If this administration, and you in Congress, want the shopmen's dispute settled through collective bargaining, the most powerful step in that direction would be to create this planning group we propose, and work out the specifics of hauling the shipments necessary to our Nation's military effort and the public health. That will persuade the railroads for the first time that a national railroad strike is a definite possibility.

Believe me, gentlemen, if they once get persuaded of that, they will come in and negotiate a settlement of this dispute within 48 hours.

I turn to my second topic. The essential shipments program we suggest does presuppose the cooperation of railroad management. It is always possible that management although they agreed to the missile train plan in 1959 when the Nation was at peace will refuse to work out a similar plan to keep supplying our men in Vietnam, now that the Nation is at war.

It is always possible that railroad management will prefer to use a kind of moral blackmail against the President and the Congressand against their own employees. In that event you may feel impelled to pass a law forbidding the shopcraft strike now set for 12:01 a.m. on June 19. If that does become your feeling we would urge upon you the seizure approach rather than the compulsory arbitration approach embodied in Senate Joint Resolution 81.

Compulsory arbitration is utterly one sided and unfair when forced on the employees of profitmaking companies. It deprives the employees of their only economic weapon to win fair wages and working conditions.

It brings in the Government to force terms on the employees that may well be more favorable to the owners and less favorable to the men than the men could have won for themselves and prevents the men from ever knowing what they themselves could have won.

It does this while imposing no restrictions whatever on the company's profits and those profits clearly would be higher if a smaller increase in wages is forced by the Government on the employees.

Compulsory arbitration is the road to serfdom. For the Government to force private employees to labor for less than they could win for themselves, so as to enrich their private employers, is a Fascist arrangement.

It is not an American arrangement. I might add that any Government seizure of an industry where the profits gained through forced labor of the employees are then turned over to the private owners is also open to this same objection. Mr. Schoene will have something more to say on that question.

Once you start on the path of compulsory arbitration for wages and working conditions you are bound to face demands that prices and profits also be controlled, in simple equity. Of course we had something like that in World War II and the Korean war.

We had wage and price controls and along with them a very heavy excess profits tax. There was at least some attempt made to impose equality of sacrifice. But none of us considered those controls as representing the American way of life, and they have been avoided so far in the Vietnam war.

It should be noted also that the railroad industry's rates or prices are already subject to Federal regulations. But their profits are not.

In fact far from being subjected to a heavy excess profits tax, the railroads and the other corporations are currently being handed by Congress a major tax cut on their profits, through restoration of the so-called investment tax credit on an even more favorable basis than before.

We estimate this new basis for the tax credit, involving a ceiling of 50 percent of total income tax liability instead of the former 25-percent ceiling, will mean at least $50 million a year more profits and less taxes for the railroad corporations. This is what Congress is handing them at the same moment they are demanding that you rob their employees of their basic democratic rights.

And lest you think that the railroads are starving for profits, let me remind you that net profits of class I railroads have already risen during this wartime period from $651 million in 1963 to $925 million in 1966.

Wholly apart from this, it is just as unfair for the Government to impose forced labor on railroad workers for the profit of the railroad industry's customers-nearly all of whom are themselves profitmaking companies as it is to impose forced labor for the profit of the railroad industry's stockholders.

If the Government wants to subsidize railroad freight rates, it should not take that subsidy by force out of the sweat and labor of the railroad employees.

We have had considerable experience with compulsory arbitration in the railroad industry, and all of that experience has been bad. The Railway Labor Act imposes a system of compulsory arbitration for so-called minor disputes or grievances, including the interpretation of labor agreements.

This had led to delays as long as 10 years in settling such disputes, causing great frustration and injustice to the employees. The situation became so bad, in fact, that Congress last year, by unanimous vote of both Houses, made substantial changes in the system. That bill as I am sure you recall came out of this committee.

Congress in 1963 also imposed a 2-year compulsory arbitration of the manning rules for railroad operating employees affecting chiefly firemen (helpers) and trainmen. The compulsory arbitration board in that case handed down an unfair and confusing award, which has imposed needless suffering on thousands of men.

Also important is the fact that this compulsory arbitration award did not settle the manning rules question, it only swept it under the rug for awhile, so far as the general public is concerned.

The unions involved have tried to settle the question through negotiations, but except for one agreement between the trainmen and 34 railroads the railroads instead have tied the unions up through court injunctions.

