complex of agencies have been created, but as yet no weapon to prevent price increases has been established.

The whole picture of the defense program so far has been one of chaotic administrative disorder. Responsibility for defense production has been shirked and passed about. Defense agencies have been almost completely staffed by high officials of the major private profit corporations. The planning of the defense program and production has been practically nonexistent. Where it has existed it has been planning for production at fantastically low levels. The Nation is now becoming the victim of the mistakes and failures of the past 18 months. The American economy and the American working force is capable of accomplishing a stupendous volume of production. The task of the Nation is to harness that power for the protection of our Nation, its people, and its freedom. As yet the engines of the Nation's strength are only idling.

4. INDUSTRY COUNCIL PROGRAM

In December 1940 your president submitted to the President of the United States a program which, in our judgment, met the basic needs of the nationaldefense program. The plan received the unanimous endorsement of the C. I. O. executive board. This plan has been offered as a constructive proposal to assure the effective execution of our national-defense program.

The Congress of the United States has appropriated specific sums of money for the national-defense program. These appropriations call for the production and supply of definite required materials. The War and Navy Departments of the United States, in cooperation with those nations which we seek to aid, have estimated the amounts of specified goods which are required both for those nations as well as for the United States.

The problem which now confronts this Nation is basically the problem of production—how to produce the required quantities of materials within the shortest period of time. It is the judgment of your president and of the executive board that this problem can be met and solved through the industry council plan that has been presented to the Federal administration. In essence the industry council plan has as its theme that:

(1) Through adequate and centralized planning each basic defense industry could be advised as to the materials that must be produced by such industry and the general price level that should be maintained for such industry; and

(2) The persons directly involved in each such industry, as management and labor, are the ones best equipped and trained to attain the goal set for the industry. The industry council plan contemplates a direct and active participation within each industry on the part of management and labor. For labor we are demanding such representation not merely to protect labor's interests but, of equal importance, to obtain the full benefit of the resourcefulness and technical skill of labor's representatives who are fully acquainted with the problems and needs of the industry.

For the national-defense program to be effectuated, it is necessary to unleash the energies and resourcefulness of all our people and not merely of any one segment. There is no monopoly of brains on the part of any one group. Our national-defense program demands the full participation of all the people. The administrative machinery contemplated under the industry council plan is simple:

(1) It is suggested that the President of the United States shall establish for each basic defense industry an industry council. Each such council would be composed of equal representation for management and the labor unions in the industry, together with one government representative, the latter to serve as chairman.

(a) Each council will be advised of the domestic and armament requirements of its industry and the general price level that should prevail for the industry. It will be the duty of each council to coordinate the production facilities of that industry to meet these requirements with the maximum degree of speed and, where necessary, to expand the production facilities to meet the requirements. It will also be the duty of each council to maintain the price level within the industry as has been established under the general planning program.

(b) To accomplish this goal it will be the obligation of the industry council to allocate available raw materials within the industry, allocate the outstanding contracts, and also any new contracts among the available plant facilities in any industry, to adjust the labor supply to the plant facilities without compelling any

forced labor, arrange for necessary and appropriate facilities for housing, and make arrangements for necessary training to meet the labor requirements.

In this manner the abuse which is now prevalent wherein certain concerns in an industry have contracts which they cannot fulfill within the next 3 or 5 years will be eliminated. All firms within the industry having available plant facilities will not only be entitled to but will be obligated to participate in the production program to effectuate national-defense requirements. Further, this program will be carried out by those who are best equipped with knowledge and training; namely, those who are actively participating within the industry-management and labor. In this manner we will not have the spectacle of plants which are idle, people unemployed in a particular industry, with the accompanying hue and cry that production is lagging.

(c) Each council will have to constantly engage in active planning in order to make certain that it is achieving the greatest possible output within the industry for domestic and armament requirements as well as planning for the maximum utilization of its facilities and labor supply in terms of post-war needs.

(d) In effect, the industry councils must be implemented with full executive and administrative authority to carry out the program for each industry. All legal and executive authority must be delegated to the councils for the purpose of carrying out the task for which the councils will have the responsibility for fulfillment. Within the discretion of the councils there may be organized within each industry regional and local machinery which would obtain the full participation of local management, labor, and others in the communities. The highest degree of morale on the part of the American people can be established with the maximum assurance of fulfillment of our national-defense program through such participation.

