Labor in War Time with Special Reference to the United States

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Labor in War Time with Special Reference to the United States

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Saxon Xoafcalar

A dissipation ewhmttfced In partial fulfillment of the requirements for the degree of Doctor of Philosophy» lm the Department of Economies,In the dradmte College of the State Unlrereity of Iowa

ProQuest Number: 10831788

All rights reserved INFORMATION TO ALL USERS The q u a lity of this re p ro d u c tio n is d e p e n d e n t u p o n the q u a lity of the co p y su b m itte d . In the unlikely e v e n t that the a u th o r did not send a c o m p le te m a n u scrip t and there are missing p a g e s, these will be n o te d . Also, if m a te ria l had to be re m o v e d , a n o te will in d ic a te the d e le tio n .

uest P roQ uest 10831788 Published by ProQuest LLC(2018). C o p y rig h t of the Dissertation is held by the A uthor. All rights reserved. This work is p ro te cte d a g a in s t u n a u th o rize d co p yin g under Title 17, United States C o d e M icroform Edition © ProQuest LLC. ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 4 8 1 0 6 - 1346



fhe writer gratefully acknowledges the guidance end assistance o f D r* f a lt e r X»* D aykiiu

£ . ''4 6 5

Chapter Introduction* • # « • « * « * « * « • • • »


t labor Imrihg the First World War# * * * * * * 11 labor During the Defense Progress* * * * * ♦ * 111 letter Laws and the Defense Program* * « • » * IV V VI

labor end Inflation control in the Defense rregfFflffls* • • # # * # # » * • * • • * * * * * labor and the feet War Period « « « * * * * * inwary and Conclusion# * * + « * * * # * » * Bibliography# * « « • * «

* * #. • # « • • #


jppendla* # - * # * • * * * * * * * ■ # * • * * *


mma fable I

Page of Strikes and lockout® and the Wwber of Employee® involved in toe limited state®

3U>24*Xftfl&* * * « * * * * * * * * * * * * * * XI XXX XV V VI


♦ * 334

Hustber of Strike®* Employees Involved, and Man Eaye lost in the United State® 1950-1941 * • » #


Duration of strike® and lockouts In the united state® a t U M M * . *^ * * * * * * * * * * * * . *


Principal Causes of Strike® and Lockouts in the United States 1914*4990. , , » » » . « • # . . »


index Wtsabers o f dost o f liv in g , thlom Hourly and Weekly Wage® in the United State® 1913-1925*


Index Humber® o f E e ta il food P rices and Whole* sa le frie s ® fo r i l l Commodities in th e tfh ite d S tates 1915*1919 « • * » * * * « * « , * * * * «


index Humber® o f dosto f liv in g in th e B aited States 1955*1941 * * * * ♦ < » , . « » * , *

* * 340

fa c to ry average H ourly lam in g® in th e United' State® of twenty*#ive Industries 1959*1941 • « » Factory Average Weekly Earnings in the United

States of twemty*five industries 1959*1941 * * * 1


Agencies and Organization® Planning for the Poet war P eriod* • * # * + * * » • » * * » * * #




XSTHQOTOTIOB The purpose of this study Is to examine critically the role of labor in a vex* time ©oonOBiy with respect to the United Statea*

Although occasional references are ©ad© to

parallel situations in other countries# such data are in­ cluded to shed light

labor conditions in the United States

rather than to describe definitively labor*# role elsewhere* It la axiomatic that labor has a strategic position in the economy particularly in a period when the tJhited States is engaged in a gigantic defense program*

Total war

as it is fought today requires the most modern efficient weapons that It is possible to produce*

Experience ha# shown

that a nation without such instrument# of war 1# no match for those countries possessing them*

The construction of modem

war equipment necessitates the cooperation of many Industries* If one essential industry falls to produce it# required quota* it may tie up the entire production of some vital weapon#. Maximum productivity presumes smooth cooperation between capital and labor#

there is perhaps no greater problem In

war time than industrial unrest which expresses itself in labor stoppages * labor turnover* decline in efficiency# short­ age of skilled workmen# unemployment # accidents and illness * and the like#

These problems indicate the latent maladjust*

merits In the economic system which cause friction* It is assumed that in war time the patriotic motive should be of first importance*

labor and capital should be

willing to sacrifice to an equal extent with the man in


3fe spite of the general recognition that no section

of the eitlseary should take advantage of the war effort for personal gain# nevertheless such instances do occur* at this point that mt'ti m and conflict ensue*

It is

If it were

possible to stabilise industrial relations and ©radicate the causes Of discord* greater produotlv© effort would he achieved* the prosecution of the war would he extended* and the aftereffects of hostilities would he materially mitigated* this study covers the. periods of 1917-1018 of the first world war end the beginning of the second world war in September# 1959* through February 1* I94t* divided into six chapters#

The study is

M a sense each la an Independent

mi%$.yet they are interrelated* Chapter t is primarily an historical analysis of the role of labor during the first world M r #

Chapter II deals with the problems of labor con­

fronting the United States in the second World War together with an examination of the methods pursued in their solution* Chapter 111 examines the merits and demerits of the labor laws as they affect maxiarum productive effort during the de­ fense program*

Chapter IV deals with labor and the control

of inflation*

Chapter V is a study of the methods and pro­

posals to stabilise employment In the post war period* Chapter VI culls the pertinent findings of each chapter and states the writer*s conclusions* Who procedure followed has been the collection of data pertaining to the role of labor in war time*

All points

of view end available evidence have been carefully weighed from an •unbiased point of view#

An attempt has been made to

roach a ©eneluaion as fee the ©efcfcode of mooting labor* a M r time problems*

Official publications# private professional

aewsgatherlng and editing services# eo a l »

Wfcia division was created m February 01, 1913, to facilitate a complete and efficient utilisation of Ifagre labon

g a s s M iteiag. fh# Division of Stevedores and Marin# workers was organised as a labor pool to make possible a better system of distribution of longshoremen*

Branches were established in

19toaraal Report of the Searetew of Labor. 1918, Ibid., pp. tt jSTTw* S. HeparlS5»t at tobor, Annnal Raport ofTh«

Seeretarx of Jggg£» IS8E» iiii* pp. «Sl-K

the principal harbor cities*

The service m s successful «s

evidenced by the report that Mew York Harbor increased its efficiency by $0 per ©emt*®® . H a M B&Ukm

The purpose of the miming division was to take oars of the recpulbing and p l m m m b of mime workers*

It rendered

a valuable servie© in inducing about 13,000 former miners who were engaged in nonwar work to return to the mines during the period of the ©mergenoy*^ In conclusion, the effectiveness of the Steploymemt genie* stay he Judged: from the fast that during the eleven war month* of 1918 the service m s able to place 2*698*887 walkers out of a total of 5,678,888 registrants or about 78 per cent*

It had 7*895,675 sails for employees and referred

3,444,098 eases to suitable Jobs* fralnlng ^ d Dilution Sgj|ge In an effort to meet the paucity of skilled labor in eertaln specialised Industries the Training and Dilution Service was organised on July 16, 1918, in the Department of feefeor# The Service was divided/into the planning, administra­ tive , training, and dilution branches which served the follow­ ing functional (I) Studies on training systems and the coordina­ tion of all plane Into a comprehensive

SSSSS& Si £&£

p, S83* S i m a . , m » * pp. s84*sas*

°l k&SZ* ASM** 19W#

educational program for all Industries (2) Methods of field work Involvings (a) organ* isation of vestibule training departments in .> companies upon request# (b) assisting em­ ployers, employees * and public school author­ ities in organising industrial training in public school** (3) Study of the labor heeds of industrial estab­ lishments so as to make available the rl^ht 'type of labor through the f« .$« Employment M s vie# {4} Study of the healthfulness of the factories for the dilution of labor' in cooperation with the. Public Health Service. The aoeompllehmmts of the Training and Dilution Service are etsMarlted as follows ?

By I m i H ' i 1910* three

hundred. fifty-nine companies had training departments * 847 firms were requesting Information and advice about training plsnsji U S establishments were preparing to set tap training system*! and 67 firms had discontinued their training departmenta*

The greatest contribution of the Service consisted

in the preparation and Retribution of'plans to those In­ dustries which 'had requested a training system*0®

SC and BTpeaeaertatlsn mmmmmm5 55555a55555555S5555555B5 Slaming SSBSSSESSSSSSS2SS5 SSBS^^ The Bureau of Industrial Housing and Transportation, established in February, 1918, worked through the U. s* Housi


lug Corporation of the Department of labor*

The Corporation,

Incorporated in funs* 1916,. endeavored to solve the housing problem by*

^tangaX RgEprt of the SsSSSiSSLSiS&S2*> « W # £ M ’> pp* 169-170*

(1) Making available housing facilities in or near the coalmanitle® which needed same (t) proving transportation service® connecting the place® needing labor with those having adequate housing (3} Encouraging and aiding private capital to build new housing project® (4) Helping in the distribution of labor and, ad'vising as to- the planing of. war contracts so a® to avoid housing congestion Gonstruetiag and operating houses# apartments# and dora&fcories.*#®

At the time of the armistice the dorporatien had under consideration ftisurtyvfeup housing projects# had been released for sixty of them*


flan® had h e m com**

plated and contract® ready for release for twenty-five projests*

In the mm of seven# plans were in preparation m

had mm ordered! in four Instances preliminary inweafctga* t i m e had h e m finished hut oonetruction was postponed*®* 11 i s a a a at Jftass.a « « « «

Labor turnover had long been an industrial impedi­ ment prior to the World War# hut the problem became more critical after the waited States became an active belligerent* Secretary of labor Wilson summarised the problem as follows: *Xn ordinary time® the labor turnover of the manufacturing establishment® of the country is on the average 30011* fhat mean© that every establish­ ment which requires the service® of one hundred

®%* &* Bureau of Labor Statistics# Monthly Review of U# 3* Bureau of Labor Statistics* v©l» y n # #e6*~* Iwid# wHousing oy I I I ! s# fipBRSBSofjCShor#* p* sis*

®*0* $* Bureau of Labor Statistic®# Monthly Review of £* S* Bureau of Labor Statistics* Vol* n , Fab#7 I9i&, ‘^Federal Housing*^ p# EoO+

workers Is accustomed . % *M r © three hundred workers during the cows© of a single year* Sine# the ear this endless migration of workers has h e m multiOiled many fold*, in s « © cities the labor turnover has gome as high as 5#0®6$«*$& the report of the President*a Mediation Commission In its investigation of labor disputes $ m the iina®r of 191? stated that i #&abor turnover is appallingly large with all the economic and social arils that rath eomdibioms signify* 4 large migratory working ferae Is so* om^ttloally am intolerable waste* socially It is a disintegrating element In #©©i©ty**W the mmm of the labor tnsmorer daring the war may he classified into- three general headings * namely* (X) Variations in the m g # scale In. different sections of the ©oumbry and, in different In­ dustries within the same section {&} Competitive bidding and stealing of workers (3) Shortage of housing and transportation facil­ ities# fh© Official Bulletin of Kay, 191®# said* *lte© great discrepancies in wages In differ­ ent Industries and in different sections of the country make it impossible to stabilise employ­ ment conditions# facilitate labor stealing by one essential Industry at the expense of another, and# with poor housing conditions, contribute to the enormous labor turnover**^? 4 report of wages by the

fsqi#t% for the

$ % * 3# department of Labor, fj* S* employment Service# U# ^Secretary of Laoor lllaOn Asks for Full Support of nation behind Labor frogram#* p# 333* ^Offielal Bulletin* op* cit* * February 11# 1918, p* 9# S# Public Information* Committee on Official Bull©in# Official Bulletin* Washington# May IS# 1916# p. 14*

seeOBdmefc of May* 19X8, showed the following discrepancies

in the wages of common laborer® in thro® largo industrial eeotlooaft, A South Atlantis' seaboard district hod a seal© of twenty-two coats m-taurj a low England district* forty cents an hours sad..* district west of the Ohio liver* fifty cent® an hour*. fhe latter section m s said to b© drawing workers like a magnet# fhla inequality of wag© rates m s not confined solely to ea»ea'!labor hut to skilled labor m well*^ $h© shipbuilding industry* before it attempted stabilisation of salary' -scales* was a conspicuous example of the affect on-labor turnover* fh® following excerpt taken from a' decision of the- Shipbuilding' Labor Adjustment Board

on April &* 1010* I® pertinents tt0n© of the /most serious influences retarding the progress of the sMpbulMing' industry# accord-' lag to the iinanimous testimony of the yard owners sad of the- district officers of the Fleet corpora­ tion* is the shifting of mm from yard to yard**#* ft*© only effective m y to stop It -is to-,remove It® Inciting cause* .the variable wage rates, paid by the different yards' In. the same competitive region *#** We have been successful in checking the shift­ ing of labor from yard to yard within the district® in which m have established mifom seal©® * but this .has only aggravated the tendency toward shift­ ing between districts, Wmm ..Bate® to Florida coaa* plaints reach us that this shifting 1® going on to the,extent of thousand® of m m a day#**#. A single yard' report®, that its daily loss of employees ex* .seeds %m hundr-et*;,t^0

®V# $# Public Information# Committee on Official Bulletin# Lii Bulletin., .Washington* May IS* 1010# p* 14* s* Bureau of labor Monthly Beview of XJ* £* Bureau of Labor -SMtictlos * Vol# fl# Bay# 1018* °Hecenfc Awards of the Shipbuilding Labor Adjustment Board,” p, 136#

M y a s £2E M a s s Bidding for workmen In the shipbuilding

m& m m 1*

tion Indus tries also *co«ntnx&be& the ineqnaXtty of *»g* scales* Complaints wot# leveled against the wag# policy of the United State# shipping B a w d which undertook to outbid ail others by its high wage scales*

It was «laitt*d that this policy do-*

moralised the -labor market in the general vicinity of the sMpyafds*

Xu ardor to maintain their workers* other indue-

trios producing we* ofoipmeut wore forced to'increase their wag# scales to m

approximate level with that of the ship*

builder® #y»4 other Mouufac furors *

■ ■ ' $ & »coal industry during tho first months of the war experienced a largo turnover of workers due to the bidding of coal operator# one against the other by the payment of bonuses*

f&ge agreements made between the ■iterators and mine

worker#' in Mmmfem* ISIS* prohibited- this practice although it still, continued to some degree#**® -■

labor stealing’was prevalent and resulted its an ex*

tension of 'the inevualitlee of the wage scales*


were reputed to have, resorted to labor scout® and private em­ ployment agencies*

**ln same cases this m e mlnfcentlonal and

was due to the differing wag# rate# set by the multitude of adjustment boards j in other cases it appears to have been da* liberate*

& % * s* Bureau of labor Statistics., Monthly Hey lew of U* Bureau,of Labor Statistic®* Vol., fXX/l'SpIi’# l O T p t i S o r djuetlint and the f i y S S f c F Bemuses at Coal Mines,® p* 188* (* .


