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Mr. M@NEAR. How are you going to get this impartial referee!
Mr. JOHNSON. You had three on there and the other side had three.
The CHAIRMAN. Do they have an umpire?

Mr. JOHNSON. He does not know how they appoint the man who finally makes the determination.

Mr. McNEAR. I do not know what the provisions are in the act.

Mr. JOHNSON. That is the key to the solution of the problem, to get the right kind of referee.

Mr. McNEAR. The fact is, and the history shows, that the referees that have been appointed by the Adjustment Board have in the great .majority of cases been very prolabor.

There was one famous case that was taken up. They had a referee appointed—he came from Minnesota--and the brotherhoods found out that he was going to give a decision in favor of the railroads, so the brotherhoods withdrew the cases. They withdrew them. That case went to court. I do not remember what happened to it.

Mr. JOHNSON. Do you not think that the railroad business is a little different than the International Harvester's business? Your rates are fixed. They are regulated. You have the matter of the United States mail and the public interest involved, so do you not think there is a difference in the two situations?

Mr. McNEAR. Well, personally, I do not think so. I think that the railroads have this element of competition now. They are no longer a monopoly.

Mr. Johxson. That is not due to the railroad management, that is due to Government subsidies that were put in over a period of 25 years to break up some of these monopolies.

Mr. McNEAR. And it is also due to the growth of Government-subsidized competitors-highways, waterways, air, busses, all kinds of things that the Government subsidized.

Mr. JOHNSON. You remember the Southern Pacific-Union Pacific monopoly. It took 10 or 15 years to break that up, and I do not know whether it has been broken up yet. The public has a distinct interest in those matters.

Mr. McNear. So far as rates and serving the public are concerned, naturally there should be some regulation.

Mr. Johnson. Your statement before I came, does it contain specific examples where men were receiving pay who were doing little or nothing?

Mr. McNEAR. Yes.

Mr. Johnson. I do not want to question you about those. I will read the record.

The CHAIRMAN. I want to ask a few questions. What is the mileage of the Toledo, Peoria & Western Railroad?

Mr. McNear. We own 230 miles. The mileage operated is about 239. The CHAIRMAN. What are the roads that you connect with?

Mr. McNEAR. We have 17 different connections. On the east, we connect with the Pennsylvania

The CHAIRMAN. I just want to know the number.

Mr. McNear. We serve as a bridge line between the eastern and the western railroads. Our line runs across Illinois through Peoria, and

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we act as a bridge line to handle overhead traffic largely between the eastern and the western lines.

The CHAIRMAN. It is a sort of link?
Mr. McNEAR. Avoiding the Chicago gateway; yes.

The CHAIRMAN. Now, Mr. McNear, in the interest of time, I am inclined to ask you about the question of these extra pay days that were allowed, but I did not think you made it quite clear to me.

I understood you to say that there were men working for 1 day and they were paid for an additional day in the yard, and in one instance, or in some instances where they worked 10 minutes, they were paid for a whole day. What brings that about. Is that the regulation, or the rules?

Mr. McNEAR. Yes; that is a rule.
The CHAIRMAN. Imposed by whom?
Mr. McNEAR. Oh, that is just an old rule that has been agreed to.
The CHAIRMAN. That is enough answer to that.

It is your judgment that the management of railroads, as well as the management of industries, ought not to be unionized so long as the workers in the industry and on the railroads are organized under regular union connections!

Mr. McNEAR. You mean that the management should or should not be unionized ?

The CHAIRMAN. That is what I asked you.

Mr. McNear. Well, I thought there was some law prohibiting the managements from conspiring together, as they call it.

The CHAIRMAN. No; there has been no law passed prohibiting management from either unionizing or not. Mr. JOHNSON. The chairman means foremen.

The CHAIRMAN. I am talking about the foremen and the management from the foremen up.

Mr. McNEAR. You mean the supervisory force ?

The CHAIRMAN. Yes; the supervisory personnel. Do you think that they ought to be organized and belong to the union that the workers belong to?

Mr. McNEAR. I do not think so; no, sir.
The CHAIRMAN. What are your reasons for saying that?

Mr. McNEAR. I think that a supervisor, a foreman, is a part of management.

