Experience Under Railway Labor Legislation 9780231881937

Table of contents :
Preface
Contents
Introduction
I. The Beginnings of Railway Labor Legislation
II. The Railroad Administration and the Railroad Labor Board
III. The Railway Labor Act of 1926
IV. Railway Collective Bargaining and the Railway Labor Act 1926 Through 1934
V. The 1934 Amendments
VI. Federal Full-Crew, Train-Limit, and Six-Hour-Day Legislation
VII. Consolidation and Job Protection
VIII. The Establishment of a Separate Railway Social Security System
IX. The Expansion of the Railway Social Security System
X. Collective Bargaining and the Railway Labor Act, 1935–1941
XI. Railway Labor Relations During World War II
XII. Railway Collective Bargaining Since World War II
XIII. The Diesel Movement
XIV. Changes in the Railway Labor Act After World War II
Table of Cases
Glossary
Bibliography
Index

Citation preview

EXPERIENCE UNDER RAILWAY LABOR LEGISLATION

N U M B E R 5 8 7 OF T H E

COLUMBIA

STUDIES

IN THE SOCIAL EDITED

SCIENCES

BY

T H E FACULTY OF POLITICAL SCIENCE OF COLUMBIA

UNIVERSITY

Experience under RAILWAY LABOR LEGISLATION by LEONARD A. LECHT

1955 COLUMBIA UNIVERSITY PRESS, NEW YORK

The Columbia Studies in the Social Sciences (formerly the Studies in History, Economics, and Public L a w ) is a series edited by the Faculty of Political Science of Columbia University and published by Columbia University Press for the purpose of making available scholarly studies produced within the Faculty.

L I B R A R Y OF CONGRESS CATALOG CAED N U M B E R !

COPYRIGHT

1 9 5 4 ' C O L U M B I A U N I V E B S I T Y PRESS, N E W FIBST P U B L I S H E D AS A BOOK

PUBLISHED I K

55-10539

GREAT B R I T A I N , C A N A D A , I N D I A , A N D

B Y G E O F F R E Y C U M B E R L E G E : OXFORD U N I V E R S I T Y LONDON, TORONTO, BOMBAY, A N D MANUFACTURED I N

THE

YORK

1955 PAKISTAN PRESS

KARACHI

U N I T E D STATES O F A M E R I C A

PREFACE

I N P R E P A R I N G this study I have been fortunate in receiving assistance from a number of persons and agencies. I am indebted to Professor Leo Wolman, who supervised its original presentation as a dissertation and made many helpful suggestions. A note of thanks is also due to Professor William S. Vickrey for reading the manuscript and proposing several changes. T o Professor Karl Polanyi I owe an acknowledgment f o r arousing my interest in the relationship between economic g r o u p organization, government regulation, and the market economy. My study, to a large extent, is a survey of one facet of this problem. And last, my wife deserves more than the usual gratitude f o r suffering through many a tedious evening while I labored in the throes of composition. A fellowship granted by the F u n d f o r the Advancement of Education to enable the writer to broaden his qualifications for college teaching materially assisted. Needless to say, the Fund is in no way responsible f o r the subject matter or the conclusions in this work. The period of history surveyed in this volume closes shortly a f t e r the outbreak of the Korean war. However, there have been no significant changes in railway labor legislation since 1951. In the area of industrial relations the recent extensions of the union shop among railroad employees constitute an important departure. Similarly, health and welfare benefits represent another current addition to the expanding agenda of railway collective bargaining. As a f u r t h e r development, the backlog of unsettled grievance cases, a m a j o r element in impeding the work of the public agencies concerned with railway labor, shows signs of diminishing. Nevertheless, there is nothing in the experience of the p a s t few years which would indicate a substantial break in the p a t t e r n of railway labor relations. LEOKABD A .

New York, New York October, 1955

LECHT

CONTENTS

INTRODUCTION i. n.

8

T H E BEGINNINGS OF RAILWAY LABOR LATION

LEGIS14

THE RAILROAD ADMINISTRATION AND T H E RAILROAD LABOR BOARD

81

HI. THE RAILWAY LABOR ACT OF 1926 iv.

RAILWAY COLLECTIVE

BARGAINING AND

47 THE

RAILWAY LABOR ACT, 1926 THROUGH 1934 v. vi.

T H E 1934 AMENDMENTS FEDERAL FULL-CREW, TRAIN-LIMIT, AND

78 SIX-

HOUR-DAY LEGISLATION vii. via. H. x. xi. xii. xm.

60

CONSOLIDATION AND JOB PROTECTION

88 102

T H ESOCIAL ESTABLISHMENT OF A SEPARATE RAILWAY 118 SECURITY SYSTEM T H E EXPANSION OF T H E RAILWAY SOCIAL SECURITY SYSTEM 132 COLLECTIVE BARGAINING AND T H E RAILWAY LABOR ACT, 1935-1941 154 RAILWAY LABOR RELATIONS DURING WORLD WAR II

172

RAILWAY COLLECTIVE BARGAINING SINCE WORLD WAR II

188

T H E DIESEL MOVEMENT

209

viii xiv.

CONTENTS CHANGES IN T H E RAILWAY LABOR ACT AFTER WORLD WAR II

223

TABLE OF CASES

239

GLOSSARY

241

BIBLIOGRAPHY

243

INDEX

251

EXPERIENCE UNDER RAILWAY LABOR LEGISLATION

INTRODUCTION

P O S T W A R seizures of the railroads by the Federal Government have focused public attention on the Railway Labor Act. This law is the most important element in the body of legislation regulating railway collective bargaining and providing social security and job protection separately from the general labor laws. The forces affecting the development of railway labor legislation and the issues arising out of its application provide the subject for this study. Two groups of pressures shaped the growth of railway labor laws. One was the industry's essential place in the economy. The other was the existence of powerful employee organizations whose strength counted in political as well as in economic terms. The result of these two influences has been a special concern with problems of railway labor by Congress and the Administration. The necessity for uninterrupted transportation service prompted Congress to enact legislation to settle railway labor disputes long before it became occupied with collective bargaining. Beginning with the Act of 1888, 1 a succession of laws was passed each of which was abandoned when the machinery it created was found inadequate in an important controversy or when the law was disregarded by one or both of the contending parties. The essential feature of these laws, other than the 1920 Transportation Act, 2 was the emphasis on voluntary procedures of mediation, "fact-finding" boards, or noncompulsory arbitration, and the corresponding absence of any power by which the Government might prohibit work stoppages or determine the content of labor agreements. The different mediation boards were seldom entrusted with exclusive jurisdiction to settle the industry's labor disputes. When national strikes threatened, the President has intervened at least as f a r back as the eight-hour-day movement of 1916. Since 1943 intervention by the President has taken the form of injunctions or Federal i U.S. 25 Stats. 501 (1888).

2 U.S. 41 Stats. 456 (1920), Title III.

4

INTBODUCTION

seizure and operation of the roads. Recent demands for revision of the Railway L a b o r Act grow out of the criticism that this dual system of public control is an ineffective halfway step toward compulsory procedures which fails to keep the peace or to encourage voluntary agreements. T h e Federal Government has regulated railway rates and service for about the same length of time as it has been concerned with railway labor. 3 T h e Interstate Commerce Commission considers changes in rates on a regional or national basis. Collective bargaining follows a similar geographic pattern. W a g e increases applying regionally or nationally are later used as the grounds for rate changes affecting roads in the same area to the same extent. Competitive pressures which would operate on any single road granting an increase are removed. This situation enhances the importance of the Government's participation in railway labor controversies since breakdowns in collective bargaining will typically affect a region or the entire nation. T r a i n , engine, and yard service employees, the operating workers, were well organized by 1 9 0 0 while shop, clerical, and maintenance employees, the nonoperating group, developed considerable union strength during World W a r I and again after 1931. The political weight of strong unions made it possible for railway labor to utilize legislation as a method for improving its legal position and achieving gains which were difficult or impossible to obtain through collective bargaining. T h e depression of the 1930's, for example, shifted union attention away from wage bargaining with employers, and instead it emphasized creating and protecting employment through full crew, retirement, and consolidation laws. More recently, the unions have been strongly distrustful of alternatives suggested to the present Railway Labor Act. Their opposition has been an important factor in accounting for the law's continuation. Railway social security and consolidation legislation has been accepted by the industry and the unions so that current interest in legislative changes does not apply to these areas. Collective bargaining and the role of the Railway Labor Act have provided the difficul< The original Interstate Commerce Act was enacted in 1887. See U.S. 24 Stats. 879 (1887).