Slreeatleth Century Fund, Labor and national Defense, op* clt*, p* 64* * *---------------

A® a consequence of the shortage of laborers and the disparity of wages,, workmen began to press their demands for 'higher salaries


their old M t e b U d b m i t s *

generally recognised by employers and

It was officials

that the discrepancies In wage goalee resulted in a large in­ crease is labor turnover, ©mccmragemimfc of .inefficiency, and stimulation .of strikes#^®

In the early part of the w

certain agencies war#'

created in the war and levy Departaaemts which worked to stabilise wage rates end to abolish the practice of competi­ tive .bidding for workmen,

$&*## agencies included;

(1) the Emergency Construction Adjustment ' slon



& s-

lame®® end. Saddlery Adjusmeat cowission

(3) Arsenal and levy-Tard Commission (41 Oeneral Orders Ho* IS of the Chief of Orm m m telatlve to labor conditions and Standards of Labor in the Manufacture of A m y Clothing (§) Shipbuilding Labor Adjustment Board {§} Gm®As*lft& for M jus ting labor Disputes in Loading and Unloading ships ■(V) Board of Hailroad wages and Working Conditions and the- Railroad Boards of Adjustments* During the latter part of the war the national far Labor Board did much to stabilise wage rate# at a fair

S% h e American Academy of Political and Social Science, ffle ■* Vol* January, 1919, v* iverit Maoy*"Seven Points for a Reconstruction labor Policy," p* ©5*

standard and to prevent labor turnover by Its policy of fix­ ing wages, hours, and conditions of labor according to the prevailing custom of the various localities where the dis­ putes .arose* Although the war Labor Policies Board had a brief existence of only six months before the ©lose of the war, it did effect a coordination of the various bureaus and services of the government in respect to wages, working condition®, and the Ilk©, thus alleviating labor turnover in companies handling government contracts* ,In addition to the establish­ ment of uniform policies in the government departments and the fomuletion of plans for the creation of a Building trades Board and a Metal Trades Board, the far Labor Policies Board attempted to cope with the problem of stabilising wages for the, general field of industry*

fbe magnitude of the

mdertaking and the brevity of existence of the Board pre­ cluded'the possibility of realisation of this goal,1 ®* The establishment of the T?* S* Employment Service helped to mitigate the problem of labor turnover*


Its system of employment offices and its cooperation with induetry, it was able to place workers in jobs suited to their .interest and capabilities and to decrease competitive bidding and stealing of labor on the part of employers» The belated improvement of housing and transporta­ tion facilities in some of the congested areas eras an impor­ tant factor in reducing labor turnover*

^Alexander Bing, ©$>* clt** p. 127*

For the first time

during the war, the shipyard* and ether war equipment center* were able to hold eiaployees by offering them moderately priced and adequate living quarter®*

Following a survey, the

Transportation Division of the Bureau of lousing and Trans­ portation reeenaended. a program for the enlargement of trans­ portation facilities, which wee a partial solution to the housing problem a* well*

The resulting program- involved a

rearrangement of train schedule'*, loan® to transportation • companies to expand their rolling stock, trackage, and the Ilk*,84 The commission on Living conditions, an emergency department created in the Department of Labor in October, 1916, attempted to discover the communities where insufficient and Improper recreational and social facilities existed and to provide means to remedy the situation*

The Playground and

Recreation Association of America was called upon to formu­ late a !program of coordination of local agencies in communi­ ties where war industries were located in order to meet the recreational needs*

A war workers * community service was

organised in thirty cities to cooperate in social activities in their respective communities*

in order to solve these

problem® without establishing additional machinery, the Com­ mission on Living Conditions held conferences with various government agencies interested In this purpose to find out what the government was doing in respect to community work*

^Annual Report of the Secretary of Labor* op* eit«* 1919* p* l©97HFor Defense? The Twentieth Century Fund, op, cit*, pp* S2-S3*

Through the assistance of th© comission on© city organised a home©* registration service to help solve the homing shortage#

The Pennsylvania legislature passed a hill provide

lag for further nee of school buildings for eoaaamtty activities#33

lit St&^eew and x&ckenta luring the world farthe- strike is perhaps the most overt expression of industrial unrest*

It has always been considered the most

effective tool to which the laborer may resort when the em­ ployer refuses to eos&ply to labor*©

It the strike

Is used as an index of industrial unrest# there is evidence then of great dissatisfaction among working groups during the world far#: During th© first six months of united states* par­ ticipation in the war# nearly S#000 strikes occurred in in­ dustrial concerns throughout the country#

The situation was

serious not only because of the loss of income to the workers involved but also through delayed production of needed war equipment*

Of the industries included in these strikes# the

hardest hit were the essential war businesses including the metal 'trades# shipbuilding# and coal and copper mining#36 It will be seen from fable I# p* 334# that 3#789 strikes and lockouts occurred la 1916# 4 #430 la 1917# and

^Annual Report of the Secretary of labor# ibid## 1919# PP* 196-1* ®%ational Industrial conference Board# Strikes In Amerjtegantgr to ■fl.rtteo April 6 to agtoSw; 3," TOT,*T

However# in the following months the

various agamies and departments of the government sought to maintain the eight hour day in plants operated by the govern* meat or in those concerns working on government contracts« President Wilson vetoed a nine hour working day bill which was passed b y ;congress#

Shortly .before the war President

Wilson in reply to a letter written to him by Governor Brumbangh in ref erenow to protecting the safeguards of labor statidi

nI think that it would be most unfortunate for any of m e states to relax the laweby which safeguards have b o m thrown about labor# I feel that there is m necessity for such action# and that it would lead to a slackening of the energy of the nation rather than to an Increase of it# besides being very unfair to the laboring people th«m»#Xvee**®l the attitude of the government departments in re­ spect to guarding labor standards was expressed through General Orders Ho# Id Issued by the Chief of ordnance# sow*


15# 1917? (1) The work day should not exceed customary hours In the particular concern or the standards al­ ready established In the Industry or in the

$* Bureau of labor staticties# Hours# Fatigue* and Mi In British Munition Factories * Bulletin Ho# S'il# wash?* ton# P« G#t 19X7# pp* B*13* clt



MaMaS i aa * 5E»

51 community* fhey should not be longer then ten hem** for adultsf time and one half for overtime; In continuous industries eight hour shift* should be the maximum; half holiday on Saturday and one day** rest in seven* (@) Standards 1m the workrooms should provide pro* beetles. against haearda and provision for comfort and sanitation; toilets should be olean and located eonvenientlyi extresse temperature* should not be permitted, and lighting should' be of proper intensity* color, and diffusion* (3) wage standard* already established in the in­ dustry and community should not be lowered* Mlniimm wage scales should be made in relation to the cost of living* (4) negotiation between employer* and employe®* should be preserved, and, if necessary * there should be established methods of joint ne­ gotiation between management and labor, (§) Legal standard* that have been established for women employees should be maintained; length of work day should be restricted to eight hours; no night work should be permitted; rest period* should be established together with a ten min­ ute recess in the middle of each working period; meal, time should be at least one half to three quarters of an hour end the place of meals should be separated from that of the men; seat* should be provided for convenient use; twentyfive pound* should be the maximum lifting weight for repetitive work; in the replacement of men by women ears should be exercised that the work 1* not too strenuous, that equivalent pay la given for equal amount of work, and that no work is permitted in living quarters* (6> in regard to the standard* for minors, no child under fourteen years of age should be employed; no child between the ages of fourteen and sixteen should be employed more than eight hours a day or forty-eight hours a week, and night work should be prohibited*6® On March 23, 1917, the Executive oessstlttee of the Association for labor Legislation issued a public announcement

3* Bureau of Labor statistics* Monthly Review of TJ. s. fiBEBSS o£ ia&gE B S S i S B sa * vol* 6, jMMm. J.UW, ’M t t r Policy of the War Department," pp. 51-53.

of It* attitude towards labor standards for the protection of workers String the war*

ft* proposals wars very similar to

those iesued by the ordnance Department In November# 1317* In spite of the efforts on the part of government and private organisations to saltttaia standards and to safeguard labor* there were tendencies to break down the existing standards# Seme of the states took legislative means to repeal labor laws*

Chi April IS* 1317* lew Hampshire passed a law prohibit**

lug strikes and lockouts during the war in factories or muni­ tion plants producing equipment for the government*

On the

same day Vermont passed a law granting the commission of labor* with the approval of the governor* to suspend any law limiting the working hours of women and children during' the war*

.likewise Massachusetts, cm key 26* 1917* enacted a law

creating an industrial commission to suspend by requests various labor laws during the war emergency*

At the request

of the Cornell of national Defense* Connecticut enacted a law authorising the governor* upon request of the council* to suspend the labor laws during the war period*63 the Council of national Defease further aubetantinted this tendency to abort labor laws by the following statements "Thousands of unskilled and unorganised workers are being employed in the manufacture of war supplies* In the rush of this work an un­ fortunate tendency has been noted In some In­ stances to break down existing standards* It is therefore important to report and to endeavor to

°®fht American Labor Tear Book 1917-18* edited by Alex­ ander ’ Wew’YorCV fEST*aSTSofeool of Social Science, pp* 16-21*

So prevent all M U U m i the rates established under collective agreements tor the Ideality for every Industry and occupation .in which such agree­ ment# exlst**^ Despite the Council*s effort## .many violations occurred,


was especially true In regard to extra compensation for over* time work, night work#. holidays# and, Sundays*

Many companies

refused to pay the rate for extra work a# revealed in the a,wards made by the H&tionaX War labor Board and other agencies* Occasionally* management permitted the worsen to mtfk m oxeesalv# amount of overtime thus threatening to- impair their health aid general efficiency#®®' Another breakdown in labor standards occurred among women workers particularly In inuniblom plant# where there was pressure for large output#

Investigation# disclosed that

women had worked long hours including night work#

Accidents *

industrial, poisoning* and 111 health had sometimes resulted in failure to maintain standard safeguards-*^

Although industrial unrest in the form of strikes and lookouts was never eradicated* there was a noticeable de­ cline of twenty-five per sent In strike# and lockouts during

®*Fir#t Annual Report of the Council of Motional Defense for year ended June 50, 1917*. 0£, elt»* p# 87# s* lational war labor Board# national war Labor Board Docket, Vol.# 1, Ho* €.1* Award in re Intirnational Brothermod W f W a d r y Employees# Local Ho* IS, versus American Locomotive Company, Schenectady, Hew York# Oct* 9, 1918, pp. 1-2, 66fhe American Association for Labor Legislation, Labor Laws In lay f %me* Special Bulletin Ho* 1, April, 1917, p* f.

the last year' of the war compared with the hl$a point of 1917,

At the beginning of the war the Conciliation Bureau

of the Department of Labor and the Board of Mediation were the only federal agencies for the adjustment of labor dis­ putes#

The Conciliation Bureau was handicapped because o f .

lack of adequate funds- and because It lacked power of arbi­ tration and compulsion in order to cope with the national emergency#

Despite these drawbacks the Department did

handle a large number of .cases and in many instances was able to mediate sucees sfully*^? Agencies of the War and Mavy Departments establish­ ed shortly after the entrance of the United States into the war also contributed greatly to the lessening of unrest in companies working cm government contracts#

The Emergency

construction Adjustment Commission negotiated agreements with the building 'trad# unions in the construction of cantonmanta guaranteeing the- adoption of .union standards*


