This put the workers, the National Labor Board, and the Government in an impossible situation, and it is a tribute to the insight, honor, and statesmanship of Senator Wagner that he has clearly seen the issues involved and has introduced S. 2926 to meet the situation. By section 5 it is provided that the workers shall really have a free choice in determining how they shall bargain and whom their representatives shall be. Company unions are not outlawed. Instead, if the workers of their own free will draw up such plans and express their preference in a free and fair election for them over the regular unions, the company unions are to be recognized. What is prohibited is, however, that the employers shall not directly or indirectly make or influence the choice of their workers. The employers are not to propose or initiate such plans of organization or to help finance them. It is to be the workers who will make the choice. This is only fair, since the law has long since recognized that a man should not serve adverse interests or represent both buyer and seller in the same transaction or both debtor and creditor. The employer, or the buyer of labor, can choose his own bargaining agency, but he is not to help the worker, or the seller of labor, to choose his. The National Labor Board is not only given the definite power to enforce such a just provision, but it is also given the power to prevent workers from being discriminated against because of union membership. If this act is passed, it can then induce workers to abandon a strike and return to work, secure in the knowledge that it can probably give the workers the protection which it promises. Now, I know it will be said that this act will undoubtedly stimulate the organization of labor into regular trade unions. That such will be the result is fairly obvious. But this will be true only to the degree that the workers wish such organization. And if they wish it, they should have it just as much as the employers. In fact, I should like to submit that the organization of labor should be welcomed instead of feared. We might get along with purely individual bargaining in a period of small-scale competitive capitalism. When large-scale enterprises appeared, individual bargaining, even under competition, became inadequate. Now that we are replacing competitive capitalism by strong associations of employers who are given the power of united action and who are coming to have even greater control over prices and production under the codes, it is, in my opinion, essential to build up organizations of labor as a counterpoise. For only so shall we obtain balance and prevent the domination of capital which seems to be the economic essence of Fascism. We must grant reciprocal rights to both parties and not exclusive rights to one, and these rights should give effective and not merely nominal freedom to organize. And to those who fear that the organization of labor as well as capital merely paves the way to struggles which will disrupt industry, may I point out that the National Labor Board will be above both sides, and while it will not have the powers of compulsory arbitration, it can marshal the forces of public opinion and thus, in all probability, compel solutions which in the vast majority of cases will be for the general good of society. I believe, in fact, that there will be much more harmony if labor's position is recognized than if it has to fight for the very basic principle of freedom to organize. I thank you. The CHAIRMAN. We will adjourn until Tuesday morning at 10 o'clock. (Whereupon at the hour of 4:30 p.m. an adjournment was taken until Tuesday, Mar. 20, 1934, at 10 a.m.) TO CREATE A NATIONAL LABOR BOARD TUESDAY, MARCH 20, 1934 UNITED STATES SENATE, COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The committee met at 10 a.m., pursuant to adjournment, in room 335, Senate Office Building. Senator David I. Walsh presiding. Present: Senators Walsh (chairman), Thomas, Borah, and Davis. Also present: Senator Robert F. Wagner. The CHAIRMAN. Dr. Brissenden. STATEMENT OF DR. PAUL F. BRISSENDEN, PROFESSOR OF ECONOMICS, COLUMBIA UNIVERSITY The CHAIRMAN. Will you give your full name, Doctor? The CHAIRMAN. And your residence? Dr. BRISSENDEN. My home address is Dobbs Ferry, N.Y. The CHAIRMAN. You are listed here as professor of economics, Columbia University. Dr. BRISSENDEN. Yes. The CHAIRMAN. I assume from what Senator Wagner said, and others, that you have given much attention to labor problems? Dr. BRISSENDEN. Yes. The CHAIRMAN. How long have you been interested in labor problems? Dr. BRISSENDEN. For about 15 years or more. The CHAIRMAN. What have been your activities in connection with them other than a study of the problems? Dr. BRISSENDEN. I at one time was a member of the staff of the California Commission on Immigration and Housing, as special agent. In 1914 I was a special agent of the United States Commission on Industrial Relations, and then at a later period I served as economic advisor for the Personnel Classification Board. Between 1915 and 1920 I was on the staff of United States Department of Labor. The CHAIRMAN. We will be pleased to have your views respecting the pending bill. Dr. BRISSENDEN. I have a statement which I have prepared. May I read this statement? The CHAIRMAN. Certainly. Dr. BRISSENDEN. The purpose of the National Recovery Act, in the words of President Roosevelt, was "to put people back to work" at wages which would provide more than a bare living. Its objective was, he said, to provide the wages of a "decent living", as a socially desirable end in itself and as a means of effecting the increase in mass purchasing power without which business will lack the markets for its goods and services which are necessary if we are to have any real recovery. I am heartily in sympathy with these purposes. But, in my judgment, the operation of the