INTKODUCTION

5

ties in the p a s t decade; therefore, experiences connected with this law receive the bulk of the writer's attention. The N a t i o n a l Mediation B o a r d , the agency created by the Railway L a b o r Act, functions effectively in settling lesser disputes which do not involve nation-wide changes in the basic terms of labor agreements. Evidence f o r this contention is to be found in the high percentage of new cases which are successfully closed through its f a cilities. 4 T h e Mediation B o a r d can also claim credit f o r ending a minor f r a c t i o n of the i m p o r t a n t national movements such as the nonoperating employees' 40-hour-week demand of 1948-49. Similarly, the N a t i o n a l Railroad A d j u s t m e n t B o a r d has operated with reasonable efficiency when processing grievance claims of nonoperating employees. I t has been much less successful in dealing with the grievances of o p e r a t i n g workers. A backlog of cases amounting to several years' unfinished work, and the infrequency with which Board members agree on decisions, are indications of this record. The operating employees' grievance docket, it might be added, constitutes a large m a j o r i t y of the cases before the A d j u s t m e n t Board. 5 Since 1940 the largest share of the nation-wide disputes have not been settled within the scope of the Railway L a b o r Act. These controversies followed a p a t t e r n which increasingly became fixed during the 1940's. Demands are formally served by the unions, and c a r riers respond with counterproposals. P e r f u n c t o r y a t t e m p t s a t negotiations fail to produce agreement and one or both parties then invokes the services of the Mediation B o a r d . Mediation proves unsuccessful and a t least one of the disputants rejects the Board's offer of a r b i t r a t i o n . A t some point in this process the union takes a strike vote and sets a strike date. T h e effect, and usually the p u r pose, of the strike vote is to create a threatened interruption to transportation so t h a t the Mediation Board will call f o r the appointment of an emergency fact-finding board. Creation of the emergency board maintains the s t a t u s quo f o r sixty days. F o r the first half of this period the board hears the representatives of both parties and it then issues its r e p o r t and recommendations. T h e r e p o r t of an emergency b o a r d is the last step provided by the Act f o r inducing agreement. * Annual Report of the National Mediation Board for the Year Ending June SO, 1950, Table 1, p. 29. 5 Ibid., Table 13, pp. 76-77.

6

INTRODUCTION

Recommendations of emergency boards are not binding on the contending parties. T h e assumption of the 1926 Act's sponsors was that the prestige of a board would be sufficient to "crystallize public opinion against the parties responsible for not maintaining peace" so that it would be difficult not to accept an award. 6 This expectation has not been realized. F o r over a decade the significant collective bargaining developments have usually occurred after the report was issued and found unacceptable. Unions have been the active group in rejecting board reports. The award, in practice, serves as a base line measuring the minimum changes to be incorporated in the new contract. Employee organizations have sought to extend their gains through further negotiations in which the carriers may also offer additional counterproposals. Few settlements have resulted from collective bargaining after the report. 7 T h e strike vote is repeated, or it becomes operative again once the negotiations bog down. At this point the President remains as the only authority available to bring the two parties together and to head off a threatened strike. Remedies available to the President— further conferences, seizures, and injunctions—are not authorized by the Railway L a b o r Act. T h e result of their use is to shift responsibility for protecting the public interest away from the Mediation Board and over to the Executive of the Federal Government. Emergency board awards, in point of fact, have determined the general features of most of the subsequent contracts. 8 T h e actual termination of disputes at the initiative of the President rather than by the Mediation Board would be a matter of minor concern unless this pattern involved consequences which were detrimental to the economy and to railway labor relations. An important effect of the current arrangements is to increase the span of time elapsing between the date when the original notices are served and the date when an agreement is finally ratified. Railway collective bargaining has become a long-drawn-out process. This time span was stretched out to more than two and one-half years in the « Testimony of Donald Richberg, counsel for standard railway unions, Hearings, H.R. 7180, U.S. House of Representatives, Committee on Interstate and Foreign Commerce, 69th Congress, 1st session, 1926, pp. 18-19. ' One important exception to this statement was the agreement reached in the World War II Firemen's Diesel controversy. See chap. 13, infra. s See Frederic Meyers, "Criteria in the Making of Wage Decisions by 'Neutrals': The Railroads as a Case Study," Induttrial and Labor Relation» Review, I V (1951), 344-46.

INTRODUCTION

7

controversy which resulted in the 1950—52 seizure. Agreements reached a f t e r such a p r o t r a c t e d period do n o t create a stable basis for workable l a b o r relations. P r i c e level changes, technological developments, cyclical fluctuations, o r wage changes elsewhere will have occurred in the interim which render the c o n t r a c t provisions obsolete by the d a t e t h e y a r e signed. 9 In almost all cases, the Mediation B o a r d h a s required a strike vote as a p r e l i m i n a r y t o the a p p o i n t m e n t of an emergency b o a r d . 1 0 T h e effect of this requirement is t o d i s t o r t the meaning of a strike vote and probably t o increase the number of strikes. I t is difficult t o i n t e r p r e t the significance of a strike vote a t the time it is taken. While the vote may be intended as a p r e p a r a t i o n f o r a genuine strike, more o f t e n it is simply a technicality gone t h r o u g h t o obtain a b o a r d hearing. Before 1 9 4 3 the m a j o r strike votes a p p e a r to have been formalities, but beginning with 1 9 4 3 they involved a t least a t h r e a t of an a c t u a l strike. T h i s technique increases the likelihood t h a t strikes will occur because it leaves the union committed t o such action on a specific date months before the possibilities f o r peaceful settlement have been exhausted. Seizures a n d i n j u n c t i o n s m a i n t a i n t h e c o n t i n u i t y of t r a n s p o r t a tion service, b u t in their p r e s e n t s t a t e t h e y c o n s t i t u t e u n s a t i s f a c t o r y and uncertain methods f o r c o p i n g with the problem. T h e P r e s i d e n t ' s authority t o seize r o a d s is a t e m p o r a r y wartime power based on a 1916 Act of Congress a n d it has d i s a p p e a r e d with the official termination of hostilities in 1952. 1 1 T h e decision of the Supreme C o u r t in the 1952 steel case c a s t s serious d o u b t as t o the power of the A d ministration t o t a k e over r o a d s in the f u t u r e without f u r t h e r a u t h o r i zation by Congress. 1 2 Seizures a n d i n j u n c t i o n s do n o t contain a n y p r e s c r i p t i o n f o r settling the underlying controversy. Seizures a r e followed b y conferences usually conducted under t h e P r e s i d e n t ' s auspices. Issues previously aired in negotiations a n d emergency b o a r d hearings a r e now t h r a s h e d a The 1948 "third round" of postwar demands was begun before the roads were taken over by the Government because of a dispute arising out of second-round demands. See chap. 12, infra. 10 No strike vote was required before appointing the 1949 Diesel board. The World War II panel boards also did not require a strike vote. See chaps. 11 and 13, infra.

11 New York Times, April 29, 1952, p. 70. 12 See John P. Frank, "The Future of Presidential Seizures," Fortune, XLVI (19S2), 70 ff.

8

INTRODUCTION

out again with the pressure on the Administration to suggest terms which will produce an agreement. There is a strong element of compulsion attached to this intervention because it is not easy for carriers or unions to reject terms backed by the prestige and authority of the President. 13 Since the objective of seizure is to remove the strike threat, it emphasizes the critical importance of reaching a settlement. Frequently the Administration discovers that the quick way of attaining this end is to suggest some additional concessions in favor of the more aggressive p a r t y . Railroad seizures have been token affairs since management, revenues, and operations remain undisturbed. They are not neutral in their effects on the bargaining positions of the disputants. Regional control of the roads while they are in the Federal Government's possession is vested in railroad presidents who assume the military rank of colonel for this purpose. If the Administration should accede to union demands and change working conditions and wages during the period of its control, it would create precedents likely to be binding on the carriers and it would also further weaken the emergency boards. If the preexisting wages and working conditions are maintained, the employees' position is weakened. Unions are deprived of their strike weapon while seizure insures that the roads are not inflicted with the loss of income which would be produced by a strike. This is the procedure usually followed, and the fact that one side has suffered a penalty not levied on the other creates a claim for concessions in the final agreement which cannot be readily overlooked by the Administration. The institutional impact of this system is to undermine the assumption that our legislative approach to labor relations facilitates collective bargaining. Failure to restore the effectiveness of negotiations, mediation, and emergency boards can only strengthen the desire to apply other approaches less dependent on the voluntary adjustments of unions and management. Implicit in this survey of railway labor relations are a number of important questions concerning industry-wide bargaining, the GovDuring the 1950-52 seizure the four operating unions rejected terms worked out by the President's personal representative, Dr. John R. Steeiman. See Hearings, Labor Diiputet brtwten Railroad Carrier* and Four Operating Brotherhood», U.S. Senate, Committee on Labor and Public Welfare, 82d Congress, 1st session, 1951, pp. 114 ff.

INTRODUCTION

9

ernment's role in collective bargaining, and the protection of the public interest in industries characterized by organized power blocs representing both sides of the labor market. While the answers to these questions lie largely outside the scope of this study, they are presented to the reader as significant issues for f u r t h e r research and evaluation. 1. Will wages and rules continue to be determined through collective bargaining if this bargaining is to be conducted on an industrywide basis? Are the consequences of a national strike in a strategic industry so serious t h a t the Government should impose the terms of settlement rather than permit a work stoppage? I s there any likelihood t h a t bargaining on a lesser geographic scale would be successful when unions emphasize uniform wages and rules and railway rates are established on a national or regional basis? 2. If the Government appears destined to become an increasingly important influence in wage determination, can the role of the market as the regulator of wages help but become less important? In an industry such as the railroads where the Government already determines rates and service policies, will the entrepreneurial function retain much significance if wages are also the result of a political decision ? 3. Do "conservative" unions made u p of highly skilled and wellpaid members display any special reluctance to strike? Why should it have been the "aristocrats of labor" in the operating brotherhoods r a t h e r than the less opulent shop, clerical, and maintenance workers who were responsible for the large m a j o r i t y or rejected emergency board reports and seizures which have occurred since 1940? 4. When unions become as powerful as the railway brotherhoods, do they not constitute "private governments"? Can private bodies in a regulated industry which so vitally affect livelihoods, j o b opportunities, and transportation service long remain free from public supervision? Is not the likelihood of public control increased by the recent amendments to the Railway Labor Act authorizing union shop and checkoff agreements? 5. T o what extent does society benefit by assisting railway unions to protect their members against technological changes which threaten to reduce employment? Should this protection emphasize the preservation of existing j o b opportunities? Can financial allowances f o r displaced employees compensate f o r the social costs of

