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take over a struck plant and settle the strike by granting the workers' demands, but we must deal with realities. The record of recent events forces the conclusion that the likelihood of the latter action is farfetched.
When the President seizes a plant, whether temporarily or permanently, and whether or not a strike exists, the workers lose their right to collective bargaining. Whether they get collective bargaining will depend on the whim of the Army officer in charge, or the whim of the former owner who will be entrusted with the management of the plant. Experience has shown that industrialists who are not compelled by law to bargain collectively are not likely to do so voluntarily. Wages in the seized plant can be fixed arbitrarily, safety standards disregarded. Union contracts become a nullity. Workers who protest or who are active in a union can be summarily discharged without any of the protection afforded by the National Labor Relations Act, since the act does not apply to Government employees. A foretaste of what is likely to happen was given in the North American Aviation strike, when the Army refused to permit the leaders of the union to go back to work.
It may be that S. 1579 was not designed to destroy organized labor, although a suspicion that it was so intended is certainly pardonable. At any rate, this bill can be used to bring about that result. Under it, Government edict can be substituted for collective bargaining, and compulsory labor for the right to strike. To put such power in the hands of the Executive is to follow a course which must inevitably be viewed with concern by all who seek to preserve and extend the basic tenets of our democracy.
The very fact that no provision was put in the bill to safeguard any of labor's rights makes us fear the effects of the measure on those rights. We have seen in recent days the passage of proposed legislation like the Connolly amendment to the Selective Service Act by devious means seeks to force compulsory arbitration on labor. Presumably- this amendment operates against both labor and industry, but the fact is that when a strike-bound plant is taken over by the Government, the strike is broken, while the owner of the plant has lost nothing by the temporary Government operation of the plant.
In our opinion, the sponsors of S. 1579 and the Connolly amendment to the Selective Service Act and similar proposed legislation render a disservice to the cause of democracy. These measures will have the effect of substituting enforced labor for free labor. We oppose such legislation because we believe that free labor is essential to democracy, and that democracy is incompatible with any system of enforced labor. We urge defeat of S. 1579.
MARTIN POPPER, National Executive Secretary, National Lawyers Guild.
BENEDICT WOLF, Chairman, Labor Law Committee, National Lawyers Guild.
NATIONAL SMALL BUSINESS MEN'S ASSOCIATION,
New York City, June 30, 1941. To the Committee on Military Affairs, The Senate, Washington, D. C.:
MEMORANDUM IN OPPOSITION TO Bill S. 1579 ON BEHALF OF THE NATIONAL SMALL
BUSINESS MEN'S ASSOCIATION
Recently four classes of legislative proposals have been presented for congressional consideration to deal with strikes slowing up defense programs. One legislative plan consists of a formula for seizure of plants where strikes take place and the operation of such plants by the Government. This procedure was followed in the case of North American Aviation, Inc. Although it may work again, the plan does not appear to be completely logical, since it is in effect a form of penalizing plant owners who neither strike nor spurn mediation. The other three classes of proposals imply coercion in some degree. They range from compulsory cooling off periods to actual arrest of strikers or strike leaders held to be guilty of activities classed as “subversive."
The principle that the Government must have the power to commandeer all resources of whatever kind that are vitally necessary to national defense cannot be disputed. It is recognized that the Government must be able to act in a crisis with speed and efficiency. But there is also the principle, which no democracy can afford to overlook, that any action of this sort must be taken in accordance
with the democratic process and provide democratic safeguards for the right of the individual.
The amended bill proposed by the War Department for authority to seize private property of all kinds would permit the President “to requisition and take over for the use of the United States or in its interest any military or naval equipment or munitions, or component parts thereof, or machinery, tools, or materials necessary for manufacture of such equipment or munitions, or any patents, plans, designs, or rights controlling the production of such materials or supplies and (b) to use on such terms as he shall deem satisfactory, or to sell or otherwise dispose of any materials so requisitioned or taken over, or any right or interest therein, pursuant to the provisions of this act.” Few kinds of property are not embraced in these sweeping terms to which this power of seizure could not be made to apply.
The President may make such requisitions, not during some definite specific period but "during any period of national emergency” that he himself proclaims. The one restriction is that he must pay as compensation such sum as he "shall determine to be fair and just,” and if any person whose property is seized thinks this inadequate he can sue for the difference.
