food when you set up parity payments.

The CHAIRMAN. Thank you very much.

Mr. FRANKENSTEEN. I have often said here "My union.” May I qualify that by saying, in speaking in my capacity as their representative, I spoke of the union I belong to?

The CHAIRMAN. The United Automobile Workers?
Mr. FRANKENSTEEN. That is right. Thank you.

STATEMENT OF A. C. HORROCKS, GOODYEAR TIRE &

RUBBER CO.

The CHAIRMAN. We have before us as our next witness Mr. A. C. Horrocks, of the Goodyear Tire & Rubber Co., of Akron, Ohio.

Mr. Horrocks, you may proceed to make any statement you wish with reference to your position on this bill.

Mr. HORROCKS. Mr. Chairman, I do not appear as an employee of the Goodyear Tire & Rubber Co. I appear as the educational director of the National Association of Foremen in which organization since 1936 I have been chairman of the educational committee, executive vice president, national president for 2 years, chairman of the board, and am now the educational director.

Our affiliated associations are scattered from coast to coast. The greater number of them lie east of the Mississippi and north of the Ohio because it is the major industrial section. In the last 7 years I have perhaps talked to more foremen than any other individual in

the United States and we have been vitally interested in this legislation with the hope that it might clarify some of the things that have not yet been brought out into the light.

I wish to state that the National Association of Foremen was organized October 8, 1925, in a meeting at Springfield, Ohio, under the laws of the State of Ohio. It is an organization for the education and creative upgrading of foremen in management and our plea is that this issue might be cleared to the point that we definitely know, as we have professed, for these years, that a foreman is management and that all men in the top ranks of management have come up through the ranks and that to our mind there is a strong line of demarcation between the man who works and the man who supervises that work. We would not classify an accountant or a timekeeper, but we would classify a supervisor of timekeepers or a manager of the timekeeping department as a foreman or a supervisor. Some time ago we were asked what our ideals were and why we had this work. I might read from our constitution naming the objects of the national association:

The objects of the association shall be (1) to increase the quality of foremanship by education through the medium of foremen's clubs, and (2) to raise the standard and promote the appreciation of foremanship as a profession.

We are vitally concerned in this war effort so see that the greatest amount of material is turned out and the foreman's first job is to get the work out. He is charged directly with that responsibility. I am well aware of the fact when you use the term “foreman" it covers quite a multitude of men, but as we use the term it is a man in industry who supervises the work of other employees. Therefore he is more vitally interested than just in the production of goods. He is vitally concerned in absenteeism, and he is concerned with the safety engineering of his men and in the hiring of competent personnel for his department and taking care of their personal grievances if they have any that are not covered by any other organization, and generally speeding the production effort.

Well, that is a rather brief statement. I could go on and on and take up your time with a lot of other things but this is an organization that has grown over the years of, by, and for the foremen. We have never used money from industry or from any association. It has been raised entirely through the dues that were paid in by its membership. I might state that those dues are $2 a year.

About a dollar of those dues goes for the publication known as Supervision, which is the only magazine in the world that is written for the foremen. And we strongly urge the consideration of that line of demarcation so that we may definitely know without guessing whether we are fish or fowl and that we are definitely management.

With that statement I shall be glad to submit to any questions you may have.

The CHAIRMAN. Then you are in favor of some sort of legislation along the line of that proposed in the Smith bill?

Mr. HORROCKS. To that extent; yes, sir.

The CHAIRMAN. How many members have you in your national association throughout the country?

Mr. HORROCKS. We are servicing at the present time approximately 60,000 foremen.

The CHAIRMAN. Were you here the other day when the foremen's representatives from the Detroit area were here? Mr. HORROCKS. No, sir; I was not. The CHAIRMAN. Do you have a membership in that area? Mr. HORROCKS. We do. The CHAIRMAN. In the Ford plant?

Mr. HORROCKS. No, sir. We have many members up there. Some of the boys in the General Motors division scattered throughout the country and we have a number of clubs that are formed there in the Greater Detroit Foremen's Association also.

Mr. MERRITT. How about the Diesel plant of General Motors?
Mr. HORROCKS. We have nothing to do with that.

Mr. MERRITT. Their foremen's organization was here and opposed this bill and so was the foremen's association from the Ford plant. They came in here and opposed this bill. Therefore, your organization does not take in all of the foremen's organizations throughout the country?

Mr. HORROCKS. Oh, no. No, sir.
Mr. MERRITT. What percentage do you take in?

Mr. HORROCKS. A very small percentage, 60,000 are not very many out of approximately 1,750,000 foremen.

Mr. MERRITT. Your organization is in favor of this legislation? Mr. HORROCKS. Yes, sir. You have the industrial division of the Y. M. C. A. known as the National Association of Foremen's Clubs that have many foremen's clubs in the East and the Iron & Steel Institute and the Petroleum Institute and the National Metal Trades Association which are all trying to do a job for the foremen.

Mr. COSTELLO. You feel that some legislation is necessary in order to make a clean-cut distinction between your foremen or supervisors and the employees?

Mr. HORROCKS. Mr. Costello, we would greatly appreciate that.

Mr. COSTELLO. Do you think it would be rather easy to define that line of demarcation, or not?

Mr. HORROCKS. I think it would be very easy to do it. You may have some isolated cases where it would be difficult but by and large it would be easy to distinguish that line.

Mr. Costello. Do you think the method of payment may be used as a method or a basis for making that line of demarcation when you are paying on a monthly basis as opposed to an hourly or weekly basis?

Mr. HORROCKS. That is right. Mr. Costello. That would be sufficient to possibly give you that distinction?

Mr. HORROCKS. I think it would.

Mr. Clason. If that was a distinction why wouldn't the management immediately take in any group as foremen by putting them on a per annum basis?

The CHAIRMAN. And if they needed them all they could do that.

Mr. CLASON. I mean, that seems to be a kind of unusual distinction. Is there any definition you would give of a man in the foreman class other than the fact that he gets paid on a per annum basis?

Mr. HORROCKS. Oh, absolutely, yes. As I just stated, the foreman is a man who has definite charge of a group of men or women and he must see that their work is produced properly.

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