10

INTRODUCTION

technological change without significantly retarding the rate of innovation? Do the long-term effects of measures such as the fullcrew laws operate to increase or to decrease railway employment? The problems arising out of railway labor relations are not confined to that one industry. Similar difficulties occur in other industries such as coal or steel, where both management and employees are highly organized and the economy cannot tolerate the loss of production attendant to a major work stoppage. There is no simple formula for reconciling the dual objectives of voluntary settlements and industrial peace. But the likelihood that the threat of strikes will lead to more stringent Government control of railway wages and labor relations would be reduced if the Administration's role in collective bargaining were minimized. As a step in this direction, the writer favors revising the present law and changing the way it is enforced so as to restore collective bargaining before emergency boards are appointed. These revisions should also include changes in the methods used for adjusting grievance claims. Seizure should be authorized as a last resort but under different conditions from those recently prevailing. The complex rules in road and engine service and the strong partisanship of the Board members lie at the root of the Adjustment Board's problems. Furthermore, its effectiveness has been greatly diminished by the tactic of resorting to strike threats or to the Mediation Board to settle grievances. There would be less difficulty with grievance cases if the exclusive jurisdiction of the Adjustment Board were insisted upon. The Mediation Board could help in maintaining this jurisdiction if it refused to mediate grievance dockets or appoint emergency boards to consider such claims. Problems arising out of grievances would be eased if the backlog of unsettled cases were reduced. The Adjustment Board has already taken a first step by establishing supplementary boards. 14 Additional boards could be created whenever the backlog at the end of any fiscal year exceeded the number of cases closed during the year. They would be temporary boards which could be retired once the backlog fell below the critical figure. The Board's work would also be speeded up if a legal time limit were set up which permitted claims " These boards were initially created in 1949. See Annual Report of the National Mediation Board, 1950, p. 90.

INTRODUCTION

11

to be filed only within two years after the occurrence of the grievance. Awards which involve large sums of back pay or create claims for events which took place years back cause a special Adjustment Board difficulty. These cases, like the others, are decided after an informal hearing and without any opportunity available to the carrier for a review of the decision. A two-year deadline on filing claims and a further change in the law limiting the retroactive application of an award to no more than three years would mitigate this problem. The Adjustment Board would reach decisions a f t e r more careful and objective consideration if both parties could apply to the courts for a review of its awards. Courts should be permitted to set aside decisions which were not in conformity with the Act or if a full and fair hearing had not been granted to both sides. The strike vote—emergency board—seizure pattern is the other focus of great dissatisfaction with the Railway Labor Act. A return to genuine collective bargaining before an emergency board is appointed would reduce the regularity with which this pattern is repeated. The National Mediation Board could make a beginning here by abolishing the strike vote requirement for emergency boards and by refusing to appoint boards on an automatic basis. The law should be changed so that one or both of the interested parties could apply for a board and the Mediation Board should be allowed to create emergency boards on its own initiative. Before a fact-finding board was appointed, the Mediation Board would hold "show-cause" hearings. The hearings would survey areas of disagreement, the actions the disputants had taken to resolve their dispute through negotiations, mediation, or arbitration, and the reasons why an emergency board was necessary. A board would not be appointed unless the hearings indicated that further collective bargaining was futile. Existing wages and working conditions would be maintained until the hearings were completed. There is little to be gained, in the writer's opinion, from compulsory enforcement of emergency board awards other than as a special measure during Government seizure. Individuals who are frequently unfamiliar with the industry will not necessarily reach an adequate decision after a thirty-day hearing. I t would make little sense to enforce awards unless unions were also prohibited from striking against private employers. An overhauled Railway Labor Act should continue to use seizures

12

INTRODUCTION

and injunctions. A number of strikes occur before collective bargaining or emergency board investigations are completed while others concern grievance claims. Such stoppages typically affect single roads and they would not take place if the law were complied with. They could be prevented if the Mediation Board were empowered to request the Administration to obtain a restraining court injunction. Strikes usually occur after emergency board awards have been rejected. In some cases, they would not have taken place if the sixtyday "cooling-off" period in the law were extended and the parties continued to negotiate. The Mediation Board should be given power to use its discretion in such disputes by authorizing it to request an injunction prohibiting a strike for an additional period. This period might vary with the circumstances of the case, and it could range up to the eighty days provided in the Taft-Hartley Law. Federal seizure should be incorporated into the law as the final public protection but in such a way as to end the system under which the Administration and the Mediation Board each engages independently in efforts to settle disputes. It should also be weighted to discourage resort to seizure. Under the new law, the Board would take the initiative and request the President to assume control of roads on which strikes were imminent. If no emergency board had been created, a show-cause hearing would be held and appropriate action taken. If an emergency board had already considered the issues, its recommendations would be made binding so long as the carriers were in the Government's hands. This state of affairs would continue until the seizure was ended by acccptance of the award or agreement on other terms. All conferences during seizure would be carried on by the Mediation Board, and strikes would be banned as at present. The disputant rejecting an emergency board's award or otherwise responsible for a seizure should bear the burden accompanying it. If unions are the active party, they would be penalized by loss of their right to strike and by the application of an award which they had turned down. If managment's actions lead to seizure, the strike prohibition should be accompanied by a corresponding control of the carrier's income. The Government could pay the roads a rental for use of their seized property. Rentals would be the equivalent of " j u s t compensation" as determined by a claims commission. Profits above

INTRODUCTION

13

this figure would be absorbed by the Treasury which would also make good any resulting losses. 18 In railway labor relations, as in other areas, policy proposals reflect the social values of the community and of their formulators along with the facts of the case. The community's values in the past have emphasized voluntary procedures in the law regulating railway labor disputes. Injunctions, seizures, and the limited application of emergency board awards hedge the voluntary principle with important qualifications. But such measures are already frequently resorted to by the Administration because the economy is unable to tolerate serious railroad strikes. The manner in which they have been utilized undermines both the law and collective bargaining. Explicit recognition of these qualifications in the Railway Labor Act would strengthen voluntary procedures. The President's influence as an arbitrator would be removed. Emergency board investigations would assume greater significance. Carriers and unions would be more reluctant to push a dispute along to the emergency board stage or to encourage actions leading to seizures. The writer believes that the changes suggested would break up the chain of strike votes, emergency boards, and injunctions or seizures by encouraging settlements in the early stages of collective bargaining. is The Roosevelt Administration followed this proposal when it took over the motor carriers during World W a r II. See Butinett Week, May 24, 1952, pp. 90-94. In a case involving the 1948 mines' seizure, the Supreme Court m a j o r i t y upheld this practice when it ruled that mine owners could claim compensation for losses sustained while under Government control but t h a t the Government was also entitled to the profits earned. U.S. Pewee Coal C o , 71 Sup. Ct. 670 (1951).

i. THE BEGINNINGS OF RAILWAY LABOR LEGISLATION

T H E Railway Labor Act in effect today represents the evolution of a long series of experiments in public control of railway labor relations. The strategic importance of the railroads to the economy and the fact t h a t the industry is characterized by a few large carriers in each area aroused public concern with its rate policies and labor relations in the decades which followed the Civil War. These circumstances were responsible for passage of the Interstate Commerce Act in 1887 1 and the first railway labor law, the Act of October 1, 1888. 2 The constitutional basis for public regulation of the industry had already been established in 1876 by the United States Supreme Court in Munn v. Illinois.3 Justice Waite who delivered the decision pointed out that "when . . . one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest he has . . . created." Munn v. Illinois concerned the power of the State of Illinois to control public warehouses. The reasoning of the decision, buttressed by the authority of Congress to regulate interstate commerce, was also applied to railway employees.4 The Act of 1888 grew out of a decade of railway strikes highlighted by the great strikes of 1877 and 1885-86. These conflicts were marked by violence on both sides. The 1885 strike initially resulted in a victory for the employees, led by the Knights of Labor, against the Gould railway interests. Here, for the first time, a union "dealt i U.S. 24 Stats. 379 (1887). 2 U.S. 25 Stats. 501 (1888). a Munn v. Illinois, 94 U.S. 113 (1876). «See Second Employers' Liability Law Cases, 223 U.S. 1 (1912); and Wilson v. New, 248 U.S. 332 (1917).

BEGINNINGS OF RAILWAY LABOE LEGISLATION

15

on an equal footing with probably the most powerful capitalist in the country." 6 One consequence of the strikes was a series of proposed laws dealling with railway labor. H.R. 7479, introduced in 1886, was based on the principle of voluntary arbitration by a three-man board. 8 A substitute bill was presented giving either p a r t y the right to demand arbitration. I t provided binding awards and penalties f o r failure to comply. 7 Another measure empowered the President to appoint a permanent commission with authority to settle labor disputes on its own initiative. The terms the commission offered could be enforced by court injunctions. 8 H.R. 7479 was passed by Congress but President Cleveland refused to sign it. He had outlined a legislative program of his own in a Congressional Message. The President suggested a permanent commission of three members with authority to investigate any railway labor dispute which threatened to interfere with interstate commerce.® Congress did not adopt the President's program but several other bills were proposed. One of these, H.R. 8865, was similar to the President's plan for investigating disputes and, like H.R. 7479, it also contained provisions for voluntary arbitration. H.R. 8865 became the Act of 1888. 10 The first of the railway labor laws provided for arbitration by a three-man board at the acceptance of the interested parties. The unions and carriers involved were each to select an a r b i t r a t o r and the two partisan representatives would select the third board member. There was no provision in the statute for enforcing awards. The 1888 Act, in this respect, set the precedent for all succeeding legislation. The Act authorized temporary commissions of investigation rather than a permanent body. In the event of a dispute, the President was empowered to select two commissioners who, together with the Commissioner of Labor, were to constitute "a temporary commission for the purpose of examining the causes of the controversy, the conditions accompanying, and the best means for adjusting it." 11 The ® Selig Perlman, Hutory of Trad« Unionism in the United Statei (New York: Augustus M. Kelley, 1950), pp. 86-88. 7 • Congrestional Record, X V I I (1886), 2959. Ibid., p. 2960. s Ibid., p. 2980. » Congressional Message of April 22, 1886, ibid., p. 3728. io Ibid., X I X (1888), 3109, 8609, 9074; see also U.S. 25 Stats. 501 (1888). i t U.S. 25 Stats, 501, Sec. 6.

