The commonest restriction on workers' freedom to choose their representatives is that practiced by the company union. The impropriety of the company union system is clear when it is remembered that the typical company union scheme requires workers to choose as their bargainers persons who are paid, in whole or in part, by the employer with whom the workers' case is being bargained. In a recent case before the National Labor Board involving over 4,000 employees, the labor adjuster and the two attorneys for the workersthat is, representing the welfare or the company union scheme, on its property, these persons received half of their compensation from the company and half from the employees.

Incidentally, this particular welfare company union plan is regarded in the community as a very successful and proper arrangement between employers and employees. I do not want to take your time going into the other defects and injustices involved in the company union plan: I mention this point only, that is, that the bargainers for the workers are paid by the man with whom the workers' case is being settled. The ineffectiveness of such representatives in bargaining for workers is apparent. The need of freedom from employer domination is patent and this freedom the bill before you seeks to guarantee.

(3) Collective bargaining to have any real meaning requires the employer to refrain from all discriminatory practices which would undermine organization. The most effective weapon which the employer possesses to disrupt a union is of course dismissal. Others of a more subtle character include discrimination as to wage or hour differentials, advancement, demotion, hire, tenure, reinstatement, division of available work. All these, the bill declares to be labor practices which are unfair, and provides means for their prevention. (4) Collective bargaining requires that a contract entered into should be carried out. This statement may sound like a truism, but within it lurks a slightly controversial question. It is the matter of the union shop. The bill provides, and in my opinion very properly, that when a union contract is agreed upon between the employer and a union, this contract with necessary safeguards, is to be regarded as a lawful contract.

So much for the purposes of the bill. But it does not stop with a recitation of purposes. It sets up machinery to carry them out. There is provision for new powers to be conferred on the several District Courts of the United States. On these there is little need to dwell. The main consideration here is the establishment of a national industrial tribunal, to be known as the National Labor Board.

The National Labor Board as proposed is necessary to make collective bargaining an actuality. Only such a Governmental agency can prevent unfair labor practices and maintain equality of bargaining power in the wage contract.

The functions of the proposed board are two: conciliation and mediation, and limited arbitration. The first is of utmost importance. The parties to an industrial dispute can come to the board, and with the advice and experience of trained conciliators, have their respective rights clarified and composed and thereby avoid what may result in costly industrial warfare. Moreover, title III of the bill creates in the Department of Labor the United States Conciliation Service.

The object of this title is to strengthen the existing services in that Department, which since last August has been of tremendous assistance to the National Labor Board created by Executive order on August 6, 1933.

The second function is arbitration. It is to be indicated that the Board is given no compulsory arbitration power, but one rather of a voluntary character. It will be competent to act as arbitrator in labor disputes only when the parties submit their controversy to the Board, and when the Board accepts their submission. The bill in no way abolishes or curtails the right to strike.

Another function of the Board is one that is nowhere provided for in the bill, but one that it will exercise with uncalculable benefit to the public interest. It is the silent preventive work that the Board will do in the way of educating disputants to settle their differences between themselves rather than go to the expense and inconvenience of appearing before the Board. Moreover, in the course of time, the Board will develop a body of precedents and these will act as guiding principles in effectuating mutual agreements.

In the immediate present and perhaps for some time to come, two important problems must be met. One is the matter of bringing collective bargaining negotiations to a conclusion. The other is the determination of workers' representatives. The National Labor Board is necessary to meet both.

As already indicated, since last June not a few employers have, by unduly protracting negotiations and even by refusing to do anything more than talk with employees' spokesmen, clearly violated the National Industrial Recovery Act. Manifestly, this is an unfair labor practice and should be dealt with accordingly. The National Labor Board is necessary to correct and prevent this evil.

Again, the question of the identity of workers' representatives, who they are, and what authority they have is full of complications and large with strife and controversy. The common-sense expedient is to settle such questions through the medium of the secret ballot. The National Labor Board has in the brief period of its existence held more than 97 elections for such purposes. Identical powers are to be vested in the Board provided for in the present bill.

In conclusion, therefore, the bill before your Honorable Committee should be enacted into law because its ultimate effect is to increase purchasing power both in the present emergency and in the future, and because it establishes the means to effectuate these necessary results.