(2) The President of the United States shall establish a National Defense Board consisting of an equal number of representatives for industry and labor unions, over which the President or his designee shall be the chairman. The National Defense Board shall establish rules and regulations for the operation of the industry councils. The general policies of the national-defense program shall be promulgated by the National Defense Board. The basic planning in order to determine the domestic and armament requirements for each industry will have to be determined by this National Defense Board. The National Defense Board will operate as a general staff. The industry councils will act as the generals in charge of their respective armies to carry through the national-defense program for their respective spheres of activity.

The Board will act as an appeals agency for the industry councils, and coordinate the work of the councils by serving as a clearing house for interindustry matters.

(3) The industry councils will furnish an excellent basis for promoting industrial peace through the perfection and extension of sound collective bargaining relations between management and organized labor. However, it must be clear that the established relations between unions and management through collective bargaining will continue. Collective bargaining procedure is not to be superseded by the industry council program. Negotiations through collective bargaining between recognized unions and management regarding wages, hours, and working conditions, must continue in order to assure the continued existence of our democratic procedures. In addition, the industry councils will not supersede but rather will secure the compliance, within their respective spheres, with all laws affecting the rights and welfare of labor, such as the social security law, the Wages and Hours Act, the National Labor Relations Act, the Walsh-Healey Act, and others.

(4) Former Attorney General Robert Jackson and present Attorney General Francis Biddle have issued opinion letters in which they have indicated that, in the interest of national defense, manufacturing concerns will be permitted, under the supervision of the Federal Government, to collaborate in the pooling of facilities, allocation of contracts, and subcontracts and in the procurement and use of raw materials. The industry council program is intended to accomplish this very end.

5. CONCLUSION

The Congress of Industrial Organizations, with its millions of members, is determined to protect and safeguard America and its democratic institutions. It is for this basic reason that we are wholeheartedly and completely in support of the national-defense program. We are determined that the program must be effectuated and fulfilled with all possible speed. We are convinced that our national 65913-41-20

policy and program for increasing production can be fulfilled only through the full and active participation of all our people.

In this endeavor the Congress of Industrial Organizations, through your president and the executive board, has submitted its industry council plan. We do not submit that this plan is the only blueprint that can serve our national-defense effort. In our judgment, it meets the basic needs of the situation. We merely ask the opportunity for discussing this plan with the responsible officials of the United States Government in order that it be given full consideration. We are deeply appreciative of the defects of the present administrative machinery which seeks the accomplishment of the national-defense effort. The C. I. O. does not wish it to be understood that it will refrain from participation in the nationaldefense program unless its own industry council plan is adopted.

To the contrary, the C. I. O., as an American institution with loyal Americans as its members, will do all in its power to assist in the national-defense program. At all times we shall attempt to point out what we may consider to be the shortcomings of the program or its administrative machinery from the point of view of ever pressing for a stronger and more effective national-defense effort.

The C. I. O. is firmly convinced that this Nation must participate in the defeat of Nazi Germany. Toward this end we have offered our analysis of the nationaldefense program and have submitted our recommendations for a more vigorous and more militant and comprehensive plan to effectuate the goal desired by all Americans.

STATEMENT BY PHILIP MURRAY, PRESIDENT OF THE CONGRESS OF INDUSTRIAL ORGANIZATIONS, ON PRICE-CONTROL BILL, BEFORE THE SENATE COMMITTEE ON BANKING AND CURRENCY, FRIDAY, DECEMBER 12, 1941

Now that the Nation is at war, it is all the more urgent that every consideration except that of the common welfare should be abandoned. It is in this spirit that I present to you today the views of the 5,000,000 workers who form the Congress of Industrial Organizations.

The men and women of the Congress of Industrial Organizations desire more ardently than any other body of citizens the destruction of Hitler and his Japanese allies. They are, significantly, men and women who stand in the industrial front lines where the Nation's armament is being forged. The Nation has no more important assets than the continued sound health, the full efficiency, and the well-being of these working people.