16

B E G I N N I N G S OF RAILWAY LABOR LEGISLATION

results of the commission's work were to be submitted in a r e p o r t to the President. T h e i r recommendations, like the arbitral awards, could be enforced only t h r o u g h the influence of public opinion. Similar use of investigatory commissions to suggest noncompulsory terms of agreement was t o be repeated again in subsequent legislation and it provides the basic public protection against railway strikes in the current law. Although the Act of 1888 remained on the statute books f o r ten years, it was seldom applied. T h e arbitration feature was never utilized and only one investigatory commission was appointed— in the Pullman strike of 1894. 1 2 T h e American Railway Union, headed by Eugene V. Debs, declared a sympathy strike in June, 1894, in support of striking employees of the Pullman Palace Car Company. Federal troops helped end the strike and a court injunction restrained Debs and other union leaders from interfering with the movement of mail in i n t e r s t a t e commerce. 13 President Cleveland, acting under the 1888 law, appointed a commission of investigation. T h i s body, whose chairman was United States Commissioner of Labor Carrol D. W r i g h t , issued a r e p o r t which concentrated on the inadequacies of the existing law r a t h e r than on problems of the Pullman strike. 1 4 The W r i g h t R e p o r t favored the appointment of a permanent three-man railway labor commission which was to be given powers in the railway labor field similar to those of the I n t e r s t a t e Commerce Commission in the field of railway rates. Carriers, b u t not unions, were to be compelled to obey its decisions. Management was to be prohibited f r o m firing employees during investigations f o r other than specified reasons and employees were not to strike or c a r r y on boycotts. T h e R e p o r t also urged the enactment of a law encouraging unions to incorporate. 1 5 The Chicago Strike Commission R e p o r t did not lead to any specific legislation but it placed the spotlight on the need for changes. I t was followed by a revival of congressional interest in railway labor. A For an excellent discussion of the period before the Railroad Labor Board, see U.S. Department of Labor, Bureau of Labor Statistics, Bulletin No. 303, Ute of Federal Power in Settlement of Railway Labor Ditputet (Washington: Government Printing Office, 1922). is In re Debs, Petitioner, 158 U.S. 564 (1895). n U.S. Strike Commission, Report on the Chicago Strike of June-July 1894 (Washington: Government Printing Office, 1895). is Ibid., pp. lil-liv.

BEGINNINGS OF RAILWAY LABOR LEGISLATION

17

number of bills were introduced and one of them, H.R. 8556, was favorably reported by the House Committee on Labor in 1895. 16 H.R. 8556 gave equal importance to mediation and conciliation along with arbitration and investigation. I t was supported by the brotherhoods and by Labor Commissioner Wright. The House approved the bill but it failed to pass the Senate and died. 17 A similar measure, H.R. 268, was suggested later in the year and it was also passed by the House but failed to receive Senate consideration. 18 H.R. 268 was important as the first proposed railway labor law which made it illegal for an employer to discriminate against an employee because of membership in a labor union. A revised version of the bill passed both houses of Congress and it was approved by the President in 1898. 19 In many ways, the 1898 Act, named the Erdman Law after its House sponsor, was weaker than the 1888 law. 20 I t applied only to train service employees. The Government could not intervene in a dispute on its own initiative. The earlier law's investigatory procedures were dropped and emphasis was placed on mediation, conciliation, and arbitration. Enforcement of the law was entrusted to the Chairman of the Interstate Commerce Commission and the Commissioner of Labor. They were to act on request of either the unions or carriers involved in a dispute. Mediation was the first procedure to be made available. If it failed, the contending parties were to be urged to agree to arbitration by a board made up of a carrier, a union, and a neutral representative. The Act provided that an arbitral award "may be specifically enforced in equity so f a r as the powers of an equity court permit," but no injunction could be issued compelling anyone to work against his will. 21 Awards, once issued, were to continue in effect for a year. A new feature of the Act was the provision that no employee could be fired during an arbitration except for due cause, nor could employees "unite in, aid or abet, strikes against said employer." 22 Section 10 was the primary reason for the unions' enthusiastic acceptance of the Erdman Act. I t stipulated that management could not require an employee "as a condition of employment, to enter i« House Report No. 1754 to accompany H.R. 8556, U.S. House of Representatives, Committee on Labor, 53d Congress, 3d session, 1895. 17 U.S. Department of Labor, Bureau of Labor Statistics, Bulletin No. 303, p. 22. is Ibid., p. 23. io Congressional Record, X X X I (1898), 5566. 20 U.S. 30 Stats. 424 (1898). " Ibid., Sec. 3, Par. 3. n Ibid., Sec. 7.

18

B E G I N N I N G S OF RAILWAY LABOR LEGISLATION

into an agreement . . . not to become a member of any labor organization ; or threaten any employee with loss of employment, or . . . unjustly discriminate against [him] because of his membership in . . . a labor organization." Use of the blacklist was prohibited by making it illegal for an employer who "after having discharged an employee, shall attempt to conspire to prevent such employee from obtaining employment." 23 Teeth were placed in these provisions by making each violation a misdemeanor punishable by a fine of from $100 to $1,000. But the protections of Section 10 were nullified by adverse court decisions. The first case was that of U.S. v. Scott in 1906. 24 Scott was a train dispatcher who threatened to fire any telegrapher who joined the Order of Railway Telegraphers. A U.S. district court ruled that this section was invalid since it was not a genuine regulation of interstate commerce. The major case which threw out the legal protection for union membership arose in Kentuck}' in 1907. I t concerned a master mechanic, Adair, who had fired a subordinate, Coppage, because of his union membership. The case was carried to the Supreme Court which again declared Section 10 unconstitutional. The Court ruled t h a t it was the right of the defendant to prescribe the terms upon which the services of Coppage would be accepted, and it was the right of Coppage to become or not, as he chose, an employee of the railroad company on the terms offered to him. . . . There is no such connection between interstate commerce and membership in a labor organization as to authorize Congress to make it a crime . . . for an agent of an interstate carrier to discharge an employee because of such membership on his part. 25 In 1899 the Erdman Act was invoked for the first time by conductors and trainmen in the Pittsburgh switching district. At the request of the unions, the ICC chairman and the Commissioner of Labor, the officials designated by the law, offered their services to the managements concerned. None of the railway officials accepted the offer. They regarded it as an intrusion on their rights which would deprive them of their "vital prerogative of determining what it [management] can afford to pay its employees." 20 The impotence 23 Ibid., Sec. 10. 2* U.S. v. Scott, 148 Fed. 431 (1906). 25 U.S. v. Adair, 152 Fed. 737 (1907), 208 U.S. 161 (1908). 2« U.S. Department of Labor. Bureau of Labor Statistics, Bulletin No. 98, Mediation and Arbitration of Railtcay Labor Disputes in the United States (Washington: Government Printing Office, 1912), p. 36.

B E G I N N I N G S O F R A I L W A Y I^ABOR

LEGISLATION

19

of the law's machinery induced the P i t t s b u r g h trainmen to concent r a t e on their economic strength. A f t e r unsuccessful negotiations and a strike vote, the employees won an increase in wages. 27 F o r eight years a f t e r the 1899 fiasco, the E r d m a n Law was a dead letter. This period was one of increasing union activity conducted outside the law's framework which marked the beginnings of modern unionism and collective bargaining in the industry. Revival of railway unionism took the form of the "concerted movements." T h e movements were a type of collective bargaining conducted on a regional basis by several unions acting together. T h e first one occured in 1902 when the western conductors and t r a i n men presented demands f o r higher wages and shorter hours to all the western railroads a t the same time and formed a regional association of union leaders to c a r r y on their negotiations. T h e carriers had refused to consider the demands when they were presented by conductors a c t i n g alone. A compromise was reached yielding an increase in p a y and other concessions a f t e r the trainmen joined the conductors and both unions had voted to strike. T h e j o i n t action "gave a g r a v i t y to the situation t h a t had been absent so long as each road dealt with its employees as an individual g r o u p . " 2 8 T h e success of this movement encouraged employees in other p a r t s of the country to a t t e m p t similar action. Agreement was reached in the 1902 controversy by direct negotiations and without the assistance of the mediation and arbitration facilities of the E r d m a n Act. T h e 1898 s t a t u t e came back to life again in 1906 when the Southern Pacific firemen voted to strike. T h e company applied f o r mediation one d a y before the strike was to become effective. While the dispute was a difficult one and involved a jurisdictional conflict between t r a i n service unions, it was finally a d j u s t e d by an agreement t o a r b i t r a t e as provided f o r in the law. 29 T h e public machinery had now come back into use again and in the next six years—until the passage of the Newlands L a w — t h e r e were sixty-one requests f o r assistance under the Act. Twenty-eight disputes were settled by mediation alone, f o u r by a r b i t r a t i o n only, 2T Ibid., p. 42. 28 Edwin C. Robbing, Railway Conductors: A Study in Organized Labor (New York: Longmans, Green & Co., 1914), pp. 63-64. 2® U.S. Department of Labor, Bureau of Labor Statistics, Bulletin No. 98, pp. 42-

48.