In the end, the unions involved will get free of those injunctions and then the manning question will either be settled through collective bargaining or Congress will face a new "crisis." Altogether up to now compulsory arbitration has been a resounding failure in this industry.

I believe Mr. H. E. Gilbert and Mr. Charles Luna will have more to tell you about that 1963 law of great relevance to your consideration of Senate Joint Resolution 81.

Equally vital is the fact that an evenhanded seizure tends to promote a negotiated setlement of the labor dispute involved while compulsory arbitration-despite all the trimmings that have been added to Senate Joint Resolution 81-does not promote a negotiated settlement because it gives the railroad corporations no incentive whatever to budge from their present position.

In the last four Government seizures of the railroads in 1943, 1946, 1948, and 1950 there were quite prompt negotiated settlements in three of the cases, even though those seizures were not evenhanded but were stacked in favor of the railroad corporations.

Here is what happened:

In 1943 the railroads were seized on December 27, the dispute was settled by the parties by January 17, 1944, and the railroads were returned to their owners on January 18, 1944.

In 1946 the railroads were seized on May 17, the dispute was settled by the parties on May 25-though only after President Truman had threatened to draft the strikers-and the railroads were returned to their owners on May 26.

In 1948 the railroads were seized on May 10, the dispute was settled by the parties on July 8 and the railroads were returned to their owners on July 9.

The Korean war seizure, on August 27, 1950, lasted very much longer-nearly 21 months. There were several reasons for that, an outrageously unfair Emergency Board recommendation, the wage controls in force at the time and perhaps more important, the completely token nature of the seizure, including the assurance that the railroad corporations would collect all the profits.

In view of the record I find it astonishing that the railroads in their current propaganda claims that seizure settles nothing. History shows that even a stacked, one-sided seizure has a good chance of promoting an early negotiated settlement; whereas the 1963 compulsory arbitration law truly did settle nothing. An evenhanded seizure law might well bring a negotiated settlement of this current dispute even before the law took effect.

I come now to my third topic: who supports and who opposes the right to strike?

I believe it is clear that the settled public opinion of the Nationespecially when opinion is not whipped up temporarily by the propagandists of crisis does support the right to strike.

The Louis Harris organization found some significant answers to this question in a public opinion poll published in the Washington Post on March 28, 1967.

Mr. Harris, among other things, asked specifically how many people approved the right to strike for railroaders. He found that 69 percent of the general public and 89 percent of the Nation's union members voiced approval of this right for railroad employees.

Now I am aware that a poll could be made, financed, say, by the railroads and with questions supplied by their propagandists, which might show different results. But I believe Mr. Harris' poll is an honest effort to get at the public's true feelings.

I find it significant also that the right to strike is supported by a very wide segment of the big business community. In March 1964,

the Research and Policy Committee of the Committee for Economic Development, after 2 years of work on the subject, published a report entitled "Union Powers and Union Functions." This CED research and policy committee, composed of 50 members, was headed then by Mr. Theodore Yntema, chairman, finance committee, Ford Motor Co., with Mr. Emilio Collado, vice president, Standard Oil Co. of New Jersey, serving as vice chairman.

Members include such men as Mr. John T. Connor, Mr. Marion B. Folsom, Mr. Frederick R. Kappel, Mr. Ralph Lazarus, Mr. J. M. Symes of the Pennsylvania Railroad-men of that stature in the big business world.

Mr. Chairman, I ask that a list of members of the CED committee who drew up that 1964 report be printed in the record after my

statement.

Senator YARBOROUGH. It is so ordered.

(The information referred to appears on p. 157.)

Senator YARBOROUGH. If you will pause for a moment, Mr. Leighty. It is 12:15 and I am forced to withdraw. Senator Morse, the ranking member of the committee, will take over for the rest of the hearing.

Senator MORSE. I would like to have your approval before you leave. We still have quite a few pages of Mr. Leighty's testimony. I have some questions to ask him. I would like to suggest that we reconvene on Monday morning and put Mr. Schoene on as the first witness Monday morning.

Senator YARBOROUGH. Yes. Will that be agreeable?

Mr. SCHOENE. That will be agreeable.

Senator YARBOROUGH. I would like to hear your testimony.

Senator MORSE. Is that satisfactory to you, Mr. Chairman?

Senator YARBOROUGH. Yes.