It has been the purpose of our movement, and in this purpose as I understand it we have had the full endorsement of our Government, to bring to American workers a decent minimum of income. The majority of American workers do not ask much, mind you—just a modest home, decent food and clothes for themselves and family, a chance in life for their children, things like that.

THE INFLATION DANGER

Since August 1939, however, 11 percent of American workers' income has been cut from their wages by the rising cost of living. The rises in cost of living in special defense cities have been even more serious than in the country as a whole. Such wage cuts mean less food and clothing; less medicine, less shelter. These cuts are in a very real sense sabotage of our defense production. We are paying the cost in lower efficiency, in more illness many times over. I call attention to the fact that known losses of man-days of work in industry due to illness in 1940 exceeded 560,000.000 man-days. Compare this to the fact that in all armament industry only 570,000,000 man-days were worked during 1940. That is, about as many man-days of work were lost by ill health as were worked on armament.

Thus, the rising cost of living strikes most severely at those whose well-being we need to guard most carefully. I submit that it is essential to the victory of this Nation that its working people shall be maintained in good health, full efficiency, and well-being.

These alarming rises in cost of living and in retail prices are clearly only a beginning. Facts, already spread before the committee, show that retail prices and the cost of living still lag far below their normal relationship to wholesale prices. I submit an additional memorandum on this subject.

I am profoundly concerned that the Nation shall not go farther along this path to inflation. The working people know from sad experience that inflation destroys workers' income first. I do not relish the prospect of struggle through the war years on the part of labor trying vainly to keep wages within sight of rising prices.

We know that this pursuit is false and hopeless for labor can never catch up. It would be a real catastrophe if labor's constructive energies and its extensive leadership were forced to spend the war period struggling vainly simply to keep for American working people that little they now have.

For these reasons I urge most earnestly the passage of effective price-cotnrol legislation. This means legislation with teeth in it, legislation of the character proposed by the responsible administrative officials.

Let me say to you frankly that the workers far and wide in American basic industries have been growing restive under the pressure of a cost of living that has been increasing nearly 12 percent a month of recent date.

WAGE CONTROLS

During the House consideration of the bill it was proposed in a number of quarters to include wage control in this legislation. The House committee and the House itself decisively rejected such proposals. It is my understanding that nonetheless the inclusion of wage controls will be urged upon the Senate. In particular I understand that certain farm interests are concentrating their major effort upon the inclusion of such controls. I am frank to say I do not understand why such a position has been taken. It seems to me in direct contradiction to the real interests of American farmers.

In the field of national policy, organized labor has been one of the most firm and consistent friends of the farmers. We have supported wholeheartedly every sound measure urged by the farm organizations for the betterment of the conditions of American farmers.

The freezing of industrial wages in this Nation would mean the freezing of the amount of money that industrial workers can spend on the crops that farmers sell. Cash farm income rises with the real income of wage workers. Most wage earners spend from 30 to 40 percent of their income on food and something like 10 percent on clothing and shoes, which come from the cotton and wool and the hides produced on farms. Labor believes that the rising real wage of the industrial workers is the best guaranty of rising farm income.

I should like to express here and now to the committee the firm and unqualified opposition of the Congress of Industrial Organizations to the inclusion of wage control in the price-control bill. For the following reasons we believe it would be most unwise to establish such control:

I. Wage control is unnecessary to prevent inflation. Extensive testimony in the House hearings on the bill made perfectly clear that the wave of price rises causing the present inflationary movement could not be attributed to wage increases.

Widespread union agreements provide fair and stable wages. The establishment of effective price ceilings would automatically prevent wage rises greater than could be met out of income at such price levels.

The British Government in a White Paper called "Statement by His Majesty's Government on Price Stabilization and Industrial Policy," dated July 1941, set forth the following position:

"It is the traditional and well-tried practice of the principal industries to regulate wages through their joint voluntary machinery for wage negotiation * * Since the outbreak of war, the existing joint voluntary machinery for wage negotiations has operated successfully. Increases in wage rates have been reasonable; the authority of the unions in day-to-day adjustment of wages and conditions has been maintained; the freedom of opportunity to make claims and to have them discussed has enabled industrial peace to be maintained.