20

B E G I N N I N G S OF HAILWAY LABOR LEGISLATION

and eight by both mediation and arbitration. T h e twenty-one other cases were closed either when agreement was reached a f t e r the mediat o r was called in but without his aid, or when one of the p a r t i e s to the dispute refused to p a r t i c i p a t e in the proceedings. 3 0 Employees usually applied for mediation when the number of men involved was small or the union was weak. Management more frequently invoked E r d m a n Act intervention in the large movements in which railway workers preferred to rely on the t h r e a t of their power to inflict losses by stopping train operations. 3 1 T h e E r d m a n Act was invoked in the 1907 concerted movement of western conductors and trainmen. This dispute was settled on terms mainly favorable to the employees a f t e r the carriers had requested mediation. 3 2 Western firemen and enginemen followed suit in 1909 with demands f o r a twenty-five cent increase in their basic daily wage and other concessions. Carriers again asked for mediation and the board succeeded in g e t t i n g the two parties to a r b i t r a t e the issues a f t e r mediation had failed. T h e resulting award g r a n t e d a fifteen cent basic daily increase and other gains. 3 3 T h e scene of the concerted movements next shifted to the E a s t . In 1910 conductors and trainmen served joint demands and requested j o i n t negotiations with the eastern carriers as a group. T h e carriers refused to p a r t i c i p a t e in j o i n t negotiations and the same demands were then presented to each of the individual roads. T h e unions concentrated on the Baltimore and Ohio as the most likely prospect. A strike vote was taken and the management took the initiative and asked f o r mediation. A compromise p a y increase was agreed to which was used as a benchmark in negotiations with the other eastern carriers. 3 4 T h e unions now adopted the tactic of picking off a single road a t a time and threatening to strike unless the Baltimore and Ohio settlement was accepted as the basis f o r agreement. T h e New York, New so U.S. Board of Mediation and Conciliation, Railroad Labor Arbitrations (Washington: Government Printing Office, 1916), Addenda, pp. 12 ff. si U.S. Department of Labor, Bureau of Labor Statistics, Bulletin No. 303, pp. 31-32. W. J. Cunningham, "The Locomotive Engineers' Arbitration," Quarterly Journal of Economici, X X V I I (1913), 274 ff. »3 U.S. Board of Mediation and Conciliation, Railroad Labor Arbitration», pp. 5062. »«W.J. Cunningham, "The Locomotive Engineers' Arbitration," Quarterly Journal of Economics, XXVII (1913), 276.

BEGINNINGS OF RAILWAY LABOR LEGISI.ATION

21

Haven and H a r t f o r d settled on these terms. T h e New Y o r k Central offered the two unions three different arbitration proposals which were turned down. The first rejected proposal was that the disputants should invoke the Erdman Act. The one accepted was arbitration without reference to the law by two outside arbitrators, E . E . Clark and P . H . Morrissey. Both were men with previous union connections, the former with the Railway Conductors and the latter with the Trainmen. The Clark-Morrissey award followed the Baltimore and Ohio agreement and it was applied on most other eastern roads. T h e award established the mileage system of pay and the speed basis f o r computing overtime for conductors and trainmen. T h e rates granted were 20—25 percent in excess of those offered by the company. A major effect of this arbitration was to standardize wage rates and methods of payment f o r an entire region. 35 Soon after the Clark-Morrissey award, eastern firemen and engineers demanded increases because the differential between their wages and those of conductors and trainmen had narrowed. They settled on an individual road basis and usually without any Federal assistance.38 Western engineers next asked f o r wage adjustments and rules concessions. T h e carriers applied f o r mediation and the engineers received slightly more than was voluntarily offered before mediation. 37 The eastern engineers' 1912 movement was the largest railway labor dispute in the Erdman A c t period. T h e engineers asked f o r higher rates of pay, rules changes, and a j o b monopoly on electric locomotives and motor cars. They were especially concerned with standardizing wage scales and working rules and reestablishing in full their differential over conductors and trainmen. 38 T h e union voted t o strike and mediation in this instance was offered on the Government's initiative. 39 Mediation proved ineffective but it was followed by an agreement to submit the dispute to a new type of arbitration board. The union and carriers were each to select one arbitrator and the two were then jointly to select five neutral arbitrators. I f the two failed to agree, as was in fact the case, the public representatives were to be selected by the Chief Justice of the Suss Bureau of Information of Eastern Railways, Railroad Wage» and Labor

Re-

lation», 1900-1946 (New York, 1947), pp. 42-43. 3« W. J. Cunningham, "The Locomotive Engineers' Arbitration," Quarterly Journal of Economic», X X V I I (1913), 278. 37 Ibid., p. 280. »« Ibid., p. 283. »» 1 bid., pp. 281-82.

22

BEGINNINGS OF RAILWAY LABOR

LEGISLATION

preme Court, the Presiding J u d g e of the Commerce Court, and the Commissioner of Labor. 4 0 Because of the n a t u r e of the recommendations, this a r b i t r a t i o n was one of the most important in railway labor history. T h e decision denied the request for wage and rules standardization but instead it established daily minima in passenger, freight, and switching service. I t also granted important rules concessions including compensation f o r time spent on duty by employees away from home while not actually operating trains or while waiting for release a t the terminal of destination a f t e r the train had arrived. Engineers were also to be given preference in electric service employment unless preference violated existing agreements. T h e 1912 award also recognized the principle of higher than pro r a t a overtime by providing t h a t overtime in passenger service was to be paid for at the r a t e of fifty cents an hour r a t h e r than on the prorated basis of forty-five cents. 4 1 The recommendations of the a r b i t r a t o r s in the eastern engineers' dispute went beyond the issues directly involved since they included criticisms of the E r d m a n Law and suggested revisions. T h e i r r e p o r t proposed t h a t a Federal agency should be created with the a u t h o r i t y to fix railway wages. 42 Employee organizations regarded the award as "one of the most pronounced failures t h a t had ever been experienced in the labor field." 4 3 They objected strenuously to the discussion of issues not involved in the dispute and to the wagefixing proposals. Nevertheless, the award stimulated efforts to revise the law. T h e unions' objections were to lead to a provision in the next act, the Newlands Law, limiting the scope of a r b i t r a t i o n findings to the issues submitted. The 1912 eastern firemen's and enginemen's movement was the last important dispute settled according to the Erdman Act. T h e union demanded increases in mileage rates, rate standardization, and a rule exempting firemen from performing certain types of work which were not regularly p a r t of their job. 4 4 U.S. Department of Labor, Bureau of Labor Statistics, Bulletin No. 303, pp. 30-37. •»i U.S. Board of Mediation and Conciliation, Railroad Labor Arbitrations, pp. 206-8, 288-89. « U.S. Department of Labor, Bureau of Labor Statistics, Bulletin Xo. 303, p. 46. « Hearings, H.R. 19730, U.S. House of Representatives, Committee on Interstate and Foreign Commerce, 64th Congress, 2d session, 1917, p. 46. « U . S . Board of Mediation and Conciliation, Railroad Labor Arbitrations, pp. 260-88.

BEGINNINGS OF RAILWAY LABOR LEGISLATION

23

Carriers this time proposed nonstatutory arbitration along the lines of the 1912 engineers' dispute but the suggestion was strongly opposed by the firemen who were sharply critical of the engineers' award. 45 The union favored arbitration under the Erdman Act and this proposal was accepted. The award which followed granted about half the wage requests and relieved firemen from cleaning engines, filling headlights, and loading supplies. As the settlement was unsatisfactory to both sides, it increased the agitation for a revision of the law. The major difficulty with the Erdman Act was that the group with the superior bargaining strength found reliance on this weapon more potent than resort to the law's procedures. Early railway unions, lacking stability and power, regarded economic weapons unfavorably, and they welcomed Government intervention as a means of equalizing bargaining power. Eugene V. Debs took a stand in opposition to strikes in 1884 when he was editor of the Locomotive Firemen's Magazine. "We are opposed [said Debs] to strikes as a means of settling controverted labor questions. . . . We are satisfied that they do not promote the welfare of the laboring man. We are persuaded . . . that there is a better way out than to 'strike o u t . ' " 46 The Railway Conductor editorialized in 1894 that "no body of workingmen can afford to strike in support of a cause that would not stand the test of impartial arbitrament." 4T In these early years carriers were not faced with a well-entrenched labor movement and they were hostile to Government participation in labor disputes. The Gazette commented in 1886 that a bill has been introduced to prevent it [a strike] by government arbitration, the results of which the railroads and their employees shall be forced to accept. . . . The men cannot be forced to accept any terms they do not like, and it is feared that there would be no end of strikes or appeals to arbitration if the men stood a chance of gaining by them.48

The brotherhoods favored the arbitration clauses of the Erdman Act when it was originally under consideration. They agreed that "arbitration in disputes arising from the semi-public duties in which 45 Report of the UJS. Board of Mediation and Conciliation for 1913-1919 (Washington: Government Printing Office, 1920), p. 11. < Public Law No. 174, Sec. 5. os The 1935 Tax Act was repealed. Ibid., Sec. 11. »8 Public Law No. 162, Sec. 1, Par. (a) '(b) (d). 97 Testimony of W. W. Royster, President of Railroad Employees Pension Association, Hearings, S. 2395, U.S. Senate, Committee on Interstate Commerce, p. 93. ®8 Railway Age, CII (1937), 1029. »• Conyrestional Record, L X X X I (1937), 6226-28. ioo Title II, Public Law No. 271, 74th Congress, 1935.