Harness and Saddlery Adjustment Commission was responsible for stopping' dispute® in the leather industry#

The Arsenal

and levy Yard Commission dealt with labor disputes in govern­ ment arsenals and navy yards#

The Shipbuilding Labor Adjust­

ment Board was effective in reducing labor difficulties in the shipyards by Inaugurating uniform wage scales and by periodically adjusting wages to correspond to the coat of liv­ ing#

The Commission for Adjusting Labor Disputes in Loading

6yAnnmal fteaort of the Secretary o£ Labor, 191S, op# cit#, P# 53#

and Pleading Ships effected agreements between longshoremen and employers in respect to wages, hour®, and wording con­ ditions*

fhe Board of Railway Wage® and Working Condition®

and the Railroad Board® of Adjustment were responsible for correcting grievance® and adjusting difficulties in the major railroad® of the united State®*

In the fuel industry the

establishment of the Fuel Mminisferation was successful in formulating labor principles between the mine operators and the- united 'Mine Workers which eradicated the unrest in- the coal industry* Although the various government agencies accomplish­ ed much In. reducing strikes and lookouts in cases under their Jurisdiction* their influence did not penetrate into a large area Of American industry*

It was not until the establish-

meat of the national war labor Board that an effective solu­ tion was found for the removal of the causes of unrest* the national War habfr Beard Ihe national War Saber Beard was officially pro­ claimed by President Wilson on April 8* 1818*

fbe President

summarised the powers* functions* and duties of the Board as follows: (!) to settle by mediation and conciliation dis­ putes arising between employers and employees in those industries and fields where delay and obstruction might affect production of needed war materials unfavorably} (S) 9 * 'provide for committees or boards in various sections of the country to effect settlements of local conflicts by mediation and concilia­ tions

w fo refer eases for final settlement before the

5b Nation®! Hoard in t he event of failure of local boards to secure a settlement of the controversy, She Board consisted of five representatives of capita! and labor respectively and two c!tisane representing the public,

later the president nominated ten umpires frooa

which the Board alght choose a ^final arbitrator in case they failed to come to an agreement#

sir* william Howard Taft was

Joint chairman and public representative of the employers * and Mr* Frank I*# Walsh served in the s m s capacity for the employees*1 ^® The principles and policies which guided the Nation­ al war labor Board, in its relations between management and labor were the followings (1) Banning of strikes or lockouts during the war (2 ) lig h t to Organise («) Eight of workers to organise in unions and i# bargain collectively through their re­ presentatives (b| Bight of employers, to organise in associa­ tions or group# and to bargain collectively through chosen representatives {*} Outlawing of discharge of workers for union membership end for legitimate union activity (d) abstinence on the part of workers frcsa coercive measures to induce persons to Join their organizations (5 ) Existing conditions

® % # S# Bureau of labor Statistics* National war Labor Board, Bulletin Mo# 267* Washington* j>* c#* 1922* pp. 10-11*

5*; (a) In concerns where the -union shop exists, It should continue, end the m i e n standards Should be maintained* (b) in firms wh©re the ©pen shop prevails and the employer deals only with the employee, such conditions should not be classified as a grleven©# by labor# However, this declaration was not intended to deprive the workers of the. right to organise in unions#

{©) Safeguards and regulations for the protec­ tion of the health and safety of the « * pleyeee should be maintained* (4) Women in Industry (a) Where women perform the work of m m , they should be compensated in equal measure and should not be permitted to work at tasks beyond their strength# ($} Hours of labor (a}’the basis eight hour day is recognised as applying to those oases exist* lag law# In all remaining oases the number of hours should be settled with re* gard to;governmental necessities and the welfare, health, and comfort of the workers* (6 ) Maximum Production (a) The maximum production In war industries should be maintained* any methods of work and operation which tend to delay production or to increase, east should be discouraged* (7) Mobilisation of Labor (a) For the purpose of mobilizing the labor supply, a list of the number of skilled and unskilled workers should be kept on record in the Pepartaicnt of Labor* This Information should be furnished by the trade unions, state and federal employ­ ment agencies, and employer* of industrial firms* (3) Custom of Localities (a) In fixing wages, hours, and condition* of labor, regard should be made to the customs

Sh prevailing in the respective localities* (9} The Living Wag# (a) The right of all worker# to receive a living wage (fe) X& fixing wages * the miahaun rat®# of pay 'Should he established which will Insure a subsistens# of heal th m& reasonable eomfort for' the worker m i his family #dt in summerIcing the principles ana policies of the Boardi it may be said that they are baaed upon coma demo** ©ratio ideals recognising the rights and duties of the player* employee* and the public*


This democratic basis was

responsible in large part for the success which the Board #»**, joyed* The jurisdiction of the Board was limited to con* trovers,lea for the adjustment of which there did not exist a means of settlement*' This excluded many of the most import**' ant industries- «#* for example* the shipbuilding* coal# and railroad Industrie#*

However* appeal, could be mad® to the .

Beard from the decisions of the existing boards In cases which involved violation of the principles in ,the president1# proclamation*

Tb# Board also determined ques felons of juris-

dictions between boards*

¥b$ Board provided for the establishment of sub** committees composed of two members to act in place of the Board in local controversies*

In cities and districts it ap-

pointed pQimmmfc local committee# to take care of eases that should .aria#*

Trained field agents were appointed to

^National war Labor Board. Bulletin No* 287# ibid*# pp# 32-33* ----

act in an investigating capacity in disputes which arose* fhe Board limited itself to hearing those eases which its sections* mxhQwmittma$and local oe&s&lfcfceea were unable to settle*


such times the Board sat as a board of arbitra­

tion to decide the dispute and make the award*

If the Board

failed to come to an agreement* than It selected an umpire* as provided in the act* who sat with the Board* reviewed the facts* and issued a declaim# the decisions; and findings of the Board during the sixteen months of its existence directly affected snore than 1*100 establishments* employing about 7X1*500 people*


directly* the Board*® agreements influenced a much wider number ©f people* because employers of many concerns were in* dnoed to apply the principles promulgated in the decisions of the Board*

Of the 1*251 separate controversies which1

were presented to' the Board* decisions were made' in 49$ cases or W pm cent of the total cases submitted*

Th® Board was

unable to agree in only thirty-four cases or seventeen per cent of the total number which were then referred to an um­ pire for decision.

If no decision was made* the case was

cither dismissed* referred* withdrawn, or left undecided* Most of the cases that were dismissed •were removed without prejudice because of lack of prosecution* or because the parties voluntarily agreed among themselves*

Of the 515

Gases referred by the Board to other agencies * more than half of them wore referred to the Bureau of the Department of Labor* Wage grievances involved the most frequent complaint

in the eases appearing before the Board# accounting for over half of the total number of disputes#

The question of hours

ranked second with discrimination against union employees in third placet

Questions about the employment of women were

also frequent sources of ~dlssatlsfastlea*

A study of the/awards of the Board reveals that . bargaining relationships and the establishment of the prin­ ciple of a living wage were the two most far-reaching prin­ ciples that were effected*.

The principle that the worker is

entitled to a living wage sufficient to maintain his fmmily in reasonable effort was emphasised in. the Board*s attest to set up a minimum wage based ..upon studies of the cost of living,*

As the minimum wage differed with the cost of living

in various localities* it did not establish an all inclusive minimum*

The decisions of the Board indicated that it be­

lieved in the principle of adjusting wages aa the cost of living changed*

In the majority of oases involving a demand

for higher wages* it granted this request of labor*


principles of the right of the worker to organise and to bargain collectively and the prohibition of employers from 41 seriminating against the workers because of membership in unions or for legitimate union activities were rigidly en­ forced*

Store than 150 cases had these points as their chief

sources of friction*

In instances where employees had been

discharged unfairly for union activity# the Board ordered their reinstatement with compensation for the time lost by their dismissal*


206 cases the awards provided for col­

lective bargaining through the channels of union shops which

had been created prior to the Board*a establishment or through shop committees selected by the free choice of the worker®#

Existing condition# were maintained In respect to

recognition of the union a® disclosed in the Board* s awards in reco.piizing the right of the employer® to refuse to bar** gain with a union where such an organisation had not existed, prior to the war*

As a rule# the basic eight hour day and -

the of good working conditions were always in*slated upon by the Mediation Bo-mrd*^

In imtances involv­

ing complaint® -in regard to. mmn in industry# the Board adamantly protected women at the point of wages* health* and general working conditions*

Equal pay for equal work and

the prohibition of tasks beyond the strength of women became cardinal principles in the Board*® awards# Although the Board had no legal authority to ©n» force its decisions * it was successful in carrying out its awards#

This was due in large part to the support of the

general public as well, as the other governmental mediation agencies and the sense of obligation incumbent on both management and labor to support the Board of their choice both as regards representatives and principles* decisions met resistance In only three cases*

the Board*® The first ease

was that of the Western Union Telegraph company versus its employees concerning discrimination against union workers# The Board ordered the company to desist in this practice* but

■* x*2 2 B L *olt** Ho. ^^*nlng Company* Coffeyvilla* Kansas* August $S# 1013* pp. 1*4*

the ©omp&ny refused#

After the President requested the com-

puny to comply to the Beard*® decision without success* the government proceeded to take over the eo^any#

The second

ease involved a group of organised workers at Bridgeport* Connecticut* who refused to abide by the Board*a decision#. The President ordered the employees back to- work under a pen* ally of deprivation of employment through the Federal Baploywent Service# work*

The.workers accepted the decision end reamed

'The third, instance was that of the Smith and Wesson

company of Springfield* Massachusetts#

The company did not

obey the Board*® instruct ions about ceasing discrimination against union worker#*

The President ordered, the Secretary

of War to take possession of the company and operate it for the balance of the war#’7** In conclusion * the National tar Labor Board per# formed successfully as an industrial supreme court during the latter period of the war*

It played an important part In the

coordination of the labor administration*

Its principal ob­

ject was to remove the cause# of strike# which impeded the progress of industry#

This was accomplished by providing the

mean# by which employees and employer# could continue their work knowing that the differences between them would be ad* Justed fairly on the basis of principle# formulated by both capital and labor*

The Board performed creditably in stabil­

ising the industrial relations through which production was sustained end Increased to maximum levels#

7*AnmaX Report of the secretary of Labor. 1918* o£. cit.,



p g o ^ ^ m

K f A «

sta a a

€n® of the major labor problems arising during the ear was the decline In the efficiency of labor* was of too types*

The alump

(1) the intentional and purposeful* (0}

the Involuntary and- unintentional*


the first type was doe largely to the independence the worker enjoyed because of the lndlspensablllty of hie labor*

The President* s ■Mediation commission stated that con-

scions withdrawal of efficiency characterised many of the es­ sential war intebrlea*^

It was believed by some commcntat-

ore that the Inexcusable slackening of labor on their job at a bine when the country was in dire need for expanded produc­ tion of goods was One of the meat legitimate criticisms leveled against labor during the war ©ra*?$

In, some Instances

the high wages resulted-In Idling and taking time off*


mony before the''Shipping Board indicated that the high salary scale had resulted in. Idling so that the efficiency of the working’force in several of the ship yards was reduced by 30 per cent*

lb was further revealed that the 10 per cent bonus

which the shipping Board authorised for laborers working six days a week had not produced the desired results,

The men*

Instead of continuing their jobs* would work six days and then lay off for two or three days after having acemulated as

720 m o i * l Bulletin, 0£. eit., February 11* 1018* p* 1S« 7®A* Bing* oj>* elt», p* 831*

m wmh money as they wanted tamporarily * the imlntentionai type of inefficiency was due primarily to undesirable working and living conditions which ware not conducive to good health», Reference has already been mad# to the effects of Iftadegnate housing on the labor turnover*

In like manner Its Influence on efficiency was

serious*^ fhe problem of inefficiency was magnified due to the- shortage of skilled' labor*

In order to get greater out*

put# it was necessary to break down the skilled work into simpler components- so that jobs could be handled by unskilled workmen*

A definite curtailment of the amount of materials

produced on the part of skilled, workers resulted*^ Hit-

|§g J$g iMMne. |j, J|g>

Si ifiiS

the complexity of the problem involving Intangible psychological factors precluded the possibility of an easy or oulok solution*

the approach used by the Mattonal mr

labor 'Board and other adjusting agencies was to get at the root of legitimate labor grievances with an effort to ellad* mate them*

M better living and working conditions were

achieved# labor** morale Inevitably was heightened* Imchg the agencies which contributed to the

^Iron. Am* fol* 101, January 31, 1918# MMany Problems for t h T ^ & p p k g Board J* pp« 332*5# ^ Journal of Economics* op# clt», Vol# XXXII, Hovember,'nri917 , p*5E5#

7®0# Watkins# 0£# eit* * p* dS*

Improvement of labor*s efficiency were*

{%} She Bureau of

Industrial Housing and Tr©naporta 11on, (2) wmm in Industry Service, (3) Investigation end Inspection Service, (4) w o o ­ ing conditions Service * (5) Division of legro Economics , {6 } Information and Education Service, (7 | Civilian Insignia Service* The work of the wesson In Industry Service took the

tmm of advising the Secretary of Labor regarding the employmeat of w & m m and cooperating with ell g o v e m m t e l agencies concerned with the welfare of women workers*77 fht' function of the Investigation and Inspection Service Agency wee to eend observers and Inspectors into in­ dustrial concerns to make- reports to the following services i Conciliation* Working. Conditions * women in Industry, Train** Ing and Dilution, etc#76 The working conditions Service was established pri­ marily to safeguard conditions of labor in war Industries* It examined working conditions, .determined standards of work* drafted rules, and cooperated with the states In the achieve-* mmt

of its parpoa##7^ The Division of Megr© Mwmmlm was organised in.

order to overcome the low standards' of efficiency a m m g the legrees which was an outgrowth of suppression and discrimina­ tion#

Among other achievements the Division organised

77fhe Annals * Vol# hUXX, Jan#, 1919, Mary Van Eleeek, "FederalTotlilea for Women In Industry,® pp« 87-94*




79Ibld., pp. 138*140.