The CHAIRMAN. Do you think that management belonging to a union with certain requirement and obligations of fidelity represented on their side would be impartial to the owner of the property if they were to belong to that union!

Mr. McNEAR. Well, I do not. Why not have the railroad presidents in a union! Why not have everybody in a union?

The CHAIRMAN. Do you think that that would work!

Mr. McNEAR. Why, no. I believe in individual enterprise and private initiative. That is the way I think you get the job done.

The CHAIRMAN. You believe that a man who has his money invested in a thing has more interest in it than the man who does not have!

Mr. McNEAR. Yes; and that man, if he is smart, is going to take good care of his employees, and our records show, the Interstate Commerce records show, that the average compensation under the featherbed rules and under Mr. Eastman's compensation, is less than what they got under our rules. It is in this exhibit.

The CHAIRMAN. Now, your railroad was taken over under an Executive order of the President by the Interstate Commerce Commission, Mr. Eastman, as I understand it, and is now in the hands of the Government.

Mr. McNEAR. It was taken over by the Office of Defense Transportation, not by the Commission, sir. Mr. Eastman acts as the Director: of the Office of Transportation.

The CHAIRMAN. Do they still have it?
Mr. McNEAR. Yes.
The CHAIRMAN. And they are operating it?
Mr. McNEAR. Yes.

The CHAIRMAN. Tell us whether or not these featherbedding practices have increased or decreased since the Office of Defense Transportation took them over.

Mr. McNEAR. About 3 months after the Government took over our properties Mr. Eastman inaugurated the standard featherbed rules, on our railroad, with some minor concessions.

The CHAIRMAN. Minor concessions to the management?

Mr. MoNEAR. Minor concessions to the management. They were very minor, but for the most part they were the standard "featherbed” rules, and they resulted in the adoption of wasteful practices that had never before been in effect on the Toledo, Peoria & Western Railroad.

Immediately when these rules went into effect the number of yard engines that were used to switch cars at the Peoria terminal was increased from three to five overnight.

The CHAIRMAN. That was demanded by the employees? Mr. McNEAR. That was made necessary by the rules which were adopted.

The CHAIRMAN. Has that increased or retarded operations of the road? What has been the effect?

Mr. McNEAR. Well, so far as the operation of the railroad is concerned, that is to say, the number of hours that it might take to get a car from one end of the railroad to the other, if that is what you mean

The CHAIRMAN. Yes.

Mr. McNEAR (continuing). I do not imagine there has been any material change in that. The point is that you are taking more equipment, more manpower, to do the same work.

Mr. COSTELLO. What was the financial condition of your company before Mr. Eastman took it over?

Mr. McNEAR. You would like the relationship of earnings to charges?

Mr. COSTELLO. Your financial condition.

Mr. McNEAR. We have some 4-percent bonds out that were selling at par.

We have a road-investment account of around $8,000,000 or $9,000,000, against which we had approximately $1,500,000 of bonds, and the interest charges on those bonds were earned about five times.

Mr. COSTELLO. You were operating at a profit at the time. It is my understanding that between the time you took it over and Mr. Eastman took it over, you had been operating at a profit?

Mr. McNear. As I explained earlier, I bought that railroad at a foreclosure sale in 1926. At that time the road was losing about $15,000 a month before taxes. I had no money, but I thought I saw

an opportunity to do a constructive job because half of this railroad was destined for the junk pile. All we did—I do not know anything about the railroad business—but all we did was to operate the railroad so that we could have some money left over at the end of the month, and we operated it in the black beginning with 1927 and ever since.

Mr. COSTELLO. There has been necessary a greater usage of equipment to perform your operations?

Mr. McNear. The equipment we had was there. They are using five switch engines instead of three.

Mr. Johnson. I would like to ask one more question. Mr. McNear, suppose that the foremen formed an organization, or union, in which there were only foremen, that is, they were not part of the same union in which the workmen belonged. Would that be a satisfactory thing, from your point of view?

Mr. McNEAR. You mean that the foremen on one railroad would be in the same union with the foremen on some other railroad?