act, through its first 8 months of life, has worked to defeat, rather than to further these ends. It has, indeed, provided the stimulus for almost extraordinary growth in labor organizations, a truly momentous achievement, particularly so if they are given the opportunity which, unfortunately, the Act has not in fact afforded them to date. Apart from this important gain, and the long step it has taken in the direction of the abolition of child labor, the record of the N.R.A. has been one of futility-unless one counts it a gain that big business units can now more easily than before exploit consumers, workers and the little business men. I do not believe that the N.R.A. has materially increased employment or aggregate pay rolls. In spite of it, or because of it, per capita earnings have declined. With a few exceptions, the codes (which are in effect public statutes) are being administered by code authorities wholly or almost wholly composed of business men. In the face of the Presidential warning on June 16 that if prices were allowed to run ahead of wages the whole enterprise, in the President's words, would be "set at naught" the N.R.A. has encouraged, or at least tolerated price increases that have, generally, outrun wages. There has been widespread price-fixing and limitation on production in the interest (or the presumed interest) of business groups, especially the big-business groups. There seems to have been widespread resort to monopolistic practices. Even the large growth in labor organization has been more marked in the case of company-fostered and company-dominated organizations than it has in case of independent self-organized associations. That the central purpose of the N.I.R.A. to stimulate recovery by increasing purchasing power has not been realized seems to be clearly demonstrated by the statistics on the trend of pay rolls and employment, published by the United States Bureau of Labor Statistics. These figures showed considerable gains between March and September, but the codification of industry did not get going apprciably before September, so that these spring and summer gains are scarcely to be attributed to any great extent, if at all, to the N.R.A. I have taken the Bureau's figures for all manufacturing industries. I have also taken a weighted average of its figures for all industries (including manufacturing, trade, transportation, mining, utilities, banking, etc.) and, thirdly, my own weighted averages of its figures for the 18 industries whose codes were signed before October 1. The changes from September to December 1933 were as follows: The reports of the National Industrial Conference Board indicate that the cost of living increased about 0.8 percent between September and December, so that real pay rolls and real per capita earnings must have shrunk slightly more than these figures indicate. Official statistics on hourly earnings of industrial workers naturally show increases since the length of the workweek has been shortened (as a result of the depression itself, as the result of the work-spreading movement, and as the result of the N.R.A.) often without proportionate, and sometimes without any, reductions in weekly wages. But even where the workweek is curtailed without any reduction in weekly pay rates there follows no gain in per capita earnings and no gain in aggregate pay rolls except to the extent that there is net increase in personnel. Statistics of hourly earnings, therefore, are of little or no value for the assessment of the effectiveness of the N.R.A. in accomplishing its central objective. I think that title II, not title I, was the essential recovery section of the N.I.R.A. Title I, which covers the industrial control provisions of the act, in the very nature of these provisions, could not be expected to be effective as a recovery instrument. The management of this part of the act should have been assigned to a national reconstruction administration. The administration to which the job was assigned has made no headway toward recovery. More or less inadvertently, it has accomplished some things in the way of reconstruction. Although extraordinary social gains could and can yet be achieved under the act, the achievements actually accomplished to date are mostly bad: Big business has been seated more firmly in the saddle, little businesses have been put in a more precarious position than ever, consumers have been undermined rather than supported, workers are not being reemployed to any appreciable extent in private business enterprise, they are not, on the average, getting any more money in their pay envelopes with which to buy "a decent living", company-dominated unions have increased more rapidly than independent ones. Some of the reconstruction results have been good: There has been a considerable increase in trade-union membership, child labor has been in large measure abolished, some competitive excesses in business have been eliminated, in a few industries employment, pay rolls and even per capita earnings increased during the fall, and apparently as a result of code operation. The CHAIRMAN. Do you think the operations of the codes have thus far tended to the disadvantage of the small producer? Dr. BRISSENDEN. Yes, that is my opinion. The CHAIRMAN. In competition with the large producers? Senator DAVIS. What percentage of the increase in employment can be accredited to Government spending? I notice that you made a comment on it. Dr. BRISSENDEN. I cannot tell you in terms of exact percentages, Senator Davis. I think most, if not all, of the net gain in employment has been due to the public employment. I do not mean by that to say that I do not believe there has been some gain in some industries, large gain in employment, but that has been more than offset in my opinion by the losses in employment resultant upon ation; for instance, the items that appeared along during |