SaSa&Hg St M S H * 1910* 2E* £*£•#

cooperative committees of shite and colored citizens la various state# sad localities where had labor relations aae* leisd* .State conferences in many localities composed of both white and colored representatives received the whole* hearted expert of many groups#


October 1 # £$13* seven

state# had Hegre worker#'* advisory committees# consisting of ■ both colored and:white citizen®* and five additional state# were in the process of appointing such cowit tees*


and city oesamitbee# were also set up in a n # of the states*8® fhe information and Education Service was organized for the purpose of promoting sound public sentiment among the workmen in industrial plant# in regard to labor questions and the issues of %he war* lowing group**

3*he service was divided into the fol-

(I) Education# (i) information* (3) .Industrie

al flanta* (4) Economics* (SI fosters#

la and through these

departments the Service by October 31* X&XB# had distributed ’ news items to over $#000 newspapers and to various magazines and publicationsj supervised speaker# to appear before various group# 1 distributed about one million poster# a month; organ* ■ iced government committees in over 12*000 plants #0 as to establish personal relationships through contact between em­ ployee# and employers and representative# of the government in all war industries*^ The Civilian insignia Service was organised for the

SQ m a ., pp» u s - u s *

purpose of .developing individual incentive to greater effort in the production of war equipment*

f© .aooompllah this pur*

pose* the service granted national war industry badges to workers as a reeagnitlon ©f.their mMmmmt in industrial war work#

The requirements were at least four- consecutive ■

months of satisfactory service in eseentiai war industries*8® Minor labor Problems during the world far The polyglot character of the working force proved to he a hone- of contention in aim# eases*

The President**

Mediation Comiaslon In its report Mentioned that in the Arisons mining district in one samp there were twenty-sis; and In another thirty-two nationalities* particularly saute*

The Balkan problem was

3h another camp a large percentage of the

workers were non^ingllsh speaking* mostly Meglean*

The look

of cohesion, mmg the man often added to greater misunder­ standing between the -workers and m m g r n m b * ® ® Another labor grievance during the war was the use of the pewit 'system by which m

employee of one company had

to secure a permit from his employer before being allowed to transfer to some other company*

The permit system had two

distinct format' (a) a company sometimes required an employee to obtain a permit if he wished to transfer from one plant or mine to another of the same concern| (fe) several companies in

8% * $« Bureau of Labor Statistics# Monthly Review of tf*

s n i SUShst g|»Iukg&» f»** vxi, a«6usi , i m , m f « n ions or^the far Labor Administration completed/ p« 6®*

^Official Bulletin * op» cite* February 11* 1918# pe ©•

ft territory occasionally ■formed.«a agreement requiring perfrom their employ*#* for transfer from one firm to an­ other*

The govewutnt mMiiation agencies recognised the

first type of permit but- condemned the second on the grounds that it was equivalent to blacklletlng. an employee for some legitimate union practice which the Mqpaxxy opposed Another wore spot for. labor was the deduction by the eo^pimy from -the wages of the workmen a certain amount to cover medical attention# education* and Insurance*


practice usually -occurred in remote places where the company was isolated frm educational and medical facilities*


arbitration boards- generally uphold the companies in such situations on- the principle that this was the only method for proper educational

mad medical

services to be made available'

for the employees and that the company should continue to select the physician and administer the school fund#

In re­

gard to insurance* this matter was usually optional# there­ fore not' justifying complaint on the pert of labor#. The, company store was found sometimes to cause dis­ content


the workers through the,', practice

of discounting

the employees* wages In advance of their payment and charging as high as 20 per cent interest for this service#

The em­

ployees had found It necessary to obtain, money in this manner because their 'Weekly or monthly pay checks were so low that

their salaries ware insufficient to live from one payday to e&othep*8^ In the billed trades. each anion had its rules of ■ apprentieesMp which it guarded closely. the w

At the outbreak of

when a ;shortage'of ©killed workmen developed* em«

ploy©re tended bo- disregard the apprenticeship rules#.


m the; righto- of m i c m -became a considerable cause of unrest m& was fought vigorously by organised groups#88 la the cases which appeared before the arbitration boards# the decisions- generally provided for the establiahaenfc of an apprentice system mutually agreed upon by both management and- a representative committee of workers and allowed for a reasonable number of apprentices to be trained#®^ In-acme companies the tain pay of a week


practice was tore­

or two weeks belonging to the employee! in

other case® the paydays were too far apart*. Although these actions did not give'-rise to serious complaint,, they did cause some disapproval among the- workers#

Arbitration beards

usually etlfulat-cd

that paydays should be once a week'and that

no more than three

day©1 salary should be retained by the


asXbi£«i p* 3# Watkins* o^* sit## p* 115* War labor Board pocket* Vol* I* on. ©it** Ho* 4a# «Aw*rd in re Bspleyee* v* St7 Louis Car Go*/October 11* 1918, pp* 1*2# . a%atlonaJ. 1» kateor a w e # poskot.Vol. I, So. 40, "Findings la re Spioyees vs* frlcS Co,*# ©t al*/Waynesboro# Pe. # July 11# 1918* pp* 1-8*

3& some eases the piece rates and bo m s system la mehln©, shops were found to be so oompUeated or unjust that they caused much complaint and unrest among employees*


arbitration boards generally ordered the systems entirely re­ vised or eliminated#8® In conclusion, the study Of Ifotor During this world War has revealed that the tmited states in coixaaon with all the warring nation© w

unprepared to deal with the tremen­

dous labor problems' 'which arise in the transition from a t laisses fair© economy to a controlled economy*

In the case

of the tJhited states,the situation was aggravated by the -ex­ tremely law wage rat# for the majority of working people- and • the undemocratic principles pursued by most employers in their industrial relations* per the first year following the entrance of the Halted States into the war the government assumed an In&lf- ■ ferent attitude about fomul ating a clearly defined labor policy*

In groping about for a solution, it ©tumbled upon a

decentralised labor administration in the form of various agencies- in the producing department# of the government*


though these agencies rendered valuable service ha meeting labor problems In their own particular departments, they failed to embrace industry as & whole and to avoid duplication of effort#

oket* Vol. I, Wo. 88, "FindWorkers, at al* versus hags Bethlehem Steel Oempsny, Bethlehem, Pe*," July 51, 1913, pp. 1—8*


i« not

disease but rather a


symptom, Indicating m&ledjuatments in the economic process in which the workers find themselves*

If Industrial discontent

Is to be eradicated $ the bail® causes of dissatisfaction in the economic system must be removed.#'

labor by and large was

not disloyal-to the government, in spite of the fact that it had more to lose, by the. consequences of the. war than did:

zmmgrnmit# The patriotism and the cooperation of the wonew men appeared just a® strong as that of any element In the eltiseary* ■fhe begiming of the second year' of the war saw the United abates adopt a centralised and coordinated labor admlnis tr&tloa*. 'the success Which this new administration enjoyed was accounted for in large part by the democratic principles of labor relations which bmm® the criteria for capital and labor for the first time in the history of the rni ted States*

y a H ' t £ Chapter XI I*ABGR MW TEE BOTtSg PROGRAM Much notoriety has been given to labor*® role la the present defense program#

Often this publicity has been col­

ored according to the particular interest® which the various writers represent; therefore* a prejudicial impression is frequently created*

Xa a

m p

economy labor always plays a

strategic role* hut the current defease program has empha­ sized more than ever labor*© importance in the present crisis, ffcis is due in large part to the fact that the present defense emergency is utterly different from that of the last World War#

Mechanized equipment such as airplanes* tanks* and the

like* is used on a much larger scale than ever before# Because mechanized warfare is so important in this period of history* the skilled worker has a significant place in the national economy*

than too* because of the interdependence

of industries* ^ one m all strike can easily disorganize and slow down the defense preparation#

In the Vanadium Corpora­

tion strike involving BBS men* the production of propellers for airplanes was considerably retarded*

In the Barvill Die

Casting Company of has Angeles a labor dispute involving only 4BS employ©©® stopped construction of aluminum die castings sorely needed for the manufacture of airplanes# The necessity of speed of production not only for the defense of the Halted State® but for all-out aid to Great Britain and other •democracies" has magnified the maladjustmeats ijk the economic system# ilk ■ the bound to

* s*

Xn an emergency problems are

How as never before much adverse criticism

75 is promulgated when the rearmament program is retarded or threatened to he delayed hy labor difficulties* It is the purpose of the writer to bring to boar accurate and relevant data pertaining to the important aspects of labor in the present emergency*

The following questions

will be discussed in this chapters

{1} strikes* ar ftelatloaa Befiggtej, Vol. V, January 87, 1941, p* 535* ^ 5 ? 0* Ct* 525 f193?), "national Labor Relations Board versus Jones and laughllm Steel Corporation,” April IS, 1937, p« 625*

98 If th© refusal to bargain, as stated by Mr. Hughes* Is one of the most mrnmn factors in labor disputes, then collective bargaining should minimise strikes. tfaioa agreements increased from 3,0£1 in 1935 to 4,193 in 1940*

Many of these agreements contain no strike

or lookout clauses* periodic rag® adjustment clauses, and procedures to handle labor grievances*

A recent study of

strike restrictions in union agreements shows the following limitations in basic defense industries: (1) In the aircraft and parts Industry, the majority of the aircraft firms provide some sort of arbi­ tration agreement or requirement to use the U* S. Conciliation Service before a strike or lockout is called* In all except one of the contract© with arbitration stipulations, strikes and lookouts are banned during the period of the agreement. (S) In the aluminum industry, all the union contracts contain some sort of adjustment machinery for settlement of disputes and grievances. Approxi­ mately a third of the agreements provides recourse to arbitration If it is accepted by both parties at the time of the controversy* Another third allows either side to take th© dispute to arbitra­ tion* Strikes and lookouts, however, are not banned in any of th© agreements* (5) In the electrical equipment industry, of agreements provide for arbitration ment of disputes as well as providing outlaw of strikes and lookouts during the contract*

the majority in the settle­ for th© the life of

(4) In the iron and steel industry, practically all of the agreements provide for an arbitrator selected by mutual consent to fee called when needed* Strikes and lockouts are prohibited in almost all cases. (5) In the longshore industry, over three-quarters of the agreements provide for the final arbitration of disputes* About two-third® of the agreements provide that in ease of conflict the work is to continue pending final adjustment* Most of the remaining third prohibit strikes and lockouts for th® period of the contract*

(6) In th© metal, mining* smelting* and refining industries, about half of th© contracts provide for arbitration of disputes* In about two-thirds of the agreements, strikes and lockouts are banned until every method of settling the controversy has been tried*

(9) In th® rubber Industry, the firestone Company is the only large concern providing arbitration* but among the smaller companies arbitration is more common* Almost all of th© agreements prohibit strikes and lockouts until every method of settling the dispute has been exhausted. Several prohibit strikes under any circumstance* (B) la the trucking industry, practically all of the contracts provide means of arbitration for the settling of conflicts* Most of th© agreements also forbid strikes and lockouts until ©11 other means of negotiation have been resorted to*35 Wage adjustment clauses found in many agreements mitigate against unrest and strikes*

la th© Yulte© Aircraft

agreements concluded on November 35* 1940, between th© company and th© United Automobile Workers of America* th© company oensegkted to review wages In its o vm plant as well as others In the aircraft industry of Southern California ©very four months*

Should the prevailing wag© in other

plants be higher, the company pledged automatically to raise its wages in conformity with the rest*3® Intelligent a i ?e6.wal CmeJllatlon a«Ert.ff. During the past two years the Conciliation Service has undergone an expansion which has included an addition to

3%onthIy Labor geyley* Washington, D* C.f March, 1941* "Strike BestrieHons W Union Agreements" by Florence Peterson of the Labor Bureau’s Industrial Belations Division* pp* 546-564# ^Labor Relations ffenorter. Vol. 7, December 2, 1940* p* SBO.