R A I L W A Y SOCIAL SECURITY

SYSTEM

131

credited this service f o r many employees. T h e minimum retirement age under Social Security was 65 in c o n t r a s t to a 60-year minimum f o r railway employees. 101 T h e railway system was to begin p a y i n g benefits shortly a f t e r the law was passed while Social Security old age payments were to be deferred until 1942. 1 0 2 Maximum monthly g r a n t s under Social Security were $85 compared to an effective $120 maximum under the Railway Retirement Act. T h e $10 minimum Social Security benefit was less than the railway minimum. 103 Social Security paid a lump-sum death benefit which equaled 3 % percent of credited compensation while the railway system paid 4 percent. 1 0 4 T h e Social Security t a x rate began a t 1 percent f o r employers and employees f r o m 1937 through 1939 and it reached a maximum of 3 percent in 1949. 1 0 5 Railway t a x rates began a t 2% percent in 1937 and leveled off at 3 % percent in 1949. T h e 1937 retirement law established the principle of a separate social security system for railway workers. T h e Act's validity has never been challenged in the courts. Like the 1926 Railway Labor Act, it was enacted by Congress and received widespread public supp o r t because carriers and unions both supported the law. The Administration's influence, as in the 1936 Washington Agreement, was instrumental in bringing about this j o i n t action. T h e railway indust r y ' s position as a quasi-monopoly whose rate, service, and investment policies were subject to public regulation made it amenable to special legislative treatment of its social security problem. ioi Ibid., Sec. 210, Par. C. Ibid., Sec. 202. IOS Ibid. 10« Ibid., Sec. 204 and Sec. 208. 103 Ibid., Title V I I I , Sec. 801, 804, 811, Par. ( a ) .

IX. THE EXPANSION OF THE R A I L W A Y SOCIAL SECURITY SYSTEM

ACCEPTANCE of the 1937 Retirement Act ended any serious challenge to the principle of a separate railway social security system. Since 1937 its history has been dominated by extensions of the original program to include new types of benefits and by liberalization of the benefits already established. A parallel development of the general social security laws in this period provided a standard which the railway system sought to excel. The unemplo3'ment compensation legislation of 1938 marked the first expansion of railway social security. Unions had favored unemployment benefits as far back as the 1931 negotiations when the Railway Labor Executives Association called for establishment of payroll reserves as a "workable substitute for unemployment insurance." 1 Railway management did not support the proposal, but it came up again in 1933 when the RLEA included an unemployment compensation law as part of its legislative program. 2 Transportation Coordinator Eastman, in his 1934 Report, advocated a nationwide unemployment law to cover the entire transportation system. 3 Likewise, the President's Committee on Economic Security recommended the "establishment of a separate nationally administered system of unemployment compensation for railroad employees and maritime workers." 4 In 1935 the RLEA initiated discussions with the Association of American Railroads for the purpose of drafting an unemployment J BLFE Magazine, XC (1931), 424; see chap. 4 tvpra. 2 Annual Report of the Railroad Retirement Board for the Year Endiny June SO, 1938, p. 12. 3 Office of the Federal Coordinator of Transportation, Report on Transportation Legitlation, p. 76. « "Message of the President Recommending Legislation on Economic Security," J a n u a r y 17, 1936 (Washington: Government Printing Office, 1936), p. 15.

E X P A N S I O N OF SOCIAL SECURITY SYSTEM

188 5

compensation bill but no agreement was reached. Repeating the experience of the original retirement legislation, R L E A sponsored unemployment bills were introduced in Congress without carrier supp o r t by Senator Wheeler and Representative Crosser. The Crosser version became law in June, 1938.® L a b o r spokesmen considered unemployment compensation especially applicable to the lower paid and younger employees in cont r a s t to retirement pensions which benefited older workers who were less exposed to unemployment. S t a t e laws, unions complained, a f forded little protection to lower paid employees because benefits were based on a fixed percentage of earnings in a prescribed period of time. States frequently paid "such an infinitesimal amount as not to j u s t i f y any efforts to collect." 7 In the union bills, on the other hand, the ratio of benefits to earnings varied inversely with earnings. A worker earning $150 compensation in a base year could draw an annual benefit as high as 93 percent of his earnings. If his base year earnings were $1,440, his maximum benefits would total only onesixth of earnings which was the benefit rate allowed in most state laws. 8 T h e standard unions strongly favored a separate compensation system f o r the industry. Railway operations, especially for train and engine service employees, frequently involved services performed in several states. Under the state systems, union members with the saine base compensation working on the same locomotive might receive widely different benefits. Wisconsin and Alabama, with certain exceptions, did not provide any unemployment benefits f o r railroad employees. The " t y p i c a l " state provided a maximum annual benefit of $240, but this might run as low as $180 in Missouri or as high as $390 in other states. 9 According to railway management, the Wheeler-Crosser unemployment legislation was an unsound measure. I t was not unemployment compensation, they asserted, because there was no constant ratio between work performed and benefits received. I t was not an s Testimony of T. C. Cashen, Chairman of the R L E A Unemployment Compensation Committee, Hearings, S. 3772, U.S. Senate, Committee on Interstate Commerce, 75th Congress, 3d session, 1938, p. 18. 8S. 3772, Congressional Record, L X X X I I I (1938), 4513; H.R. 10127, ibid., pp. 4018, 9706"; Approved, Public Law No. 722, 75th Congress, 1938. 7 Testimony of C. M. Hay, RLEA attorney, Hearings, S. 3772, U.S. Senate, Committee on Interstate Commerce, p. 29. s Ibid., p. 54. » Ibid., p. 29.

134

EXPANSION

O F SOCIAL S E C U R I T Y

SYSTEM

insurance plan since neither "cost nor benefit were related to the r i s k . " 10 T h e bill permitted striking workers to collect unemployment benefits. Carriers feared t h a t " t h e unemployment f u n d would become a strike benefit fund to a g r o u p directly responsible f o r the stoppage of work." 1 1 Moreover, forty-five state laws unreservedly disqualified employees from receiving benefits while on strike. 1 2 T h e absence of a "merit r a t i n g " t a x reduction provision impressed the railroads as an u n f a i r discrimination. Thirty-nine state laws contained flexible t a x r a t e plans offering t a x reductions to employers who accumulated a surplus of credits over debits in their reserve account. In most states these plans reduced the t a x r a t e from 2.7 percent to 1.8 percent, or by one-third of the total. T h e Wheeler-Crosser Bill took the railroads out of the state systems and it therefore denied the possibility of such t a x reductions. 1 3 Flexible t a x r a t i n g was widely supported as a method f o r providing management with an incentive to stabilize emplo3'ment. Rejecting this contention, the R L E A asserted t h a t employment changes "depend almost directly on the changes in volume of traffic which . . . is obviously dependent on business conditions over which the railroads have clearly no control." 14 Their opinion was shared by the R a i l r o a d Retirement Board which pointed to the absence of " a n y connection between a p a r t i c u l a r employer and his responsibility f o r unemployment." 15 Merit r a t i n g , the unions argued, could not provide a substantial enough incentive to prevent large-scale layoffs because it permitted an a d j u s t m e n t of taxes over a range of less t h a n 3 percent of the payroll. 1 6 T h e 1938 law was passed without merit r a t i n g and its absence was to provide a point of contention until this f e a t u r e was finally adopted in 1947. 1 7 T h e Railroad Unemployment Insurance Act of 1938 covered the same employees who were included in the 1937 retirement law. 18 An employee who earned a t least $150 in his base y e a r was eligible to io Testimony of J. H. Parmelee, Research Director of A A R , ibid., p. 80. n Testimony of C. D. Young, Vice President of Pennsylvania Railroad, ibid., p. 73. 12 Ibid. is Testimony, J. H. Parmelee, ibid., p. 81. « Testimony, C. M. Hay, ibid., p. 179. is Testimony of M. W. Latimer, Chairman of Railroad Retirement Board, Hearings, H.R. 10127, U.S. House of Representatives, Committee on Interstate and Foreign Commerce, 75th Congress, 3d session, 1938, p. 252. if Testimony, C. M. Hay, Hearings, S. 3772, U.S. Senate, Committee cn Interstate Commerce, p. 179. it Congressional Record, L X X X I I I (1938), 9706; Approved, Public Law No. 722, 75th Congress, 1938. " Public Law No. 722, Sec. 1, Par. a.