Mr. Johnson. That might be it, yes, or just a local union. For instance, in the Southern Pacific shops in the Sacramento area there are probably 200 to 500 foremen. I do not know what the number is, but there is quite a group of foremen. Suppose that they formed a union for the purpose of handling their particular problems in dealing with the employer as one unit instead of each foreman talking to the employer personally to adjust his affairs. Would there be any harm in that in the operation of the railroad?

Mr. McNEAR. If it was confined to one company--that is, the foremen of one organization would not be in the same union with the foremen of some other company

Mr. JOHNSON. I do not know about that.

Mr. McNEAR. Well, the reaction I have offhand, this is a new subject to me, but the reaction I would have offhand is—why do it? What is the reason for it? Is it because the foremen are not getting enough money?

Mr. Johnson. That may be one problem; yes.

Mr. McNEAR. All the foremen want to do is to get a little more inoney. The foreman is management. You know a man who works by the hour, when he leaves the job he forgets it. He leaves a job where it is. He goes on home and has nothing more to worry about. But a foreman usually takes his troubles home with him. He is a part of management. He may be called during the night. The foreman is the fellow that is on his way up. He is going to be up in the president's chair some day. That is where he wants to get. I do not see that foremen's union proposition at all. I do not see the reason for it. I can see this part of it, that some fellow who wants to organize a foremen's union, will say:

Look at the hundreds of thousands of foremen in the country. Here is another juicy deal that we can pull off.

That is what it looks like to me.

Mr. JOHNSON. You certainly admit that an individual foreman, going up and talking to the Southern Pacific, does not have a very persuasive situation in trying to get adjustments; but if he were talking for 200 foremen on the matter, he might be more effective.

Mr. McNEAR What I am wondering about is. What does the foreman want; What is his grievance?

Mr. JOHNSON. He wants all the things that the workmen want.

The CHAIRMAN. What he wants under this legislation is a separate union.

Mr. McNEAR. Has there been any mistreatment of foremen? What are their grievances ?

The CHAIRMAN. That is a broad question.

Mr. McNEAR. I never heard of it on our railroad. I never heard of it any place before, except I think there was some talk about it in the motor industry.

The CHAIRMAN. There was considerable talk about it in the motor industry.

Mr. JOHNSON. You do not think it would be a good idea?

Mr. McNEAR. I would like to know where the idea comes from. Does it come from some business genius who sees the dues that they would get out of this thing?

Mr. JOHNSON. According to the testimony that we had, it came from the foremen, that they would just naturally organize. First they had a social club, and then they said, "Let us use this group to get to bargaining for wages, for conditions, and to get a system of promotions.” Many of the foremen do not have any right to hire and they have no right to fire. They are just messenger boys to carry out your orders.

Mr. McNEAR. Is that because the foreman's job has been taken over by the shop steward!

Mr. Johnson. I do not know. I am trying to find out from you. Mr. McNEAR. You are getting into another question.

The CHAIRMAN. Thank you very much. Your statement has been very interesting

The CHAIRMAN. The next witness this morning is Mr. Harry La Viers, who lives in my district, and is connected with coal companies in that district.

Will you give the reporter your full name and state where you live, your position, and whom you represent.

STATEMENT OF HARRY LAVIERS, PAINTSVILLE, KY.

Mr. LAVIERS. Mr. Chairman, my name is Harry LaViers. I live at Paintsville, Ky. I am an official of 2 operating coal companies in the Big Sandy Elk Horn District, and employ some 600 men. I am president of the local coal operators association whose member companies produce approximately 12,000,000 tons of coal per year and employ more than 10,000 men. I am also chairman of the local draft board No. 89, Paintsville, Ky.

I appear before your committee to endorse the objectives set out before you in H. R. 2239, and to urge upon you prompt and favorable action on this legislation. I have read the bill and have heard Congressman Smith explain to this committee the purposes of the bill, and I believe it will accomplish its purpose as set out in the preamble "to provide for the successful prosecution of the war by prohibiting actions interfering with the full utilization of manpower.' merate the reasons why I believe this would in a large measure be a repetition of many previous witnesses who have expressed themselves so much more ably than I can, and I know that you gentlemen are pressed for time to give proper consideration to the various bills now

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