IOC its personnel and a reorganisation of its functions,


tii© new plan the country M s been divided into four areas on the basis of an et^al distribution of dispute© with & regional supervisor la each district under th© direction of Dr, John B# Steadman, director of the Service*

Each day the regional

supervisor® receive reports from th© commissioners in their respective area® about the status and progress of mediation in various controversies#

During the emergency the Service

is cooperating closely with the national Defease Commission* In case of failure to achieve a settlement on & defense indus­ try dispute, help 1® obtained from th© Commission#


special! gts have been given jurisdiction 1m the aircraft, shipbuilding, and other basic defease industries#®7


XU StebSrnaa recently reported that unions are cooperating to a large degree with the Service in an endeavor to prevent work stoppages*

Many of th© agreements that have been aego­

tists® by th© help of th© Commission have provided for calling In a third party nominated by Mr* Steelman who assist® in settling th© difficulty*

In many eases the unions are taking

the Initiative in contacting th© Conciliation Service before the ©vent of expected trouble*

During th© year 1940, th©

Service, through th© cooperation of both management and labor, was able to prevent 94 per cent of the total disputes which It 38 handled from ©vert conflict* g7Xbld#. Yol* 7, November 11, 1940, pp* SE6-9* aeXbl*«. Yol* 7, January 13, 1941, pp* 490-1*

101 flie ffatlonal Defense Mediation Board By executive order of March 19, 1941, President Boeeevelt created in the Office for Emergency Management the national defense Mediation Board consisting of eleven members appointed by the President; three representing the public, and four delegates, each for labor and management*

Soon after­

wards the personnel was increased by naming tea alternates to serve in the absence of the regular members#

Br. Clarence

Dykstra was the first Chairman but was later replaced by Mr* William H. Davis. , Th© purpose of


putes certified to it by




Secretary of

reviewlabor- dis­ Labor.These con­

flicts were ones which th© Conciliation Service had failed to eetti* and threatened to obstruct the production of war materials essential to th© national defense program*


accomplish its objectives, th© Board was authorized; (!) to endeavor to adjust disputes by assisting the parties to negotiate agreements (2) to afford moans for voluntary arbitration if the parties agree to such procedure f$) to assist parties in a dispute if they, wish the establishment of methods for settling future con­ troversies between them C4) to investigate issues of a controversy and practices and activities pertaining to it; to conduct hearings, take testimony, and make recommendations for th© settlement of a dispute; to publicize findings and recommendation &if th© Board deems such action justified* (&) to assist and cooperate with the national Labor dela­ tions Board in disputes tha| relate to the appropriate bargaining representatives *

^ Labor Delations Reporter. Vol. 8, March 24, 1941, pp. 84-5* '

102 With the establishment of the Mediation Board, the government decided that the policy of persuasion hacked by informed public opinion was for the present a better method of handling labor conflicts than that a t legislating against labor stoppages*

For the time being it was decided that an

extension o f conciliation -and arbitration should he tried in order to ameliorate strikes in the defense industries*


ever, the most immediate effect was to enhance the importance of the Conciliation Service*

The executive order of th©

President stated that employers and employees engaged in any form of defense industry must exert ©very effort to settle their difficulties which included notifying th© Federal Con­ ciliation Service of impending disputes in order that action might be taken immediately to effectuate a settlement*


addition, when an employer or union wished to make any change in th© existing contract in respect to wages, working condi­ tions, and the like, they should notify the Conciliation Service*


Although th© Mediation Board has no authority

in law and no power of subpoena, it can wield pressure on reemlcitrant parties in labor controversies, not through any judicial order but through the avenue of public opinion* In some respects the new Mediation Board is very similar, and in others dissimilar to th© National War Labor Board during the last World War*

Th© Mediation Board will

conduct hearings and maintain a regular docket of labor cases.

4QLabor delations Benortey, Vol. 8, March 24, 1941,

The cases outside of Washington, B* 0*, will be heard by a judicial examiner| in addition, local hoards may he designated to heat* local controversies with th© right of the national Board to make final review*

In these regards, the Mediation

Board and the old lational War Labor Board are $uite paral­ lel.

They differ In that the Mediation Board may consider

only those oases certified to it by the Secretary of Labor, and eases may mot he taken to It directly without first giv­ ing the Conciliation Service an opportunity to bring about a settlement.

With th® national War Labor Board, labor dis­

putes could be taken to it without first having been handled by the Conciliation Service,

It was necessary to tak© this

course of action at that time, because the Conciliation Ser­ vice was .a comparatively small and inexperienced agency# Another difference lies In the fact that the'national War Labor Board was, for the most part, an arbitrations! agency and a Board of final authority# sometimes effect a conciliation#

However, its examiners did The Mediation Board Is

unlike the World War Board in that it has a broader scop® of power®,

The War Labor Board was mot permitted to interfere

in a controversy In any field in which there was by agree­ ment or federal law some means of settlement which had not as yet been tried, while the Mediation Board is authorized to assist the national Labor Relations Board in speeding up its action In disputes involving defense industries*4^

* Vol. 8, March 31, 1941, pp. 181-8.

104 Hie effectiveness of the National Defense Media­ tion Board in lessening labor stoppages is apparent from the number of important controversies which it has assisted in settling#

These inelude the seventy-five day Allis Chalmers

Company strike* Vanadium Corporation, Hie American Car and founding Company, American Potash and Chemical Company, General Motors Corporation, Minneapolis Honeywell Begulator Company, and the like#

In many cases strikes were averted;

in others, disputes which resulted in labor stoppages were settled#

Bine© its establishment the Board failed to bring

settlement in only six cases, namely?

bituminous coal, north­

west lumber, North American Aviation Company of Inglewood, California, the Federal Shipbuilding and Drydock Company at Kearney, New Jersey, th® Air Associates, Inc# at Bendix, New Jersey, and the Captive Coal Mines#

In the soft coal strike

and the Northwest lumber disputes it is believed that the publicity and recommendations of the Board were of assistance in later securing a settlement*

President Boosevslt’s proclamation of an unlimited national emergency on May 27, 1941, marked the passage of the defense labor stoppages from a policy of super-mediation initiated on March 9, X94X, to one of more drastic superarbitration#

The declaration constituted a definite statement

that there would be no defense strikes#

The President justi­

fied the new policy by stating that there was no attempt to weaken or stop the social gains previously secured but that

threats to this country from within and without necessitated increased production of war materials and did not allow for work interruptions because of disputes between capital and labor* In adopting this new policy, the government still relied on the initial machinery already set up to effect aettlesmeats of disputes, I*©*, principally the Conciliation Service and the National Defense Mediation Board*


the new policy implied that capital and labor would automat­ ically negotiate their controversies*

In order to back this

expectation, the government would, if necessary, use


emergency powers contained in Section 9 of the Selective Training and Service Act of 1940*

This section authorizes

th© Presidents {1} to take possession of any plant manufacturing ■ defense materials which refuse© to produce good© ordered by th© War or Navy Departments (2) to remove draft deferments should striker© refuse %fee recommendation of government agencies {3} to declare martial law and break up picketing by federal troops if workers strike against recom­ mendations of the government (4) to apply the federal criminal cod© dealing with conspiracy, espionage, attempts to defeat th© igowernmeai purposes, and enticing employees of arsenals or armories* During the last, World War similar measures were employed m several different occasions.

For example, in

the Smith and Wesson Company case the employees went on strike because of union discrimination* to obey the War labor Board*s decisions*

The company refused This course of action

resulted im President Wilsonfs order to commandeer th© plant.

106 Similarly, The Western Union Company*s failure to obey the Board's order to cease discriminating against union employees resulted in government seizure of the company's properties* In aBridgeport# Connecticut# munitions plant# striking workers refused to return to work on the basis of a settle­ ment by the Board*. The President demanded that they return back to work under penalty that refusal would moan withdrawal of draft deferment and blacklisting- from the federal Bnploymeat Service* Shortly after the President's declaration of the new labor policy# the officiala of the A* F* 1* and the C* I# G# issued statements to the effect that in case any of their members of the affiliated locals stopped work on defense projects- without giving the government agencies an opportun­ ity to settle the dispute, they would immediately bring ip

disciplinary action against them* '' The first action under the euper-mediatlon policy was Preeide&t Roosevelt's order for th® army to take over the strike bound plant of the North American Aviation Company plant at Inglewood, California# on June 9, 1941*

In this

ease the union defied the Board's recommendation for th© strikers to return to work pending © final wage adjustment* Other oases involving a test of super-mediation were: the Federal Shipbuilding and Brydook Corporation at Kearney, New Jersey# in August# 1941; the Air Associates Inc* at Bendix#

6' and 1941# _

?0l* 6# June Z91941, pp* 505tpplecient« Vol* 8, June 2,

Bew Jersey, and tho Captive Coal Mines dispute in IJcvooiber* 1941* Tie refusal of the federal Shipbuilding and Drydock Company to follow the Board*a rocosmiendatloa inmaintenance** of~membership clause in a collective bargaining contract resulted in the Bavy Department *u taking over the company’s yards* The defiance by the management of the Air Associates Inc* in the Board’s recommendation to reinstate a number of strikers to their foxmer positions resulted in the army’s seisure of that plant* Themost »©var© test of the'new policy cam© with th© Captive Coal Mines dispute*

Th© issue in this case m s

th© refusal of the management of th© United States Steel Com** paay to grant a closed shop collective bargaining agreement to th© union*

Upon.refusal of th© national Defense Mediation

Board to recommend a union ©hop, President John. 1# Lewis of the United Min© Workers Union called a strike la th© Captive Coal Mines which seriously threatened to ti© up the production of steel needed in 'the defense program*

Mr* Lewis was sub**

jested to much sever© criticism from both the public and organised labor la general*

The argument of the union rested

la the fact that 95 per cent of the captive miners were already members of th© union and that an acceptance of the ■ open shop would invalidate the Appalachian agreement which was in force la 90 per cent of the Industry*

A denial of

the closed shop, it was believed, would automatically nullify ©slating agreements and thereby adversely affect th© morale of the workers*

The steel operators and th© national Mediation

Board concurred that th© closed shop agreement was not necessary

to protect th® security of the United Mine Workers union, because 95 per cent of the workers in the captive mines were union members*

As far as causing m invalidation of the

Appalachian agreement Is concerned, the Board could not con­ ceive of the operators who possess a closed shop taking ad­ vantage of an opposite decision in th® captive mines.


m s believed that th© proper way for the union to achieve its goal of a closed shop was through the voluntary bargain­ ing process and not by the aid of the government*

To grant

th© closed shop under such eireta&stanees would be opposed to the fundamental right of the workers to join a union and slight tend to increase the danger of strikes with resultant reactionary labor policies in the future#

Upon the rendition

of the majority decision, the C# X# $♦ mesfeers of the National Mediation Board immediately resigned#

Because of .the gravity

©f th© situation President Roosevelt took the dispute into his own hands and endeavored to solve


crisis by proposing

that the union issue remain in status quo during th© emer­ gency period and that the union and management submit th© css® to arbitration*

This course was finally followed with

John R* Steelman, John L* Lewis, and Benjamin F# Fairies© as arbitrators*

The final decision awarded the all-union shop

to th© United Min© Workers, because it was- thought that it

would merely perpetuate and guarantee the status quo as the mines were already


par cent unionized#45*•

fefess BgjaSLBMl gm,a.?,fer, Vol. 9, November 17, 1941, Labor Relations Reporter* Vol* 9, November 24, 1941 jSSor Relations Reporter* Vol* 9, December 15, 1941 PP* 400-2#

pp# 287-9, pp* 296-9#

Strike legislation of some sort appeared to be a certainty even though the Captive Min© Dispute was settled* Th© Captive Min© Strike crystallised public sentiment against labor stoppages which had been growing for some time*


houses of Congress immediately enacted some foim of restric­ tion*

Chairman Morton of the Hons© Labor Committee submitted

a proposed bill approved by th© President to the Committee to "strengthen the national Defense Mediation Board*"

Th© bill

would create a new Defense Mediation Board similar to the old on© but with power to enjoin strikes or lockouts for a thirty day period from the time of the certification of the dispute# Xn the meantime the status quo would be frozen#

Other bills

under consideration purporting to restrict labor disputes were th©: Conn&lly, Worley, and Smith bills respectively*The Connally and Worley bills authorized the President to take over and operate coal mines closed by labor stoppages* Representative Smith’s bill Introduced into Congress on November IS, 1941, provided compulsory mediation and a thirty day moratorium after strike notice was given to the Secretary of Labor and management*

Strike ballots were required under

government supervision*

The status quo of th© union shop was

to be frozen*

ticketing denoting violence and Intimidation of

strangers was prohibited*

Jurisdictional strikes, racketeer­

ing, boycotts were to be eliminated* was to be effect©d#

Mediation of disputes

As a penalty for unauthorized strikes,

all privileges of the Wagner Act, the Social Security Act, Morris LaGuardia Act, and federal relief laws would be

lie withheld from unions, and strikers*


With the flood of nm strike limitation hills before Congress, organised labor began to prepare for an all-out opposition to suoh legislation*

President' Green of

th© A* F* L* proposed a new War labor Board {similar to the labor-Board during World War X) in which labor would be represented to deal with disputes without barring strikes. Mr* James Carey* Secretary of the 0* X* 0** urged the estab­ lishment of industry 0000011® that would gire labor a share in the planning and execution of production*


