Page images

There should be a complete picture of the ESOP program-
Senator Nunn. You are saying you had the hearings when?
Professor GREEN. December 12 and 13 in Washington.
Senator Nunn. I will ask the staff to get us a copy of it.
I have read some of your articles, and I have some of Kelso's too.
Professor GREEN This would be a good package.
Senator Nunn. Thank you for your testimony. I appreciate it.
Professor GREEN. Would you like to have the cartoon
Senator Nunn. Thank you very much.
Professor GREEN. Thank you.
[The information referred to in Mr. Green's testimony follows:]

[From the Wall St. Journal, Feb. 10, 1976)


"I hold in my hand a list of 28 American banks that are in trouble through having made bad loans," says one of the great liberal newspapers of the land. "I hold in my hand a list of umpteen other banks that have made risky loans to X, Y and Z,” says another of the great liberal newspapers of the land. Congressional committees hold investigations. Presidential candidates fulminate. Bank reform legislation is drawn up to deal with the situation.

Until now, we have not commented on this latest sport. Frankly, we've been bored by it. The “troubled bank" story is last year's story and the story of 1974, when it really looked dicey as to whether the banks had sufficient capital to get through the squeeze. (See for example, "Bank Soundness” in these columns, November 24, 1974.) The reason the liberals in Congress and on the great liberal newspapers of the land were not then wringing their hands is not hard to recall. They were then worried about the faltering economy and were exhorting the banks to make bad loans.

The banks, you'll recall, were told they had to be socially responsible. The liberal commentators fumed that banks were actually refusing to lend money to "redlined" neighborhoods. The New York banks were being vilified and picketed for their hesitation in buying Mayor Beame's municipal bonds and taxanticipation notes. House Banking Chairman Henry Reuss, for gosh sakes, was pushing credit allocation legislation that would have required the banks to make loans to suit his tastes. Mass transit projects seemed to be the favorite idea. Wouldn't it be swell if everyone had a Metro like Washington, D.C.?

At the same time, you must recall, the liberals were screaming at Arthur Burns to gun the money supply faster. In the current sport, which The Economist of London calls "bashing at the American Banks," there has not been one word in all the newspaper stories and all the congressional testimony that makes the connection between an increase in the money supply and bad bank loans to X, Y and Z. Members of the congressional banking committees, if not the great liberal newspapers of the land, are supposed to know of this connection:

1. The Fed increases the money supply by monetizing debt, i.e., buying interestbearing bonds from the banks with printing-press money. 2. The banks have more cash as a result. 3. The supply of good customers wanting to finance profitable projects has not increased. 4. The banks are losing money by sitting on cash. 5. They make loans to riskier customers. 6. They form Real Estate Investment Trusts. 7. They throw money at anyone who doesn't look like an out-andout burglar. 8. A Go-Go Era is born. 9. Roaring inflation develops, followed by 10. Collapse.

It is thus deliciously clear why the liberals have had to wait until recovery seems to be underway before they decide to talk about a year-old story. By now, we are all supposed to have forgotten their prescriptions when the banks really wer ein trouble, so they can piously proclaim how much more prudent they would have been than those reckless bankers,

The liberals are still after Arthur Burns to gun the money supply. But they want the banking laws reformed so that for every bank lending officer there is a government bank regulator, who will be wise and prudent in seeing to it that monetized debt goes, not into those awful REITs, but into socially desirabla projects, like Big MAC bonds and New York State TANS.


We're bored by it all. It's too transparent. The liberals have learned a thing or two in the last few years, but so have we all. When Mr. Reuss tried to ram his credit allocation legislation through the veto-proof Democratic Congress last year he was almost laughed off Capitol Hill. He's not going to do any better with a phony hoorah about troubled banks and a "moderate” approach to bank reform,

We don't need any new banking laws and regulations. Bank lending officers and loan committees don't need bank examiners at their elbows to tell them X is socially desirable and Y is not. The important thing is that Arthur Burns doesn't forget what he's learned and start pumping out printing-press cash. With or without further "reform," the banks will be as sound as a dollar.


One unexpected spin-off of government giantism has been the pleasing advent of court fights pitting government agencies against each other. Maybe the system is evolving new checks and balances.

One of the juiciest such battles has the FCC on one side and the Justice Department giving a helping hand to cable TV operators on the other. The cable TV people sued because they didn't like FCC rules.

Justice doesn't like them either, and for good reason. It's hard to imagine any clearer case of a federal agency interfering with market competition, even though such cases abound. The FCC has complex restrictions on cable and pay TV film and sports programming. For example, cable operators can show any film distributors will let them have in the three years after its release, but for seven years after that they can only show the film if it is also being offered by conventional broadcasters.