Senator MORSE. Let the record now show when we finish with Mr. Leighty today we will reconvene promptly at 10 o'clock Monday morning because we have a lot of witnesses to hear.

Senator YARBOROUGH. I will be here at 10 o'clock.

Mr. LEIGHTY. There is much in that 1964 big business report that I disagree with heartily, nor do I agree completely with their conclusions about "Government intervention in collective bargaining." But I do find the general tenor of their conclusions on the subject highly significant, and I should like to read you a few paragraphs on this from their report.

There is little evidence that industrial peace is achieved through increased government intervention. While government intervention may end particular strikes, the prospect of intervention may increase the number of disputes carried to the point where intervention becomes necessary.

The number of strikes increased during World War II (1942-45) despite the quasi-compulsory arbitration provided by the War Labor Board. Experience with emergency boards under the Railway Labor Act provisions also suggests that fact-finding boards with power to recommend settlements do not lead to voluntary agreements.

The government has seized the railroads and enforced acceptance of emergency boards' recommended terms of settlement when the railway brotherhoods have refused to accept the terms of the recommended settlement.

In their effect on employers, recommendations were tantamount to compulsory arbitration. (This particular statement, I may say, I find inaccurate.) Free collective bargaining disintegrated in both cases to the point where Congress has now legislated overt compulsory arbitration in the railroad "work rules" case.

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The reason for the failure of government intervention to produce industrial peace is fairly clear. Compulsory settlement is destructive of collective bargaining because it removes the responsibility from the parties. Compulsory procedures establish an "adversary" attitude that minimizes the desire of either party to compromise . Free collective bargaining falls into disuse under such a system. A further result is that government-influenced or government-dictated agreements may affect the entire economy, placing federal authorities in the role of controlling wages, prices and working conditions.

The proper role of government in labor-management relations and collective bargaining is to establish the rules of the game and see that they are observed— not to decide what the final score should be.

We emphasize that the possibility and fact of strikes must exist if there is to be free collective bargaining, and we urge that government intervention strikes should be strictly limited.

However, strikes are not to be welcomed, and efforts by the parties to resolve their differences without work stoppages are important.

That was the conclusion reached by this group of big businessmen after 2 years of studying the subject. By contrast, I should like to quote from Mr. Daniel Loomis, speaking on behalf of the Association of American Railroads:

The situation today and in the last 10 years has been the worst in history since the first attempt of Congress to deal with railway labor disputes. The railroad industry approaches the proposition of compulsory arbitration with considerable reluctance, but based upon the experience of the last 10 years we do not see any other solution to the problem . . . If we could see any other way out than the adoption of the final and binding effect of the awards of Presidential Boards we would accept it... The railroads believe, as I have already indicated, that the present Act should be amended to make the reports of Presidential factfinding boards in disputes concerning rates of pay, rules or working conditions, final and binding. We believe that strikes and lockouts in the railroad industry should be outlawed

That is the railroad industry's view. But what I want to stress is that it is not a new view. Mr. Loomis made that statement to a Senate committee on July 25, 1950. In other words, the railroads were making the same kind of argument to Congress in 1950 about the "intolerable situation" that they are back here making to you today.

Just how "intolerable" to the public interest has the railway brotherhoods' conduct been in the years since 1950? That brings me to my fourth and last topic-what is the background of labor-management relations in this industry, against which you should judge S.J. Res. 81? As to the industry itself, the railroads haul over 43 percent of the Nation's intercity freight traffic. Their gross revenues last year were $10.7 billion. Roughly half their revenues go for labor costs.

In terms of carload freight haulage-about 90 percent of their business-the railroads are now making an effort to retain and recapture some of this business; but most railroads treat their passengers and their less-than-carload freight as unwanted stepchildren. There are 76 class I railroads and several hundred other railroads, including switching and terminal companies. There are about 630,000 current railroad employees.

On the labor side, the industry is organized on craft lines into 24 standard railway labor organizations. There is a considerable amount of joint bargaining by groups of unions, especially among the nonoperating organizations. The practice of national handling, or industrywide bargaining, began in 1932 at the request of the railroads. Most of the unions also follow this practice on wage-and-fringe movements -as we call our requests for improvements.

However, the locotomtive engineers and the trainmen have begun to move away from national handling. In some cases, other unions also have found that the best way to achieve innovations in the way of employee benefits was to progress our movements first on individual rail