On December 3* 1941# the louse passed the Smith Anti-Strike Bill*

As passed by th© House* the- bill differed

from th© original Smith bill in that it outlawed seme strikes for Sixty days* entirely forbade jurisdictional and sympathetic strikes* established a national Defease Mediation Board with­ out th© power of making Its recommendations effective* for­ bad© employers to grant all union ©hops not already in exiatens© and to require the registration of labor unions*


U b s r gollffiUa wader tfee Impact of War With the Japanese attack on Pearl Harbor on Decem­ ber ?* 1941, followed by th© declaration of war by the United States m Japan on December 8 and th© declarations on Germany and Italy m December 11, labor relations in the United States **j>&bor Halations Reporter. Tol* 9* November 24, 1941, pp* 294-5» and SunplSent* p. 4, 4^ S t e Miftlitefi $pjm&££.t Vo:>- 9* Deoeober 1, 1941, PP* 351-2* M.SIH.9M Reporter. Vol. 9, December 8, 1941, p* MB*

Ill took on mnow perspective*

Almost immediately the war closed

the divisions between labor, management, and all groups in the population*

Anil-strike legislation which only a few days

previous bad been a stark reality began to fade with the call­ ing of an all labor-industry conference by President Boosevelt on Deember 17*

Th© primary purpose of the conference was to

reach a unanimous agreement to prevent all work stoppages due to labor disputes for the duration of the war*

In advance of

the conference, the following achievements were hailed* (I) labor* b pledge to continue work without interruption, {8} the calling off of practically all strikes md the referral of disputes for mediation or arbitration, (3) proposed regional plans of cooperation between management, labor, and th© government,

The first of these was effected on December 9 in the state of Connecticut between the Manufacturers Association, the A* F* L*f C* X# 0*, and the Gover­ nor of the state* (4j Pressure from the Office of Production Management to bring about an agreement between the A* F# L* and the I* I. 0* to live and let live*4*

The labor-industry conference called by the Presi­ dent on December 17* 1941, had as its prototype a similar assembly during World War X, a War Labor Conference summoned by President Wilson in tanuary* 1918*

The objective was th©

same, namely, the formation of a labor policy to prevent work stoppages*

4%feag pp* 393-4*

Presiding over th© 1941 Conference were William

mslilms Beporter.



IB, 1941,

112 H. Davis, Chairman of the Defense Mediation Board,, and Senator Thomas, Chairman of th© Senate Committee on Education and Labor# Mr* Davt© had long held the view that an agreement between labor and capital by pressure of the government was necessary to prevent labor stoppages*

Senator Thomas repre­

sented a key figure In labor legislation*

The principal point

of disagreement in th# conference ■arose over the fuestion of the closed shop* The employer members favored a freezing of the status quo of the union ©hop by statute*

The C* X« 0*

went on record as opposing any agreement maintaining the status tue of th# union shop*

The JU F* L* member© did not specifi­

cally declare themselves on the question stating rather that neither employer nor employe# should take advantage of th® other during th® war*

The final agreement of management

and labor accepted by the President was as follows:


lockout© wm® banned* and. It was suggested that a War labor Board be set up by the President to handle all labor disputes* In respect to the all-union shop issue, m consen­ sus was achieved*

However, it appeared certain that the

issue would be left b© the Jurisdiction of the War Labor Board# The employer group thereupon issued a statement saying that the Board should mot be permittat to accept for arbitration the issue of the closed shop on the ground© that it would tent to Increase labor disputes*

Th® employer group suggested

that the issue be settled in advance by banning new all-union

Tol* 9, December 82, 1941,

US agreements except as arrived at by voluntary negotiation.' Eatablistmaat of the War iUafror Board 0a January 12, 1942, President Koossvelt issued an ©xeeublv© order establi ashing th© lational War Labor Board* Twelve members were anointed to the Board refresenting equally th© public, employees, and employers, together with eight alternative members,,, four delegates from the labor group and four representing capital * Saif of the members of the old Board were appointed to serve m

th® new Board*

William B* Davis, chairman of the old Board,, was appointed to hold th® same position on the new Board* la ©ontreating the powers conferred on the War Labor Board with those of th© national Defense Mediation Board, It Is interesting to note that there are two important powers granted to the War .Labor Board which were not possessed by the national Defense Mediation Board, namely8 power to make final disposition of disputes and to compel arbitration*


executive order creating the Board said: "After It takes jurisdiction, th© Board shall finally determine th© dispute, and for this purpose may us© mediation, voluntary arbitration, or arbi­ tration under rules established by the Board*"®0 Th© expressed powers of compuleory arbitration are likened to those of the War Labor Board during th© last World War*

With th® possession of this power It ©ay make the

4%&bor ReiftMm# .gr faort©r, Tol. 9, December 29, 1941, PP* 461-2. ^fe&SE Relations Reporter. Tol, 9, January 19, 1942, p. 837.

l±‘i difference between success ox* failure of the new labor program. Labor and eapital will know is advance that if they do not reach an agreement in the colleotiv© bargaining process, com­ pulsory arbitration awaits them,

this fact i n itself is apt

to cause the various parties to settle their differences among themselves rather than to risk an arbitrary decision which may prove distasteful to both sides*. fh@ power to make final determination of a dispute differ© from that of th© .Motional .Defense Mediation Board*a authority to use reasonable efforts to make a decision and, upon failure of the parties to comply, 1° publish its finding© and rasonmad&tto&a*

This power is expected to give the new

Board much greater prestige in the sight of all groups. Because of its right of final authority th© new Board has several additional sanctions not possessed by the old Board, in addition to th© sanctions of plant seizure by th® Army and levy which was used to back up several decisions of the old-Board.

In respect to the employers, government orders or

priorities may .be-withheld on refusal to abide by the Board #s decisions*

fm the ©as© of employees, nonconfomance can lead

to an extension of draft age limits and prohibition of further job openings*

A final difference of the new Board over the

old is found in the power of the Board to take jurisdiction of « labor dispute on its own initiative#

However, the usual

procedure will be the same as that followed is the past, namely;

the certification by the Secretary of Labor of those

disputes to the Board which the conciliators of the Department

115 of Labor have boon unable to solve*

Excluded from Its juris­

diction are all disputes for which other avenues of settle­ ment are available*

This would include disputes pertaining

to the violation of the Wagner Act in which recourse is had at in the national Labor delations Board* In the Board'*a initial meeting on January 16* 1942, the procedural pattern to he followed in the settlement of disputes m s formulated*

It m s decided that members of th©

Board are to handle the thorniest oases in which "final deter­ mination" is to b© effected*

Associate members will handle

disputes involving mediation or voluntary arbitration*


©emit to* will be charged with the responsibility of sifting case® and ascertaining that all possible means of settlement have been resorted t© before turning the disputes over to the 52 Board* It is Interesting to not© that th© Board has not chosen any definite principles as criteria for the settlement of conflicts but has decided to let th© circumstances sur­ rounding each case somewhat determine the outcome*


some ini&lng of a general policy in respect to the all-union shop {the most frequent of all disputes} may be gleaned from the recently negotiated settlement ©f five eases which appeared before th® War Labor Board*

The five cases were*

Hobert Jacob Shipyards,

Ine*t BendtxAviation Corporation, Marshall Field and Company,

5^abor Relations Reporter* Vol. 9, January 19, 1942, pp* 536-y* ''and' SupolSaent* p* 4* 88M £ a £ B S a U e a a isaailsE* Vo1- 9» January 26» 1941» pp* 569-70.

Wolverine Tube Company* and the Maytag Company.

In these

Instances the union settled for something less than the closed shop#

In three of th© disputes* some form of maintenance-of

membership clause m,» accepted; la one*. ah agreement that the company would favor th© union, vrns approved; and in the other* a wage increase m s agreeable to the union* because through 5g it* it obtained © long- desired contract#

TM aa&MM of M e S atlo aal M fm se Mediation Board* Although the national- Defense Mediation Board lacked compulsory powers of arbitration and powers of sanction to bach up its deolslofflSj it nevertheless proved effective in preventing labor.stoppages in vital defense industries*


lag th© nine and one^half months of its existence it proved that the voluntary cooling off period can be successful*


statistics in the table below show that during March, 1941t when the Board began to operate, 17*.885 workers were Involved in disputes handled by the Board, and the same number were on strike which registered 0*0 per oent at work#

In November*

the.last full month of th© Board*s existence, 316*830 workers were involved in pending cases, 14,195 were on strike, and 801*955 or 94 per cent remained at work*

During the last two

weeks of December 350*753 workers were Involved in cases under the jurisdiction of the Board, and none were on strike thus indicating a 100 per cent effectiveness in voluntary cooling off*

Ch&lzma William E* Davis of the Board consenting on

Vel* 9, February 9, 1948,


these figures ©aids

WW© have reached a point where management and labor readily agree to m immediate return to work as soon as a strike is certified to the Board# What Is more important, however* is that we are getting cases before a strike, and we are now settling the majority of controversies without th® loss of a single hour of product ion.

Month March April May June July August September October November December®

Workers* Involved

On. Strike1

[email protected]* at Work

17,825 161,654 616*092 505,892 76,016 95,197 141,970 177,425 216,230 350,753

17*825 106,909 15,234 8,000 1,053 11,495 13*567 16,660 14,195 0

0 54*735 601,058 495,895 74,163 81,902 126*403 160*757 301*935 350*755

Percentage* 0 34 98 90 90 D0 90 91 - 94 100

^Average number for the month %irst two weeks In reviewing th© eases which th® 'Board handled, cer­ tain principles appear to have emerged although there has been no official publication of them# la*

The first of these tenet®

agreements arrived at by both parties in a dispute are

the best form of regulation#

Secondly, labor unions which

have the status of bargaining agent for the workers bav© the right to be protected against hostile acts of the employer and the efforts of rival unions to succeed them*

Third, the

granting of the all-union shop to a union bargaining agent should not be given except on condition of agreement of all


p* 4 6 5 #

1SB3£&S£« Toi* 9» Deoeffiber 29* 1941»

118 parties.

Cases involving union security were the most fre*

quest type of dispute handled by the Board and centered around th© closed shop* saintenanoe-of^membership, and shop discipline methods#

On th® majority of instances of union security the

Board was hesitant to depart from the prevailing form of security which- it found to exist among the employees and management*

In these difficult case® which had as their roots

the organisational activities of rival unions, th® Board attempted to overcome the conflict by using clauses and agree** meats between the .parties in order to arrive at a common understanding# In respect to the closed shop issue*,, in only one case did the Board recommend such a course*

It Involved the

Bethlehem Shipbuilding Corporation which- had previously refused to sign, a uniform regional closed shop contract which had been accepted by all employers in the shipbuilding industry on th© Paalfle Coast*

In th© Captive Ooal Mine case* the Board

rejected the demand for an all-union shop*

It refused to

believe that a closed shop was necessary to protect the secur­ ity of the union and that the granting of such by a government agency would be opposed to the right of the worker to join a union.

In several eases involving the demand for the closed

shop# the Board found that it was used merely as a bargaining device for other Issues* The maintenan ©e-of-mamb©rship was used by the Board in a amber of cases in which the all-union shop was demanded# Some of the outstanding cases where it was applied were: Borth American Aviation 0©iapany, Western Cartridge Company,

lib and the .Federal Shipbuilding and Drydoek Company*

In th©

North American Aviation ease it was need to bolster up the morale of th© union after the expert©nee of th© army*© oooupatIon of the plant*

In the Western Cartridge Company Instance

it was granted because of the conduct of management*

In the

Federal Shipbuilding ease it was recommen&ed as © reward to th© union, because It had agreed with th® shipbuilder© to refrain from strikes for two years*

Mr* Charles B* Wysstmski,

Ir*» formerly public member of the Board* has stated that much criticism was levied at the Beard fey this decision because it was felt that th© Board wee effecting a major change in its policy*

It m s believed that preventing a worker from with*

drawing from th® union was damaging to th® ''moral© of th® employ* ©as and that it would stimulate a similar demand fey all, union leaders*

The criticism carried to th© floor of Congress

caused the Board to shift Its reecMendatlcns in respect to union security#

In later instances where the .lo&rd resorted

to Mlnt©maac#*of*m^ife©rshIp clauses* It did m with qualifiestlo&4* In a number of cases in which union security m s involved, the Board recommended various shop rules Intended to stop the activities of rival unions*

In the tfaited Engineer­

ing and Foundry Oompany ease, th® Board, instead of granting an all-union'shop, recommended m agreement prohibitlag manage­ ment*© ©pposition to the eaelsting union*© interest in return for the promts© of th© union not to solicit members on the company* & time and property*

The fourth principle adhered to by the Board was in respect to wag© recommendations#

It endeavored to base its

decisions on th® ©ompetltive factor in the industry and area and on the ability of the employer to pay*

In order to arrive

at a just decision, the Board frequently appointed special investigators to make a thorough study of the situation.