It doesn't take much imagination to see that the many effects of this rule is to give protection to broadcasters, who feel, for mysterious reasons, that the FCC has a public duty to preserve their access to programming.

While the court is on the subject, it might do well to examine the legal theory that has extended the FCC's mandate from the public airways to the control of programming circulated by private cable. The unsoundness of that principle is the biggest issue of all.


A recent story in this newspaper about the rapid rise in malpractice judgments against attorneys and the consequent rise in malpractice insurance premiums propelled us somewhere over the rainbow into a delicious reverie about a possible result. Suppose that the attorneys followed the lead of doctors in Los Angeles and other parts of the country and protested the higher premiums by engaging in a work slowdown, or better yet, a strike?

What would life be like if the great law firms and the solo practitioner stayed home, clogging the golf courses and tennis courts of America ? It would be Paradise Regained. The normal intercourse of life would flow smoothly, unchecked by the law's and the lawyer's limitless capacity to complicate and tangle things. Disputes would have to be resolved by common sense and mutual trust, rather than on the basis of who could hire the fastest gun. The wheels of commerce would turn more swiftly as people without special training in obfuscation and logic-chopping made clear and understandable agreements. Individuals with disagreements would have to rely on their own capacities for reconciliation and forgiveness instead of the brutalities of specially trained gladiators. The pleasant consequences are virtually limitless, and include not having to pay huge legal fees.

But lawyers are a clever group. They know better than to go on strike, no matter what the provocation. They know that people would learn, all too soon, that things worked perfectly well, or even better, without them. Oh well. It's nice to dream.

Senator Nunn. Our next witnesses are Mr. Allan McGarity, president, Harmony Blue Granite Co., Elberton, Ga., and Mr. Albert S. Norman, international representative Granite Cutters, International Association of America. They are accompanied by Stewart Smith.

Gentlemen, we are glad to have you, and we will be glad to have von all come up. You can introduce any other people that you have, and proceed inany way that you feel best.

We are delighted to have both of you with us. We have both management and labor represented here. We are certainly interested in your testimony.



Mr. McGARITY. Mr. Chairman, I appreciate the opportunity of making an appearance before this committee, and am pleased with this chance to share with the committee the impact of Federal regulatory authority over my company, to share matters of concern to me, and to explore areas of possible improvement. I appear here today as president of Harmony Blue Granite Co., Inc. located in Elberton, Ga. My company employs about 105 people. Our business is using granite to make monuments, grave markers, grave ledgers, and mausoleums. Our products are sold in about 42 States. The company has been in business about 40 years. Regulatory authority over my company of governmental agencies can and does have consequences for the good or for the bad.

I address myself to our experience with the Occupational Safety and Health Act of 1970, commonly known at OSHA, and in doing so would like to tell you what I do not want done. I do not ask that the law be repealed, for I am in general agreement with the general objectives of the law. It has accomplished improvement in safe working conditions for many people. My company's objective is to provide a safe and healthy place for people to work. I do not ask that anything be said or done on my company's behalf to OSHA as my company's dealings with them is in a different forum and should be settled there. I do not question the right of OSHA to deal with us because they clearly have the right to do so by congressional mandate. What I do, however, is address myself to the form, the manner and the mechanics of carrying into effect the law.

Our company was first inspected by a single inspector from OSHA about the middle of May 1973. That was a general type inspection dealing with various housekeeping matters and mechanical things. We were cited for violations of Federal standards. This citation was not contested and the violations were all corrected. There was no inspection for sound levels or silica dust levels-conditions common to all granite manufacturing facilities in Elbert County where we are located.

On April 4, 1974, there was a second inspection by a single inspector limited to sound levels and silica dust levels for which we got cited for violations of Federal standards. This citation was contested resulting in OSHA dropping the citation dealing with silica dust levels and resulting in a consent decree on the sound levels. Thereafter, the company retained a sound expert from Atlanta for advice on sound levels at the places in our plant which OSHA had said Federal standards were being violated. His recommendations were implemented.

On June 3 and 4, 1974, we were inspected by three persons for a third time. This inspection dealt with general housekeeping functions and things of a mechanical nature together with inspection for sound levels and silica dust levels. These were completely different inspectors than before. We received a citation for violations of Federal standards on the general inspection and a further citation of Federal standards on the silica dust levels and sound levels. The citation on the sound levels and the silica dust levels was contested and pends, but the citation on the other matters was not contested and was complied with. The citation alleging general housekeeping and mechanical violations generally involved things present when the two earlier inspections were made, but nothing was done. Places were inspected the third time for silica dust and sound levels that were not inspected before although these places were present as before.