EXPANSION

OF S O C I A L S E C U B I T Y

135

SYSTEM

receive benefits if he had completed a waiting period of at least fifteen consecutive days of unemployment or two half-month periods with eight days of unemployment in each.19 Otherwise eligible employees were to be disqualified from receiving benefits if they ( 1 ) voluntarily left work without good cause; ( 2 ) were discharged f o r misconduct; or ( 3 ) failed to accept suitable work without good cause. A worker could also be disqualified if his unemployment were due to participation in a strike "in violation . . . of the Railway Labor A c t or . . .

of the established rules . . .

of

a bona fide labor organization" of which he was a member.20 Employees could not be denied benefits ( 1 ) f o r refusing to accept a j o b left vacant because of a legal labor dispute; ( 2 ) if the wages, hours, and working conditions offered were substantially less favorable than those prevailing locally for similar work; ( 3 ) if accepting a position involved loss of seniority rights; or ( 4 ) if signing a "yellow d o g " contract were required as a condition of employment. 21 A n eligible employee was to be paid benefits f o r each day of unemployment in excess of seven during any half-month registration period. The ratio of benefits to earnings was much greater at the lower end of the income scale. Daily benefits ranged from $1.75 daily f o r an employee with the minimum of $1.50 to $3.00 a day f o r a worker earning $1,300 or more. 22 Benefits were payable up to a maximum of eighty days in a single benefit year. 23 The Retirement Board was authorized to prescribe special rules governing benefits f o r parttime workers. 24 Benefits were to be financed by employers who were to pay a tax of 3 percent on their employees' compensation. Earnings in excess of $300 a month were not subject to the tax. 25 Ninety percent of these contributions were to be deposited in the "Railroad Unemployment Insurance Account" and they were to be used solely to p a y benefits.26 T h e balance was to be carried in a second account, " T h e Railroad Unemployment Administration Fund," to be available f o r the cost of administration. 27 The unemployment program went into operation on July 1, 1939. I t was to be administered by the Railroad Retirement Board which was also authorized to establish free employment offices.28 A t the time it was enacted, the railroad unemployment law paid 1» Ibid., Sec. 3. 22 Ibid., Sec. 2, Par. a. 25 Ibid., Sec. 8, Par. a. 2« Ibid., Sec. 12.

20 Ibid., Sec. 4, Par. a. 2» Ibid., Par. c. 2» Ibid., Sec. 10.

21 Ibid., Par. c. 2« Ibid., Par. d. 2? Ibid., Sec. I I .

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EXPANSION OF SOCIAL SECURITY SYSTEM

more liberal benefits to lower income employees than most of the state systems provided. This differential narrowed as the income level increased. Retirement Board actuaries estimated that "on the average, the railroad benefits . . . would be 47.22 percent greater than under the state laws." 29 The minimum weekly benefit under the railroad law was seven dollars. Eight states provided a flat minimum weekly benefit and only two equaled and one exceeded this figure.30 Most state systems paid a maximum weekly benefit of fifteen dollars. The maximum weekly benefit for railroad workers was twelve dollars. 31 Forty states allowed an annual maximum of $240 to workers earning at least $1,440 a year for two years and eleven provided higher payments. A railroad employee who earned $1,300 or more in his base year would receive a maximum of $240 in a benefit year. 3 2 In most state systems the lowest paid worker covered by the railroad law would receive a minimum of $50 if he had been employed full time for two years. Under the railroad law, however, the same worker employed full time for one year received $140. 3S The 1937 retirement law and the 1938 unemployment legislation provide the basis for the present railway social security system. The constitutionality of the unemployment insurance law has never been challenged in the courts. Railway social security developments since the enactment of the two laws have been heavily influenced by the unemployment account's surplus and the prospective deficit in the retirement account. In the first year of Unemployment Act operations, fiscal year 1940, some $15 million was disbursed in benefits while taxes accruing during the year and collected by October, 1940, exceeded $65 million. 34 A 1940 Retirement Board study of one hundred railroad workers in each of forty-three states compared the benefits they had received under the railroad system with the payments each worker would have obtained if he had been covered by the law of his state of resis» Testimony, M. W. Latimer, Hearings, S. 3772, U.S. Senate, Committee on Interstate Commerce, p. 139. »o Testimony of Horace A. Bacus, Research Director of Railway Clerk's Brotherhood, Hearings, H.R. 10127, U.S. House of Representatives, Committee on Interstate and Foreign Commerce, p. 76. « Ibid. »2 Ibid., p. 76. >4 Annual Report of the Railroad Retirement

1940, pp. 60-61.

¡>3 Ibid. Board for the Year Ending June 30,

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dence. T h e s t u d y showed t h a t in almost t h r e e - f o u r t h s of the cases weekly benefits were higher under the s t a t e law. 3 8 Although t h e maximum annual benefit under the s t a t e laws was less t h a n the railway system's maximum in almost five-eighths of the cases, this difference was significant only f o r employees e a r n i n g less t h a n $ 7 5 0 credited compensation in 1938. T h e B o a r d estimated t h a t benefit p a y m e n t s could be increased by more t h a n 100 percent without d e s t r o y i n g the F u n d ' s solvency. 3 8 T h e relatively low level of railway benefits was largely a result of liberalizations of the s t a t e laws. F r o m 1937 t o 1940 sixteen s t a t e s h a d increased the r a t i o of benefits to earnings and twenty-two had increased the minimum number of weeks of benefit in a y e a r f o r employees with the lowest earnings. More states now provided flat minimum weekly benefits. 3 7 B o t h railway unions and carriers agreed t h a t unemployment benefits should be liberalized b u t conferences on the s u b j e c t failed t o lead t o agreement. T h e two g r o u p s p r i m a r i l y disagreed on merit r a t i n g which management insisted should be in the bill along with higher benefits. 3 8 T h e R L E A and the A A R each went ahead with measures embodying their own views. T h e Retirement B o a r d s u p p o r t e d the unions' p r o p o s a l s which it estimated would involve a t o t a l increase in cost of a b o u t 115 percent in c o n t r a s t to a 35 percent increase under the c a r r i e r measure. 3 9 S. 3295, the c a r r i e r bill, and S. 3920, the union legislation, differed in their t a x features and in the extent to which each liberalized benefits. 4 0 T h e Association of R a i l r o a d s protested t h a t its members were u n j u s t l y penalized since the}' paid a 6 percent social insurance t a x as compared to the 4 percent maximum paid by other industries s u b j e c t t o the Social Security A c t . T h e y proposed t o remedy this situation by s u b s t i t u t i n g a variable t a x r a t e f o r the 3 percent unemployment insurance levy. If the assets in the unemployment a c c o u n t S3 The Board used the provisions in state statutes on March 1, 1940; the base period was determined as if the workers had flrst applied for benefits on July 1, 1939. Jurisdictions omitted accounted for less than 4 percent of employees covered by the railroad law. Ibid. no Congressional Record, LXXXVI (1940), 9644. 3T Testimony of C. M. Hay, Hearings, S. 3920 and S. 3925, U.S. Senate, Committee on Interstate Commerce, 76th Congress, 3d session, 1940, p. 43. 38 Testimony of J. M. Souby, AAR counsel, Hearings, H.R. 9706, U.S. House of Representatives, Committee on Interstate and Foreign Commerce, 76th Congress, 3d session, 1940, p. 143. a» Testimony, M. W. Latimer, ibid., pp. 188,193. «oS. 8926, Congressional Record, LXXXVI (1940), 6521; S. 3920, ibid.

138

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SYSTEM

a t the end of the preceding fiscal year were less than $100 million, the 3 percent r a t e would be retained for the next fiscal year. If they were between $100 and $125 million, the rate would be 2 p e r c e n t ; and the t a x would fall to 1 percent if the account's assets were $125 million or more. Since these assets were in excess of $125 million when the bills were under consideration, the immediate effect of this change would be to reduce the payroll t a x paid by carriers from 3 to 1 percent. 4 1 T h e Senate Commerce Committee, in its m a j o r i t y report, rejected merit r a t i n g on the basis t h a t "the m a j o r p a r t of the unemployment on railroads is not due to failings of p a r t i c u l a r managements but r a t h e r is inherent in the economic organization of the c o u n t r y . " 4 2 Devices usually suggested to enable management to stabilize employment such as t e m p o r a r y price concessions or greater o u t p u t diversification were "of limited applicability to the railroad industry." I n the opinion of the Committee m a j ority, the t a x r a t e paid by the railroads was not comparable with t h a t paid by employers under the Social Security Act. T h e 1937 Retirement Act had relieved the carriers of their payments to private pensioners most of whom could not have been t r a n s f e r r e d to the public rolls under the Social Security Act. A minority of the Commerce Committee favored the carriers' proposals. T h e y supported t a x reduction and feared t h a t if the union bill became law "the radical increase in benefits . . . would encourage the states to a similar liberalization of their unemployment insurance a c t s . " 4 3 Congress accepted the m a j o r i t y r e p o r t , and S. 3920, embodying most of the union proposals, was passed in 1940. 4 4 T h e amended Act provided substantial increases in benefits. One i m p o r t a n t change substituted a registration period of fourteen consecutive days, with benefits payable for every d a y of unemployment over f o u r in the period, for the original law's fifteen-day registration period with benefits payable only for unemployment a f t e r the seventh day. 4 8 T h i s provision allowed some assistance to workers with five «i Testimony, J . H. Parmelee, Director of the Bureau of Railway Economics of the AAR, Hearings, S. 3920, U.S. Senate, Committee on Interstate Commerce, pp. 64 ff. « Senate Report No. 1752 to accompany S. 3920, U.S. Senate, Committee on Interstate Commerce, 76th Congress, 3d session, 1940, pp. 11-12. «Ibid., p. 22. ** Congrettional Record, L X X X V I (1940), 13536; Approved, Public Law No. 833, 76th Congress, 1940. « Public Law No. 833, Sec. 9, Par. a ; Sec. 3.