Marlin Rockwell Corporation case Is a typical one Involving, the factor of competitiveness of prevailing wages* .The recom­ mendation of the Board was that an increase in wages he given, because the prevailing- rates la nearby cities were higher than those paid by the company*

Th© General Motors case illustrates

the ability to pay principle*

The union demanded a ten cent an

hour Increase while the company was willing to grant from three to five cents#

The question did not concern the prevailing

m g © level because General Motors was meeting that level and. surpassing it in many instances*

Th® Board recommended th®

Increase to ten cents solely on th© grounds that company profits Justified it* The fifth© followed by th© Board was in regard to th® decisions of th© National labor Relations Board* On all questions pertaining to th© bargaining unit and unfair labor practices th© Board recommended that the parties con­ cerned should follow the decisions of th© National Labor Rela­ tione Board* The Board refused to accept cases involving jurisdic­ tional disputes and to enforce eontracts which had been breached.

M & t e & Reporter, Tol. 9, January 19, 1942, pp* SS8-4S*

121 mk ii&SX MMMMM

m m Mm

la addition to the Federal Mediation Servim$ several states and munlcipaliti®© have'established mediation machinery wiiie^ is rendering valuable service la/handling labor disputes and in reducing labor stoppages#

Most of the states nave legis­

lation dealing with mediation and eonclilation#

Sewever, in

the majority of cases0 their work is not very effective, because they do not have a fall time experienced staff, media­ tion being Just an extra duty of the State Secretary of labor* Iff©etlv© mediation machinery is found in only ten states# The names of these states-and the type of machinery are as follow*! fennsylv&nia Massachusetts Mew York Alabama Indiana

Illinois Wisconsin’ Minnesota Michigan tjrtah

state mediation hoard " * * • » « on© or two full time mediator© • © « • » »

» *

» *



labor relations boards acting in the capacity of mediation and enforcement# Sam©

Mm York, Massachusetts, and Pennsylvania appear to he the most outstanding#®®' Boring the year 1940 the Hew York State Media­ tion Board mediated 370 disputes involving ©1,GS6 employees and received 834 cases for arbitration*®*

Mr# Arthur, S* Meyer#

chairman of the Mm York Board of Mediation, stated that in 56 Labor and Hatlonal Defense* The Twentieth Century fund, M m York# 1941, gg* 87-S* ^Fourth Annual Report* Hew York JBtat© Labor Department, Board of1SiSdfa'tlon, p 7 "10 *w

1940 defease ©trikes In Haw Tork State were almost negligible.*


Any dispute arising within the state, either intrastate or interstate, may be taken under the jurisdiction of the State Boards*

Although the federal Conciliation Service has juris­

diction over state disputes m well* an arrangement is made between the state and federal »«rvlc© whereby the State Board ■generally handle# the © a @ e , O f the municipaliti®#, Mew&rk, lew Jersey, and Toledo.* Ohio* have demonstrated successful mediation agencies*


Labor Gein#

te w

i l£

ssl Baaaaaa Sa-SsMM

At the beginning of the defense program tie naming of Sidney Hillman m co-director with William S* K&udeen in the Office of Production Management inferred that the Boosevelt administration was determined that labor should share equally with management in defense planning*

This policy of © Y* A# Training

national Youth

Administration offers vocational, training to young people employed


II. Y* A* work projects*

On July, 1941, the

K* Y* A* Inaugurated a special program to enable out-ofschool youth to acquire training which would aid them is securing employment in defense industries*

An appropriation

of $60,000,000 was mad® under the national Youth Administra­ tion Appropriation Act of 1942 to promote this program* *Tbe direct objective of this legislation is the preparation of 868,900 young persons for employment in private defense jobs in twelve months ending June S0, 1942.*®$ .Mechanical workshops operated similarly to those in private industry have been established*

Skills that are

learned include aviation mechanics, sheet metal work, ‘eld­ ing, machine work, pattern making, electrical, work, etc*


majority of the workshops are local, permitting the youths to commute back and forth from their homes to the shop*


young people receive wage® between #82 and |25 a month*


^ U * S* Bureau of Labor Statistics, Monthly Labor Review, October, 1941, Vol. §3, *M. 1. A. Work Prograa for Defense," p. 888.

a part of their training the enrollees aid in the production of useful objects such as army cots, garbage cans, duffle bags# and the like#

The requirement for enrollment in the

$# Y# A * program consists of being a citizen of th© United States between the ages of seventeen and twenty-four, who is out of school and In need of employment* SooaleldzM Training fov Universities and Colleges. Because of the shortage of professional engineering skill in defease industries* Congress appropriated money to defray the costa of [email protected] short courses offered by the cooperation of more than 155 engineering colleges and universities* sis is placed


abort int.©naive training on specialized

phases of the profession*

The courses are tree of charge to

either employed or unemployed persons provided they can qualify tmder th© following rules:

1} college training in r"iglneerlng*

S) training in higher mathematics and allied subjects* 5) experienee that Indicates that they could benefit from, the courses#

With the beginning of the fiscal year 1941-42 the

program has been expanded to include training in -chemistry, CO physics* and production supervision#

2 M &* £, £. a a t i&§ f. £.


aaferi&r. l a s m *

The Civilian Conservation Corps has* as part of its program* vocational training*

Seme of the principal fields of

^Defgnae dob Training Federal Security Agency, U* S* Office of m rnS&WSxim ' 8 March of MuoatLon# Federal Security Agency, U* S* Office of Muoation, September, 1940* So* 21* p* 91 Social. Security Bulletin* op,* ^t#» August, 1941* P« 12#

14S vocational preparation in the C* G* G* program ares


cial subjects, eleotrteeX courses, building trade® and eon* struction®, national resources, mechanics#

A large part of

t W educational activity is devoted to ^training m the job” in order to provide the ewps with a self sufficient personnel*. Although It is claimed that I M s vocational training qualifies enroll©©® for i®A standard Jobs, it 1® believed by the fwen* tietb Century Fund that most of %be acquired skills have value obi©fly from a military standpoint, i«@«y they are skills that can be used most readily’with an army on the fields


this point of view,, th© C* C* C» training is of little value for industrial production*86 fbe Work Project® Administration'®® a part of its program offer® im~a©rvice training for employees engaged la the 60 many projects which it sponsor®* ' The training includes teaching method© and technique© of Job performance*


the program does not develop skilled workmen, it doe® give the employee some basic knowledge in handling tool®, and the like* which when supplemented by training in the vocational trad© schools* adapts the worker more quickly to industrial production*

^School Life, Federal Security Agency, 0* S* Office of Education, WasSEgton, 0* £•* January, 1941, wfhe Federal Security &g©ney~~Seho©l© under the Federal Govemmsnt,1* by Walton 6* $ohn9pp* U6-7. "ikM-r

1941, p. 179,

iwithin Industry. This type of education deals with industry’s own training responsibilities.


program involves the upgrading of all classes of employees through th© method of planned Job progression. Job rotation, intensive training and instruction, dilution of skilled occupations, and apprenticeship training*

Upgrading refers

to the movement of the employee within the organisation for the purpose of developing and using his abilities to the optimum caps city.

Fob progression implies the promotion from

within and the transfer of the employee to the job he is best suited for*

Fob rotation is the practice of trading Jobs with­

in a plant and aims at the development of a flexible and versa­ tile working force*

This type of training consists of three

important phases i (1) development of production specialists through intensive instruction both on and off the job (2} development of all-round ©killed mechanics through apprenticeship training {Si development of supervisors.^ Dilution of labor mean© the breaking down of production jobs into simpler component parts which can be performed by a worker in a short period of training*

This method run® the danger

of encountering the antagonism of labor unions.

As a general

rule, the union© will consent to the use of the method If they can be convinced of an actual shortage of skilled workmen.

Trajjxisg, Within Industry. Office of Production Manage­ ment, M o S r SIvimeE,WaaSlnitoa, D. C,t. Bulletin, Ho. 1, August 15, 1941, P* s.

146 In the metal trades, for example* the unions have not opposed the dilution program, hut they hare demanded that semi-skilled workers he paid the rate of the Journeyman*

Xu the engineer­

ing trades, the unions demanded not only that the new workers he paid at a lower rate hut that the practice of dilution §1 should he ooterminous only with the emergency* The training within industry is being promoted by the Defense Commissi©** through the training Within Industry Division" of the Office of Production Management*

It Is

headed by Ohanning Dooley of So cony Vacuum Company mad I# W, Diets of Western H o c trie Company*

Both these men assisted

in mobilising the labor skills during the last World War* The Division acts as a service agency, formulating and study­ ing various training methods which may serve as guides for individual companies in setting up their training plaits and noting a# a clearing house for the experience® of other plants* In setting up the program, the country was divided into twentytwo districts*

In addition to a district representative, each

district ha® two advisers from employer® and two from labor* There are also ten or more specialists In personnel problems 98 to assist In promoting the program* The training within industry had Its Impetus chiefly in answer to the need for skilled workers la the aircraft and

Bulletin. 0. S. Departausnt of Labor, Washi t _ _ „ 1041, "Training Workers for National Defense" by William f, Patterson, pp* 1-3* 9' 8l*bag gn«

Fuaa, PP* 43-5* w


National BefenaA. og. 2i&*, Twentieth Century

machine tool industries*

So successful M ? e the results teen

that other Industries requiring a rather high type of shilled personnel have begun to adopt a similar plan under the guidance

of the government program,# The most common training method is that of a separate shop or school, in connection with the plant#

Here the trainees are permitted to work m the same

type of machines and do the same hind of work that is per­ formed on the assembly line#

they are under the direction

and instruction of skilled workmen#

On completion of the

course* generally from eight to nine weeks* the trainees are given, jobs on regular production work*

Sometimes the trainees

are obtained from the vocational schools and ere given the finishing course within the company1a wm school*

In some

eases* the company will loan mam of its skillet workmen and equipment to the community vocational school* and the training is obtained there instead of within the company's plant*


practically all cases* close cooperation is maintained between the company and the community vocational school*

By lune IB*

1941* 89$ companies installed some form of training, within . their industry program* programs include?

Borne examples of successful, training

The Connecticut Plan# The Sperry Oyrosoope

Company# and the Bastem Shipbuilding Company* The Connecticut plan represents a cooperative effort of employer® and the city to give selected unemployed persons training that would e%uip them for skilled jobs in the commun­ ity Industries*

In the city of Bridgeport# Connecticut# the

operation of the program includes:

(!) infiltration of

learners# { 2) general apprenti eeship training# (3) special training for special Jobs# (4) intensive training for emergency work*

lac& program is designed to use the existing facilities

in the city*

The infiltration of learners involves a program

'in which us© is mad© by the local Industries of the services of the state employment agency and the Adult Outdance Service*. These services are designed to .select the best qualified trainees for particular Job openings#

The purpose of the

general apprenticeship training is to continue and develop the apprentice courses of the trade schools*

Specific train*

lag for particular Jobs Includes specialised courses taught under the direction of the trade schools*

Intensive training

for ■otaergaacy-work involves a series of intensive emergency courses undertaken in cooperation between the local manufac­ turers and the trade schools*

The Vought-Bikorsky division

of United Aircraft Corporation is on® of' the many companies in Bridgeport which is finding' the Connecticut plan of great assistance*

When the tremendous growth In defense orders

caused a serious shortage in its labor supply# the company turned to the Bridgeport training program for workers who had some knowledge in sheet metal working and aircraft riveting*

The training course quickly supplied the company with its needed personnel#^

National Industrial Conference Board# Mm York City# October# 1941# "Studio* In Personnel Policy# Bo* SC# ^uick Training Procedures#" pp* 13-El# by permission*

148 The Sperry Gyroscope Company, Inc*, manufacturer of instruments used in target detection, communication, naviga­ tion, and fire control, requires workmanship of the highest quality due to the delicacy of the instruments*

Unable to

obtain a sufficient number of.skilled workmen to perform the Jobs essentia! to this business, the company turned to a train­ ing program of its r a la an attempt'to produce trained work­ men as rapidly as possible to perform a amber of highly skilled assembly operations*

The trainees are assigned first to a sepa­

rate bench in the assembly department and placed under the su­ pervision of a skilled instrument assembler*

After some

instruction, the trainee Is put in production work where his work is rechecked carefully*

As a trainee becomes proficient

at the, simpler operation®, he is advanced to mors ©copies Jobs* The B&stera Shipbuilding Company, faced with a prob­ lem of shortage of skilled labor for certain types of work as that of ahlpfitter, began a training course in 1033*

The course,

conducted after work hours, consists of classes In blueprint reading, mechanical drawing, shop mathematics, and is open to The classes are supplemented by actual prae95 tic© in fitting the sections of a hull from blueprints* company employees*

The apprenticeship training program is another method by which industry is endeavoring to meet the skilled labor prob­ lem*. Because the apprenticeship period usually consumes from two to five years, the program is handicapped in helping in the

94Xbid«| pp* 21—B* Ibid** pp* S3—4*

present exigency*

Then too, labor anions have curtail©4 the

number of apprentices allowed in certain industries*


according to a vmm% labor study made by the Twentieth Century Fund* a considerable expansion could occur without any union opposition an the majority of companies have fewer apprentices than allowed by union regulations*

Under most apprenticeship

plans, the trainee® usually engage In production work at the beginning of their period of apprenticeship so that their work is to a considerable extent productive* The program is under the direction of the Federal Com­ mittee on Apprenticeship as part of the Division of labor Stan­ dards in the Department of Labor and functions .closely with the draining Within. Industry Division* tional agency#