The CHAIRMAN. Thank you, Doctor, very much. I appreciate your assistance in this matter. We will try to hear Mr. Hotchkiss, Mr. Ogburn, and the present witness, Mr. Hillman. The others are excused until tomorrow morning.

STATEMENT OF SIDNEY HILLMAN, PRESIDENT AMALGAMATED CLOTHING WORKERS OF AMERICA, AND MEMBER OF THE LABOR ADVISORY BOARD

The CHAIRMAN. State your full name for the record, Mr. Hillman. Mr. HILLMAN. Sidney Hillman, president of the Amalgamated Clothing Workers of America, and member of the Labor Advisory Board.

The CHAIRMAN. How many workers are there among the Amalgamated Clothing Workers?

Mr. HILLMAN. About 135,000.

The CHAIRMAN. How long has that organization been in existence? Mr. HILLMAN. Since 1914, as a national organization.

The CHAIRMAN. How many branch unions have you?

Mr. HILLMAN. Probably about 120 local unions.

The CHAIRMAN. Affiliated with the American Federation of Labor? Mr. HILLMAN. Yes; affiliated with the American Federation of Labor.

The CHAIRMAN. You may proceed.

Mr. HILLMAN. Mr. Chairman, and members of the committee.

Senator WAGNER. I think before you begin, Mr. Hillman, if it does not take too long, I would like to have you explain to the chairman some of your social activities outside of the ones you have indicated.

Mr. HILLMAN. I am director of 2 labor banks, 1 in New York and 1 in Chicago. Off the record, we have not applied to the R.F.C. for any assistance all during the depression. I am also associated with the Amalgamated Housing Corporation, which comprises cooperative housing in the city of New York for close to 1,000 families, and also, so far, we have met all our obligations and there is no receivership in sight.

The CHAIRMAN. How large are the banks that you referred to? What is the number of depositors and what is the amount of deposits? Mr. HILLMAN. We had at one time in the New York bank over 120,000 depositors.

The CHAIRMAN. That is larger than the Chicago bank?
Mr. HILLMAN. Yes; that is larger than the Chicago bank.

The CHAIRMAN. We would be very glad to have your views on this bill.

Mr. HILLMAN. I will be brief. The splendid presentation by Mr. Green, president of the American Federation of Labor, really covers the ground as far as the factual case is concerned in reference to the need of this additional legislation.

I am wholeheartedly in support of the bill, because this bill, when enacted into law, will give section 7 (a) reality. Section 7 (a) of the National Industrial Recovery Act, in my judgment, is the very heart of the whole National Iudustrial Recovery Act. The purpose of the National Industrial Recovery Act is to increase the purchasing power and give a more equal distribution of income among the large masses of the people. It is my judgment that if not the whole reason for the depression, at least the major part of it is caused by the low level of wages that has prevailed even during the time of prosperity.

As a member of the Labor Advisory Board, sitting in on the hearings for the promulgation of Codes of Fair Practice for industries, I have found that wages have gone down as low, in many industries, as 5 cents an hour. We found in some cases they went down as low as 2 cents an hour.

The CHAIRMAN. Was that prior to 1929?

Mr. HILLMAN. No; this is since the N.R.A.

The CHAIRMAN. I do not follow you to the extent of your observation that the depression was caused by low wages.

Mr. HILLMAN. Lack of purchasing power.

The CHAIRMAN. I always thought the depression was caused more by the extent of ruthless speculation and gambling and the inflation of capital.

Mr. HILLMAN. It is my judgment that viewing the total amount of money that went into wages in this country and that was spent, that we could not possibly support the mass production that we are equipped for.

The CHAIRMAN. You certainly could not support the extent to which capital was inflated and expanded. I refer particularly to the extent to which industry consolidated and reconsolidated, and piled up enormous capital, which of course affected the workers in their wages, and also affected the value of the securities.

Mr. HILLMAN. Of course that is quite effective, but taking the current industry, the information available is that the average person of over 18 years of age bought less than one suit of clothes a year. The CHAIRMAN. Are you talking about prior to 1929?

Mr. HILLMAN. Prior to 1929.

The CHAIRMAN. Yes.