There are many kinds of property that should be clearly exempt from this power. If the right of free speech and free press is to be protected, then the bill should clearly not include magazines, newspapers, and radio stations which may now well come within its scope. There is no reason why more definitive standards should not be set forth limiting the powers to confiscate. As the law now reads the right of seizure may be exercised on the mere written finding by the Secretary of War or the Secretary of the Navy, that a sale or disposition is necessary to insure prcduction in sufficient quantity of the patented commodity or articles for defense purposes and that production thereof cannot be otherwise obtained. Practically every important machine is protected by patents.
A key machine, for example, in any plant, however small and however indispensable to the productivity of the plant or its very existence, may be seized (compensation of 75 percent) unless the owner consents that it may be used by or for the Government for national defense or "other governmental purposes.”
Rather than blanket powers with a list of inferential exceptions, it would be far better if the War Department listed plainly the sort of property that it might consider necessary and ascertain conditions to seize, and draft a bill applying to that sort of property. The measure is nothing short of wartime control and does not appear to be warrantable even in our present emergency. The Government already has very broad powers under the Selective Service and other Acts to seize and operate plants making, or capable of making, munitions or Government supplies. It may need additional authority, but if it is necessary to expand such powers, they should be expanded carefully, specifically, and not recklessly with catch-all phrases.
Under existing law the Government's power to seize realty is complete, due compensation being provided. If the Government wishes to buy, as an extension of an Army camp or other Federal defensė unit, a farm which has been in a family for generations that is being farmed by the current generation, there are legal methods of acquisition. Also, no provision exists for recapture by the original owners after the emergency has passed.
The purpose of the measure is to enable the administration to carry out the defense program without the interruptions by disputes between capital and capital, labor and labor, or capital and labor. But under the National Defense Act and the Selective Service Act, the President already has authority to commandeer plants making, or capable of making, munitions, or refusing to produce war materials. Under the new bill he could take over any plant where there was a strike and have authority to:
(a) Repuisition inventories and current production of any plant, raw materials and shift such materials from place to place;
(6) To sell or otherwise dispose of requisitioned plants, raw materials, tools, and all real and personal property such as stocks and bonds, newspapers, etc.;
(c) Take over plants or any part of plants whether or not management refuses to manufacture defense materials at a "reasonable price” or refuses to bid on a defense order.
The wording of the bill is broad enough to permit the Government to requisition without showing specific cause any article of private property in the Nation and its Territories which can be related to national defense or govern. mental interests, in the opinion of the President.
The bill would seem to hold out some possibility of modifying its effect through the courts. The court could rule against the Government as going beyond the “intent and purpose" of Congress. But the judicial remedies would apply only after the property had been taken over.
If Congress must pass a law, let it go to the root of the evil. Let it find ways to insure a man who pays dues to a union to have the right to a voice in the management of that union without running the danger of strong-arm tactics. What is sought by the present measure is Presidential power to plug a few loopholes allegedly now existing in his power to take over plants in case of work stoppage. It should be remembered that section 3 of the Selective Service Act gives the Government power to take over industrial plants, if the owners refuse to cooperate on defense contracts.
During the Allis-Chalmers strike, the labor union was willing to go back to work, if certain condition's were met. The employers, too, agreed to go back to work on condition. Technically, it is said by the proponents of the measure that neither side had "refused” to reopen the plant. But, technically, there was a refusal, for the consent to return to work was on condition, and conditional acceptance in the law of contracts is by every conceivable standard a refusal.
In the event of administrative arbitrariness of which we have in recent years had not a little evidence, judicial review of such an order of the President commandeering a plant, etc., is not encouraging. There are many limitations upon the right to and the adequacy of judicial relief.
There is always the presumption of validity in favor of the statutes. This presumption must be overthrown “beyond all reasonable doubt" before the statute is held void. An almost impossible task.
There is no safeguard of judicial review. Even if there were the review would not extend to the fact-finding function of the Secretary of War or Secretary of the Navy in making the requisition. His findings would be conclusive unless arbitrary.