The OSHA personnel were courteous and polite, but, in addressing myself to sound levels and silica dust levels violations, the inspectors were not qualified to pass judgment on remedying a violation. On the two occasions that we have been inspected for sound levels and silica dust levels, the inspectors were industrial hygienists. Their job was to inspect the workplace and to recognize any hazards to employees and to make tests and draw conclusions and to decide whether or not a citation should be issued for violation of Federal standards. They demonstrated no competence in industrial management or manufacturing processes. For years, sound and silica dust have been combatted by use of earplugs and Bureau of Mine forced-air respirators. This has been our way. Relying upon Federal standards the position of OSHA is these respirators, regardless of effectiveness, can only be used if engineering and administrative solutions do not work. Generally, at the time the hygienist caused the citation to be issued, he did not know of any concrete solution for the violation. In spite of this, the regulatory process was triggered under which the company was faced with monetary penalties presently or in the future.

When the hygienist completed his inspection, he held a conference with us relating what he found, stating that there was an apparent violation of Federal standards, intimating a citation for violation of those standards could be expected and stated it was up to the company to find a solution for the violation. The hygienist stated the solution was a managerial problem and he offered no valid solution. The hygienist talked in vague and general terms, suggesting theoretical and speculative solutions, but nothing practical and concrete. The company was put under the gun without knowing of solutions and without being shown any.

There was no period in which solutions could be sought before the company was slapped with a violation of Federal standards even though the company, as was our case regarding silica dust and sound, was doing what had been acceptable in the industry for years. After the first citation for sound level violations, we got pointed toward a partial solution to our sound problem by a company officer seeing in Elberton a dealer from Kentucky, who had seen a man from Minnesota, who suggested rugs. The company was left to its own devices in trying to work out solutions to the sound and silica dust problems. In our pursuit of our silica dust problem, I find OSHA subordinates quality without at the same time improving healthful working conditions.

Our experience demonstrates the objective of the law can be met and at the same time the procedures can be changed. In my belief,

there are certain things that need to be done. I find one of our difficulties is that OSHA forgets we are dealing with human beings. The regulation becomes an end to itself. As in our case, we had adopted industry standards dealing with sound levels and silica dust levels. Employees become accustomed to these standards. Then OSHA steps in and requires change within a specific time. My company has one employee who states emphatically he will quit before he will make a change in operations where silica dust is present. He could be lost to a company in Elbert County who has not been visited by OSHA. He uses a Bureau of Mines forced air respirator. Now the company cannot afford to lose a valuable, trained employee. However, I find no room in OSHA's approach to the silica dust problem to accommodate this employee to change.

The second area that causes me concern is you never know when you are through with OSHA. Now I realize and can appreciate that employee working conditions is a continuing concern. However, I do not understand why in 1975 my company was found to be in violation of Federal standards when those conditions existed in 1973. Why did not the inspector in 1973 make a complete inspection? The things that were found in 1975 were akin to the same things found in 1973. There comes a time when an employer should be able to reasonably say we are in substantial compliance with the Federal standards.

The third matter that concerns me is there no time lag between finding of a violation of the Federal standards and the citation. I can appreciate the necessity for no time lag when the violation is critical and possibility of injury is pressing and immediate. When the violation is not of that nature, such as in my company's case dealing with sound levels and silica dust levels, then there should be efforts toward a solution before citation. A person should be given a chance. OSHA should be known as a solving agency and not a citing agency. I get the idea OSHA does not trust people.

A fourth area that produces concern is OSHA should not have the authority to issue a citation unless it knows of a solution to the violation. To me it is fundamentally unfair to drag a person into court without reasonable cause and that is what OSHA does when a citation is issued and it does not know of a solution. This makes for too much power and breeds distrust in government.

My fifth concern is that OSHA should be required to furnish to the employer a reasonable solution before it could issue a citation. I do not say that solution must be followed as a person might have an equally valid alternative. I do say if there is a solution, OSHA ought to furnish it. After all we are playing a game, we are trying to better the working arena of the American employee. If there is no solution, OSHA in my judgment has no business issuing a citation. This to me is an arbitrary exercise of power incompatible to what I have come to know as the American form of government.

My sixth and final concern is the qualifications of the inspectors. In our case, that of the inspectors for sound and silica dust. The inspection should involve people with a background qualified to judge if there is a violation in fact and the significance of ordering a change, and I think it fair to state our inspectors had no knowledge of manufacturing processes and what ordering change meant. My

« PreviousContinue »