Mr. HILLMAN. Which obviously shows the lack of purchasing power in the country.

Senator WAGNER. And the reason they did not buy is because they did not have the wages.

Mr. HILLMAN. Of course we all love to be well dressed, if nothing else. It is the lack of purchasing power. I have been sitting in as a member of the Labor Advisory Board in one industry just a few days ago, and the figures presented showed that in 1929 the average wage for the whole industry was 25 cents an hour. That was a very substantial industry, employing probably between 50,000 and 60,000 workers.

Now, the National Industrial Recovery Act is for the purpose of at least putting a bottom to the low wage levels, and, through the provision for maximum hours, to create employment.

Taking out section 7 (a), I am satisfied in my own mind, especially with the experience of the last 7 months, there will be no enforcement of the labor provisions of the Code, and if section 7 (a) is not properly backed up, I am very fearful that the whole N.R.A., the great achievement of the last 6 or 7 months, may degenerate into purely monopolistic organizations, protecting themselves against unfair competition, and that the main purpose of the National Industrial Recovery Act, providing for the labor provisions of the Act, will fall down just because of lack of enforcement.

I would like to go on record and say to you, Mr. Chairman, that in my experience with the men in industry, the largest number are anxious to cooperate with the Government. They want a constructive way in dealing with the problems of industry.

The CHAIRMAN. You mean the employers?

Mr. HILLMAN. The employers. They all recognize that the old method must mean ultimate bankruptcy for all of them. But the trouble is that a small group can always create a situation where the people who would like to do the decent thing are helpless. We are getting today a great number of complaints from a number of employers that the codes are not properly enforced, and because of that it creates again unfair competition.

Now, section (a) in my judgment, should have been sufficient, The language is clear, and anyone who desires to cooperate with the Government can just read the language of the section and know that it gives labor the right to organize. But our experience is that starting with the minority today, but spreading and becoming soon the majority action in the industry, that they are trying to find ways of violating the letter and the spirit of the law.

The bill to me I would not say that every word is perfect and that there isn't any room for changes or amendments, but it gives substance to the law, it creates a board that will be an impartial board, three impartial representatives of the public, which will work toward the proper confidence of industry and labor, and then two representing industry and labor, so as to give, as the Secretary stated yesterday, proper contact and intimate knowledge of what is going on in industry.

The people who are opposing it know what the purpose of the law is. It is the same group of people who have opposed and denied labor the right to organize in the past. I represent, as president of the Amalgamated Clothing Workers of America, an industry where 75 or 80 percent of the employers are under a contractural relationship with our organization.

There has not been a single strike or disturbance, to my knowledge, since the N.R.A. in that 70 or 80 percent of the industry. But you find a great deal of strife in that 20 percent who are still opposing not merely the N.R.A., the law, but would like, in my judgment, to have a situation where they do not have to live up to the labor provisions of the code. Only yesterday, 1,200 or 1,400 people walked out in the city of Cleveland in one plant, merely on account of section 7 (a). Now, here is a company that had a company union 15 or 20 years. ago; then the depression of 1928-29 came and they wanted to reduce wages, so they abolished the company union. They did not ask for any vote on it. Then they proceeded making reductions. Since the N.R.A. they called the company union back again. Discharges have taken place, and a couple of days ago another person was discharged because of activity in organizing the people into an independent, organization, and as a result there was a walkout of about 1,200 to 1,400 people.

I can see a real danger ahead of us, as President Green has pointed out this morning, unless we can establish governmental agencies that will give protection to labor, and protect their rights under the bill, that we are heading for a great deal of industrial unrest that is uncalled for.

I believe that the act, when enacted, and when the employers will recognize that they have to deal with the law as is, that we are going to enter into an era of cooperation in industry instead of strife, when this bill becomes a law. It is because of that, and because the bill makes proper provisions for guaranteeing labor the right to strike, a right that labor cannot possibly give up under any conditions, when it is given the proper governmental machinery, I believe the strikes will be very much minimized, just because there will be a relief for the workers when they have grievances to take up.

I conceive that the bill at this time is necessary and it ought to be treated as an emergency measure, as emergency legislation, to. protect and safeguard the workers under the Industrial Recovery Act.