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t o seven days of unemployment, and employees with a t least eight days of unemployment in a registration period gained three benefit days. A related change was t h a t increasing the number of compensable days in a benefit year from eighty to one hundred. 4 6 Along with the increase in the number of benefit days, daily benefit rates were also raised. T h e daily rate f o r employees earning $ 1 , 0 0 0 t o $ 1 , 2 9 9 in the base period was increased to $ 3 . 0 0 . T w o new earnings categories were established which paid higher benefits than the 1 9 3 8 Act's $ 3 . 0 0 maximum. T h e y paid $ 3 . 5 0 daily to employees whose base period compensation was in the $1,300—1,599 group, and $ 4 . 0 0 daily to those earning $ 1 , 6 0 0 and over. 4 7 T h e effect of this revision was to raise the maximum weekly benefit from $ 1 2 to $ 2 0 . Higher daily benefits and more benefit days in a year increased the maximum compensation payable in a benefit year from a range of $ 1 4 0 to $ 2 4 0 to one of $ 1 7 5 to $ 4 0 0 . Higher paid employees were the chief beneficiaries of the new schedule. An employee who earned $ 1 , 6 0 0 in his base period might gain a possible annual increase of 67 percent while a worker earning $ 1 5 0 could improve his maximum benefit only by 25 percent. F u r t h e r liberalization was provided by a change in the waiting period. I f their first registration period included a t least eight days of unemployment, employees were to receive both waiting period credit and compensation for each day of unemployment in excess of seven. This change allowed seven days of compensable unemployment in the first registration period as compared with ten days in subsequent periods. 4 8 This was different from the 1 9 3 8 A c t which provided no benefits for the first half-month of unemployment. During congressional discussion of the legislation, it was estimated t h a t the change in the registration period plus the increase in the number of benefit days in a y e a r would, on the basis of a "complete c y c l e , " entail an added cost of 4 2 . 8 percent. Revision of the waiting period requirement was calculated to raise benefit outlays by 1 4 percent. Higher daily benefits were estimated t o add only about 5 percent since they were limited to employees earning a t least $ 1 , 0 0 0 in base y e a r compensation. I f the amendments had been in force in fiscal y e a r 1 9 4 0 , the total benefit outlay would have approximated $ 2 4 million as against actual expenditures of less than $ 1 5 million. 4 6 4« Ibid., Sec. 10, Par. c. Ibid.. See. 0, Par. a. «» Annual Report pf the Railroad Retirement Board,

« Ibid. 1940, p. 69,

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EXPANSION OF SOCIAL SECURITY

SYSTEM

A t the time the 1940 amendments were enacted, railway unemployment benefits were again more liberal than those granted by most of the state systems. Its $400 maximum annual benefits f o r the highest income employees was exceeded only in California where employees contributed a 1 percent tax on their compensation. T h e railway maximum annual benefit f o r the lowest income group exceeded that paid in any state. T h e twenty benefit weeks allowed in a year was equaled by three states and exceeded only by California which provided a twenty-six week maximum. Maximum weekly benefits in all states were less than the $20 maximum provided in the railway law. Only California, which paid $10 a week, granted a higher minimum weekly benefit than the railway minimum of $8.75. T h e minimum in thirty-eight states was $5 or less.50 T h e r e were no further m a j o r revisions in railway social security legislation through the end of W o r l d W a r I I . T h e Second Revenue A c t of 1940 permitted employees to include military service in any war period before 1937 as credited employment under the Railroad Retirement A c t . T h e Federal Government was to bear the cost of crediting this service. 51 T h e 77th Congress, in 1942, extended the provision to include service begun during a " w a r service" or " n a tional emergency" period a f t e r 1936. A g a i n , the Government assumed the expense. M i l i t a r y service rendered a f t e r 1936 was to be reckoned at $160 of creditable compensation f o r each month. 82 T h e annual ratio of receipts to disbursement f o r retirement operations did not range much above one and a half to one until the end of fiscal year 1943. 33 Consequently, there was no rapidly growing surplus to be used f o r enlarging benefits or reducing taxes. P r o posed revisions of the Retirement A c t , however, were presented at each session of Congress. T h e Senate Commerce Committee considered a series of such measures in 1939. 54 Several of them attempted to liberalize requirements f o r disability pensions so that persons with less than thirty years' service or under 60 years of age might 5» Testimony, J. H . Parmelee, Hearings, H . R . 9706, U.S. House of Representatives, Committee on Interstate and Foreign Commerce, pp. 91 ff. si P a r t I I , Public L a w N o . 801, 76th Congress, 1940. »2 Approved, Public L a w N o . 520, 77th Congress, 1942. ss Annual Report of the Railroad Retirement Board for the Year En-ding June °0, 1945, p. 2; ibid., 19U, p. 2. " S e e Hearings, S. 306, S. 328, S. 693, S. 968, S. 969, S. 1112, S. 1724, S. 1781, S. 1828, S. 2443, U.S. Senate, Committee on Interstate Commerce, 76th Congress, 1st session, 1939.

EXPANSION OF SOCIAL SECURITY SYSTEM

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q u a l i f y . O t h e r bills p r o p o s e d t o increase monthly benefits and t o allow credit f o r service p e r f o r m e d before 1937. T h e Retirement B o a r d opposed these changes. I t felt t h a t they did not w a r r a n t the additional cost, and the B o a r d was uncertain of the extent to which the 1937 A c t "meets needs o r its exact cost." 5 5 T h e y were not supp o r t e d by the R L E A which pointed out t h a t f u t u r e benefits would be endangered "if we begin t o a d d f u r t h e r benefits without considering . . . c o s t s . " 5 8 I n the e a r l y 1940's the railway retirement system was more generous in most of its benefits t h a n the Social Security Act's old age provisions. T h e a v e r a g e m o n t h l y benefit in October, 1943, was $66.30 u n d e r the railway law a n d $ 3 2 . 2 8 under Social Security. 5 7 L u m p sum death benefits t h r o u g h October, 1943, averaged $225 f o r railroad employees as a g a i n s t $ 9 4 provided by the Social Security law. T h e Social Security survivor benefits were g r e a t e r and monthly p a y ments p e r family unit a v e r a g e d $41.35 in October, 1943, in c o n t r a s t t o the $35.62 p a i d by the railway system. 5 8 A much higher p r o p o r t i o n of family units received benefits under the railway law t h a n t h r o u g h Social Security. Monthly income beneficiaries in 1942 c o n s t i t u t e d 6.5 percent of all active railway employees whereas in the Social Security System these beneficiaries numbered only .95 p e r c e n t of active employees. 6 9 T h e p e r c e n t a g e of r a i l r o a d employees who h a d reached retirement age was g r e a t e r t h a n in most industries. F o u r a n d a half percent of the workers covered by T i t l e I I of the Social Security A c t were 60 y e a r s or older in 1941 while the c o r r e s p o n d i n g figure f o r the railway system was 7.8 percent. A l a r g e r s h a r e of eligible railway employees chose to retire. Annuities were g r a n t e d t o 25 percent of the persons with wage credits who were 6 5 o r older under the railway p r o g r a m while the p e r c e n t a g e f o r Social S e c u r i t y was only 15 percent. 6 0 T h e t a x r a t e required to finance the railroad system in p e r p e t u i t y was considerably more t h a n the one necessary f o r the equivalent Social Security benefits. T h e second railroad a c t u a r i a l valuation estimated a p r o b a b l e f u t u r e cost as of J a n u a r y , 1944, of 10.4 percent of the creditable p a y r o l l a n d it allowed f o r a possible low figure of 8.1 percent and a high of 14.5 percent. T h e corresponding 55 Letter from M. W. Latimer to Senator Burton K. Wheeler, ibid., p. 6. 5« Testimony of J . G. Luhrsen, RLEA Executive Secretary, ibid., p. 60. 5' U.S. Railroad Retirement Board, Monthly Review. V (1944), 39. 5» Ibid., p. 41. »»Ibid., p. 39. «o Ibid., p. 40.

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estimates f o r Social Security were 4 percent of the creditable payroll as a minimum, 5 % to 6 percent as probable, and 7 percent as the maximum. 6 1 Surplus funds in both the retirement and unemployment accounts grew rapidly during the war years. Soon a f t e r Pearl H a r b o r , there was a s h a r p drop in the number of railroad employees who retired and this trend continued through 1944. T h e retirement account's balance stood a t over $321 million on J u n e 30, 1944, and it had increased by $137 million in the preceding fiscal year. 9 2 Wartime demand f o r labor drastically reduced unemployment compensation payments. Benefits were paid to 162,000 workers in the fiscal year 1940-41 and to only 15,000 in 1942-43. The balance in the unemployment account was $190 million on June 30, 1941, and in the next three years it rose to $498 million. 93 In 1943 the Retirement Board prepared the d r a f t of a bill to expand the concept of compensable unemployment and to liberalize both retirement and unemployment benefits. I t s p r o g r a m was presented to Congress in 1944 by Senators W a g n e r and Wheeler and by Congressman Crosser. 6 4 Congress did not pass this legislation, but similar bills were again introduced in 1945. 8 5 President Roosevelt supported the measures and they became law in 1946.a® The 1946 law provided the most far-reaching changes in railway social security since the original Railroad Retirement and Unemployment Acts were enacted. T h e separate tax, unemployment, and retirement legislation were combined into the closest American approximation to Britain's "cradle to grave" security program. Railway workers were now to be covered by "the most comprehensive protection in the United States against the five m a j o r hazards of economic insecurity—old age, disability, death, unemployment, and sickness." 67 «i Ibid., p. 43.