"The policy of the Government, therefore, is to avoid modification of the machinery for wage negotiations and to continue to leave the various voluntary organizations and wage tribunals free to reach their decisions in accordance with their estimate of the relevant facts."

II. Any wage control established in the same sense as price control would be administratively unworkable. Those familiar with the vast number of wage rates in a single major production plant realize how impossible it is to set equitable and just wage rates by administrative determination for all the classifications of labor and major industry. The classifications used differ widely from company to company so that it is very difficult to compare the wage schedules of any two companies, to say nothing of trying to compare two different industries. Administrative machinery set up in connection with price control to administer wage control would almost certainly break down not only in the administration of wage control but in price control also. Thus, effective price control would be destroyed by the attempt to include wage control with it.

The traditional and ready machinery for the determination of wage rates is made up of literally hundreds of thousands of collective agreements all through the major industries of the Nation. These agreements are supplemented by nego tiating committees who have considerable experience and knowledge on the mat ter of rate adjustment. An attempt to replace this vast working machinery with a newly established administrative machinery created on an emergency basis would be, in my judgment, great folly.

III. The freezing of wages would be most unfair to American working people. Industrial profits have leaped ahead since the armament program began. The National City Bank of New York reports that 350 leading corporations had profits, after deductions for taxes, 25.7 percent higher in the first 9 months of 1941 than in the same period of 1940. The annual rate of return on net cost rose from 9.9 percent in 1940 to 12.3 percent in 1941. And the profits for the first 9 months in 1940 had already jumped for a list of similar leading corporations 42.3 percent above the first 9 months of 1939. On the other hand, average hourly earnings of workers in manufacturing industries rose in the first 9 months of 1941 less than 8 percent over the same period of 1940.

In view of such profit figures, it would be most unfair to freeze now labor's share of the national income. I would like to point out in this connection that in Great Britain extensive wage increases have taken place since the war began. The British Ministry of Labor has published an investigation showing wage increases between October 1938 (the latest present war date for which investigations were available) and July 1941. This study covering 6,000,000 workers showed an average increase in basic wage rates of 18 percent, with an advance of 42 percent in total pay. The advance in the cost of living during the same period was 28 percent.

The British Press Service reports that very substantial wage claims for workers covered by the Amalgamated Engineering Union, which means most of the mechanical trades in Great Britain, are being pressed through voluntary arbitration procedure. It is reported that substantial wage increases are probable. It is the British experience, therefore, that though the Nation is at war, wage increases should not be prevented.

IV. Wage controls, aside from those established by joint agreement, inevitably drag in their wake ever-increasing controls of other types over labor. As soon

as wages are frozen, except by voluntary agreement, the necessity begins to arise for a regulation preventing workers from changing jobs. This kind of restriction, when established by compulsion, is part of the system of Hitlerism. Labor is anxious and willing to help prevent unnecessary migration of labor. Already, in many places affiliates of the Congress of Industrial Organizations have worked out voluntary agreements designed to place workers where they are needed. That, I believe, is a sound and proper way to accomplish the necessary movement of labor and to prevent harmful migration.

THE INDUSTRY COUNCIL PLAN

The Congress of Industrial Organizations has proposed to the Nation and to its leaders repeatedly what we call the industry council plan. This proposal was set forth at length in the House hearing on the bill. I wish to present here, for the committee's information, a copy of that portion of my report to the Congress of Industrial Organizations convention which relates to this proposal. I will not go further into detail concerning it except to say that it provides what we in labor believe to be the necessary machinery for establishing maximum production, for maintaining industrial peace, and for regulating by agreement the proper relationship between industrial income and wages.

MEMORANDUM ON COST OF LIVING CHANGES

Cost of living between August 1939 and October 1941 for the major cities throughout the United States has increased 11 percent. The rise since the first of this year has been almost 9 percent. Within recent months, the increase has been at the rate of 1 to 12 percent a month. Retail food prices, which go to make up the over-all cost of living, have risen 19.3 percent between August 1939 and October 1941. Of this increase, 14 percent has occurred since January 1, 1941. On a wholesale basis, foodstuffs have increased between August 1939 and