The proposed measure, in the face of present circumstances—however crucial they may be is an unwarrantable abdication of congressional powers. It illustrates what the President may, by means of party pressure, do except for the last vestige of judicial review, which, as above noted, under present circumstances seems highly doubtful.
The small businessmen of the country are not able, due to lack of financial stability, to resist arbitrary disruption of their plants, under the guise of “national defense or other governmental purposes."
They look to Congress to fulfill its pledged duty of safeguarding their constitutional guarantees and preventing a reptition of delegation run riot.
In view of the above the measure should be reported unfavorably,
J. RAYMOND TIFFANY, General Counsel.
Kalamazoo, Mich., July 1, 1941. SENATE MILITARY AFFAIRS COMMITTEE,
Washington, D. C. GENTLEMEN: My name is Monroe Shakespeare and I am president of the Shakespeare Co., fishing-tackle manufacturers at Kalamazoo, Mich. I am also secretary and general manager of the Shakespeare Products Co., manufacturer of automotive parts. I am vice president of the Associated Fishing Tackle Manufacturers, a trade association, and am a national director of the National Small Business Men's Association, with which I have been associated since its inception.
Our plants have operated on a two or more shift basis for the past several years, and for many months we have been converting our activities from nondefense to defense production. Our tool room and engineering departments have been practically 100 percent so engaged for the past several months, and we have already made substantial deliveries of new products to the airplane companies. We are doing everything within our power to put our whole facilities on to high priority essential defense production of a high-precision nature.
It was this urgent defense work which has kept me here and made it necessary to submit my testimony in writing. I should have greatly preferred to submit my testimony in person and to have been available to answer questions.
I have studied over Senate bill 1579, which appears to be aimed at expediting the defense effort by making isolated machines or part of inventories or whole plants available for defense, even though the plants may not be fully equipped
to handle contracts or subcontracts. That is a desirable end, and we cannot expect to prosecute defense effortfully or to engage in a war effort without great sacrifice of many of the liberties and prerogatives to which we have been accustomed.
According to my experience and wide acquaintance, I can say that defense subcontracts are being widely spread. Every main contractor and every subcontractor that I know (and they are many) are searching diligently for suitable sources and finding many such sources with whom subcontracts and sub-subcontracts are being and have been placed.
There is considerable reference to a lag in defense production. The "lag" in defense production, if there be one, is a lag behind a wished-for or “planned” schedule that was hopefully estimated. There is abounding evidence of the impossible having been accomplished in case after case. Schedules have been met and exceeded, only to have the schedule increased terrifically in view of the outstanding performance of a plant or an industry. Then the complainedof lag is figured from this new desire which is called a schedule.
To permit some board or bureau to send representatives into any plant with the authority of the President and remove any machine or part of inventory would reasonably be expected to work great hardship on the labor displaced and the markets ruined, and with the investment of widows and dependent children ruined without fair compensation.
Tne value of a machine or a bit of raw material could hardly be evaluated to the defense industry as more than the value of a similar new machine or new material. But to a going plant whose continuation in business depends on that machine or raw material, the value could easily amount to 10 times or 25 times the new or replaceable value (if it were replaceable, which it would not be) of the machine or material being expropriated.
Furthermore, it could reasonably be foreseen that in the operation of this bill that there would be declared a shortage of certain types of machines or materials which would then be gathered from hither and yon and stored and later distributed in the places where the shortages existed. And we could expect to see quantities of requisitioned machinery and materials stored at Government expense in idleness and which items were accumulated at the ruination of many individuals, but which later turns out not to have been suitable for the defense effort and so never were so used.
The drafters of this bill envisioned a need for a machine in a particular defense plant on which they were unable to get immediate delivery. They also foresaw that such a machine might exist in some plant not on defense and they desired a mechanism to secure such a machine for the needy defense plant. Such a situation is obvious and the suggested procedure seems worthy. If the need were for one machine or a few such specific needs, the operation would be simple and practical, and the hardship not nearly so widespread. In such definite cases, the defense manufacturer could inspect the machine and assure himself of its usability for the purpose intended and take it directly into his plant and start producing. We all agree that defense is entitled to such a desirable end.
But in practice it would not (could not) work out that way. Defense manufacturers would list shortages which would be sent to the new bureau. The bureau would endeavor to collect stocks of machines and materials from lists. Many items so collected (if not most of them) would be found deficient for the purpose desired. The machines would be too old or they would be too worn or without modern attachments and, therefore, not capable of doing fine work. The materials would not be just the size or the temper or the finish needed. They would become available only then as scrap to be reconverted into new material at tremendous waste and would not solve the immediate problem of defense needs. The waste would be prodigious, along with untold hardships which would be rather widespread.
If a nondefense manufacturer has a material or a machine which is needed in defense, he can now be offered the opportunity to accept the defense work that could be done with his material or machine; and, if he refuses, his plant can be requisitioned. As a compromise to requisitioning his plant, he would surely greatly prefer to sell items of raw material or usable machines at reasonable figures which could be agreed upon on a mutual basis, provided that the parting with the machine or the materials would not work almost complete havoc and ruination with his business. This bill, S. 1579, does not provide for any such exceptions or contingencies.
Much more immediate good to the defense effort can be obtained sooner and without hardship by encouraging the design and engineering and inspection departments of the various procurement branches to authorize obvious improvements in methods and materials and designs that are urged by defense manufacturers and for which they are willing to assume reasonable responsibility. “Reasonable responsibility” would ordinarily be considered the replacement of any devices found to be defective or unsatisfactory, which is ordinary business practice.
It is almost inconceivable the difficulty that is encountered by manufacturers in getting any deviations from blueprints or standards such as are normally readily secured from any commercial concern. Each Government employee seems to be chiefly concerned with avoiding all responsibility so that nothing can be pinned on them in case something does not work out as well as was contemplated.
Obviously, if an engineer or a department head were to grant 100 changes to 1 or to a number of manufacturers, there would be 2 or 3 or 4 of them which would not work out satisfactorily and which would be a disappointment, and for which somebody should be blamed. In the case of private business the management would weigh all of the successful and improved and economical changes against the few which did not turn out well, and, usually, based upon the financial balance sheet of the concern, which measures its success, they would determine the value of the employee and the success of his judgment. In the case of Government employees, however, they seem to be universally convinced that they must not take any responsibility where they can possibly make a mistake that can be pinned on them and used to either hold them down or to eliminate them from the service. They seem to feel that no matter how many good decisions or how much progress is made by a number of good decisions that if there are even a few errors in judgment made or unfortunate decisions made, that they are quite liable to be made the goat and, therefore, lose their job or lose their advancement; and there is not the incentive on their part to take this responsibility. In the Government service there does not seem to be the opportunity for advancement or gain sufficient to offset the consequences that may follow the assumption of responsibility.
This serious deficiency could be largely eliminated if capable Government employees were given the opportunity to use discretion when they had as a basis the written recommendations of the subcontractor and the written approval of the main contractor together with the reason therefor and the benefits to be obtained. Then if it seemed reasonable to the Government employee and he acted upon his best judgment based on the written recommendations, there should be little occasion for severe censure or possible dismissal of an employee; and, with these fears removed, real progress could be made.
With regard to the specific provisions of this bill, S. 1579, I am sure that most all manufacturers having any facilities that are new and modern and accurate enough to use on defense also have the personnel in their management and in their shop to do defense work. Therefore, they are in a position and are willing to do this work rather than give up their facilities to some other plant. Practically all such manufacturers have already felt the pinch of priorities and delayed deliveries of materials and supplies. For the most part they have already solicited or obtained defense subcontracts.
In view of the foregoing, there would be too little of usable assets of any nature which were usable on defense, but which were in the hands of manufacturers who were too short-sighted on the national-defense picture to see that the way to keep in business and build for the future was only possible if they did all the defense work of which they were capable. The usable defense assets in the hands of such short-sighted manufacturers would be too insignificant to warrant the drastic procedures contemplated in this bill.
This bill, as now drawn, would provide about the most potent weapon possible for political persecution under the guise of defense. As pointed out in detail above, it does not seem possible for it to accomplish enough more for promoting defense production beyond what can be accomplished now under already available national emergency powers to warrant subjecting hundreds and thousands of workmen, widows and dependent children, and aged investors to the bitter, burdensome hardships that would accrue to them.
Again I want to thank you, gentlemen of the committee, for permitting me to express these views, which are based on my personal experience. Sincerely yours,