It Is principally a promo­

At the beginning of 1940 it had established

about 500 Joint Apprenticeship Committees throughout the United States*. Slimy of the aircraft, machine tool, plumbing, sheet metal, electrical, and building and construction apprenticeship programs have,already been established and expanded in many of the leading manufacturing companies throughout the country* The number of apprenticeship program® Increased from 500 in May, 1940, to 1,000 in August, 1041*®* In conclusion, from the beginning of the defense train­ ing program In July, 1940, to January 1, 1948, 8,477,400 persons £* Information Service* 0. S# Government Manual, Washington, D* C*, larch# 194l7p* 533; 0$* cit** The Twentieth Century fmd,.pp» 39*40} Apprentice Fro&rag® and Standards* tJ* S» Department of Labor, 5 m « ( i o? Labor "Stanaards, Wa’ shington, D* 0«, 1940-1941* 97& S i S i gSSJSte Bulletin. August, 1941, QD* Pit** p» 13*

received instruction for war work in the vocational schools, public school work shops* and through the colleges and univer­ sities*

The number of enrolls©® in the supplementary course®

during the eighteen month period was 835,400*

During the

seventeen months from July 1* 1940 to December 1* 1941, the number of trainee® in the pre-employment refresher courses was 712,000*

The number of enrollees in the universities and col­

leges for defense courses in engineering* chemistry, physics, for the year 1941, totaled 220,000*

In the M« V# A* training

program 334,000 completed training in defease courses from July 1, 1940 to January 1, 1948*

During 1941 the out-of­

school rural and non-rural youth program has had an enrollment of 349*700 youths*

As to the success of placement* data are

available only for the pre-employment refresher courses*


July, 1940 to June, 19U* the public employment office® had been responsible for placing nearly 44*000 workers*

By June

30* 1941* over 145*000 trainees had found employment in industry* In addition to the 8*477*500 markers who have been trained through the vocational training program* more than 8*000*000 workers In industry have received within plant train­ ing from program® installed by their employers in cooperation with the Training Within Industry Branch of the O* P* M* Labor Division*

According to a report issued by Oh&iming R# Dooley

on October 3* 1941* the Training Within Industry Branch ha® given assistance to nearly 1*800 defease employers during the 011 first year of its operation* 9% f s* President* Official Bulletin of the Agencies in the Office for Skaerge&oy Jlauagemeni* Washington* D* C** Victory. January 6* 1948* pp« 86-7 and Defense. October 7, 1941, p* 9; Social Security Bulletin. August, 1941, op, oit«« p p « 15-6,

151 C ontract P ls tr ltu tlo a An important method of utilizing all the available skilled labor reservoir of t&® nation as well as iho machinery and equipment is the distribution of defense contracts to tie ©mall industrial plants throughout the United States*

In the

early part of the defense program the distribution of contracts was in the nature of sub-contracting or farming out some of the work of the large manufacturers to small firms in outlying communities*

An outstanding example of a sub-eontra©t ing plan

was one which has hern In operation at the Kearney and Tracker Corporation of Milwaukee# Wisconsin# manufacturer of milling machines*

The company established an outside work department

whose duty it was to carry on the work with Its many sub­ contractors*

The Kearney-plan involved breaking d o m the work

into .various pieces and then allotting each piece to a sub­ contractor who was best ©quipped to handle the job#

The sub­

contractor must guarantee that he will complete the job in the required time and according to standards laid down by Kearney and Tracker Corporation*

la turn* the corporation allowed the

sub-con tractor a fair profit*

So successful was the Kearney

and Tracker plan that the War Department selected It -as a model, and some of the officials of the company v/©re called to Washing­ ton to assist the War Department in speeding up the farming out program*



^dF&Htee A* Rowan, "^listing Small Dlants for 0* S. Defense" 14?, January 30, 1941, pp. 29-30.

15& As the defense progr&m progressed and with it the extension of priorities in certain basic rr.w materials, hundreds of small manufacturers began to feel the pinch.of dwindling supplies and were forced to curtail operations*


of them had received any defense contracts*

"Priority unemployment* b m m ® a serious problem la may ao»mitle$*

To meet the problem of saving these

small industries and to utilise the maximum productive power

of the nation*s resouroe®* a Division of Contract Distribute tion was established within the Office of Production Manage**

mm% with Mr# Floyd Odium as director# The Divisions w***pro "-ides a clearing house of Information** ©lose to home— for prospective contractors and sub­ contractors in the field, for* A m y and Ufavy pro ourcmmt officers* and for firm© that m w hold defense contracts. and need sub-contractor© to help them speed up deliveries* The objectives of the are; (1) the estab­ lishment of office® throughout the country where a contractor or prospective contractor could receive Information! {£) advis­ ing manufacturer® a® to securing contract® which they are qualified to handle! {5} assistlag large contractor® in sub­ contracting their worhj (4) helping small firm© to pool their equipment so that they may jointly be la a better position to handle defense order®! {5} helping manufacturers obtain financial assistance*

SgSSMS. C ontract S e rv ic e . U. S. P resid en t Saergenoy Management* Production^ oivisfSir* Office of Production Manage­ ment, 1941,. p* B#

15S there 1 b a rsgiou&l office established. at each of the twelve federal Heserve Banks and their twenty~four branches* Bach of the offices has in its possession the Army and Bavy buying list together with blueprints of bh# items and in some oases samples* In order to make certain that no qualified firm was neglected in receiving defense orders* special trains were chartered for the purpose of a tour of the nation on November 10# 1941* with .exhibits to help email manufacturers to decide whether they could do defence work*3-0^

On January it 194£f

an a m o m ® ament- was mad® by Mr. Odium whereby arrangement© were being aa4® to establish production pool® in a given locality extending from Chicago to the lent Coast*

these pools will

consist of- mall manufacturers who acting individually could accompliaii but little in handling defense orders but when acting collectively can handle a considerable amount of business*2^ attaatttoft ft£ 1M&1&* IBMm&* from the beginning of the defense program it was recognised that discrimination against minority groups would impair the productive effort of the nation*

As a consequence

of this belief* the National Defense Advisory Commission mad® provision for the training of Uepre workers so they could


Defense. q%» olt»» Movember IB, 1941* p* 32.

10Sn s t e » op* elt*. January 6, 1942, p* 17*

154 qualify for defense jobs#

In tbs estabilsbment of vocational

training schools in tbs simper of 1940# the request of tbs C o m ! salon was fallowed that* w***in tbs ©xpenditur© of federal funds .for vocational training for defense# tber© should be ao^diso|^imatioa on account of race# creed# or later on when additional funds were appropriated for this pur* pose# a similar statement was provided in the training legis­ lation*

Is respect to employment policy* the Gkms&issloner of

Mutation also stated that "workers should not be discriminated against because of age# sex# race*, or color**104 M serimination, however* soon appeared in the refusal of some employer® to hire certain persons because they belonged to a particular .race* nationality* or religion* Reports from state employment offices showed that in respect to citizenship and nationality In every state many employers refused to employ aliens even going beyond the legal require­ ments of the federal government#

This discrimination applies

not only to defense work but also to non-defense work*


Sew Tork aircraft company refused to accept naturalized Germans and Italians*

la other cases* naturalized citizens of any race

are acceptable provided they have citizenship papers dated prior to 199ft*

toother company refused to accept any but

toeri can-born citizens in its employ*

On© employment office

i ® % # g0department of labor, 0* S * Bureau of Labor Statistical Labor Review* 2un©t 1941# Tol# 52* "Scgro Pai^tieip&tion'in'Defense W S 7 r 9 * 104ibia.* pm 1389#

reported? "If employer® would relax on racial# nationality# and religious speciflentions * an additional supply of skilled labor would immediately become available* Our experience shows that in many eases these specifi­ cations are not set up by the management but are the result of individual prejudices ©a the part of foremen and minor department heads Racial discrimination against Negroes appeared to be quit© general in the skilled and- seed-skilled occupations. In a letter sent by Sidney Hillman to all holders of defense contracts# a plea was mad© to us© all available Negro labor reserves before recruiting additional labor from outside the 10© local areas. Some relaxation of racial requirements did ensue#

In many of the army eamp constructions Negro skilled

and unskilled laborers were given employment*

For example#

at Fort Jackson* South Carolina# more than six hundred Negro carpenters were given Jobs*

The iron and steal industry

reported that many skilled and unskilled Negro workers were being placed on the payroll* On April 11# 1941* Mr* Hillman established the Negro Haployment and Training Branch and the Minority Group Branch In the Labor Division of the Office of Production Management. Its aim was to promote the training and employment of Negroes and other minorities In the defense program#

The Labor Divi­

sion of the National Advisory Commission succeeded in securing IGS Itolovment Security Review. Washington# B* C*# April* 1941, "Bmplo^^ Defense Workers," pp. 17-19. *Q6P©f©nae. U. S. President* Official Bulletin of Office of Imergency Management# Washington* B* C.t April 15* 1941# p* 5#

156 an agreement from the unions whereby they would not discrimi­ nate against colored worker®*

As a result, many Hegroes were

admitted to membership in local unions*

The Labor Division

also endeavored to open up new fields *£tich had been closed 107 to Megroes* Upon repeated complaints of discrimination against minority worker® in employment in defense industries, President Roosevelt recognised that steps must be taken to deal effectively with the problem*

In S&eeutiv© Order 88&3

of dune 85, 1941, President Boeeerelt established a Committee on Fair laployment Practices in the Office of Production Management in order to prevent discrimination in employment 108 and training in defense work* On this occasion the Presi­ dent statedi *It is the policy of the United States to encourage full participation in the national defense program by all citizens of the United States regard*™ less of race, creed, color* or national origin.*••* The President further remarked; *It is the duty of employers and of labor organi­ sations in the furtherance of said policy and of this order, to provide for the full and equitable partici­ pation of all workers is defense industries, without discrimination because of race, creed, color, or national origin#*11** The President directed;

(l) that all government

agencies concerned with vocational training should take 107 Labor Information Bulletin* Bureau of Labor Statistics, 1941, w8©gro Labor in Mational Defense, * by Robert C* Weaver, pp* 10-11* i06&. S« President., Office of Baergeney Management, Production Management Office, Labor Division, Washington, 0* 0«, ^Minorities in Defense, * pp. 15-18# 109Ibid., p. 16. U QIbld.. p. 16.

special measures to prevent discrimination* {&} that all government contracting agencies should include a nondlscrisainatAon provision in defense contracts; (3} that a Committee on fair Ihploymeat Practices he created in the Office of Production Management to investigate complaints of discrimination and seek redress of grievances from employment on defense work*^3, fhe Presidentfs program brought about a relaxation In employer discrimination almost immediately*

A number of

aircraft firms reported that they were beginning to train and employ Kegro workers*

.Several' shipbuilders reported &

substantial increase of Hegroes on their staffs as well as in the powder plants and arsenals of the nation*

Much antag­

onism still continues not only against negroes but toward noa*[email protected]*

this was reflected in a statement by Attorney

General franols Biddle of the .Department of Justice in which ho said that many complaints had been received about employers discharging workers because of a suspicion that they might be disloyal aliens or because they had foreign sounding names* President Hoosevelt commenting on this statement said: #Sueh a policy is as stupid m it is unjust*, and m both counts it plays into the hands of the enemies of American democracy* By discharging loyal* efficient workers simply because they were bora abroad or because they have fforeign-soundingf names or by refusing to employ such men and women* employers are engendering the very distrust and disunity on which our enemies ar© counting to defeat T‘ ^

1 ^ 7 * "W* id-7*

^ %r©ss Bel ease, U# S* President* Office of Production MaaagmeFt* January’11!'*. 194&*

Mention has already been mad© of th® seriousness of the memployment problem due to the application of priorities#

Government estimates place priority unemployment

to nearly 2,000,000 by tbe close of I941*m

A good example

of this type of unemployment is tbs city of Manitowoc* Wisconsin* and nearby towns which were dependent upon aluminum for the manufacture of aluminuawar©*

Sever® m employment en­

sued from the failure to secure aluminum for domestic purposes* % © a appeal to the 0* P* M* a contract was later placed through the Contract Distribution Division for the manufacturing of needed war material® made from aluminum consisting of canteens and the like ae a part of the soldierfs field equipment Due to the embargo on silk iayports from Japan and the prohibition of domestic us© of raw silk, much dislocation and unemployment was caused In the nation's silk hosiery mills* In the swear of 1940 the unions endeavored to meet this prob­ lem by th® registering of the unemployed workers and offering training courses to enable them to participate in defense work* la August* 1941, 0# P. M, regional conferences were held repre­ senting government* labor* and management in the silk industry

^ ^Mgfteaa federation!at* October* 1941* “Priorities and Labor/* pp* 5-7 sod 32* 114 Dabor Relations Reporter* Tol* 9* September 29* 1941, p* 107? imeri cSff st» 0ctober* 1941, “Priorities and labor*“ pp* o-7©nd o£#

which resulted in a program of retraining displaced workers in 115 similar types of work* With the extension of priorities to the automobile industry coupled with the retooling of the plants subsequent to their production of war equipment* severe unemployment followed#

The city of Buffalo met this problem by what has

become known as.the “Buffalo Plan#*

Machinery was set up

representing gevewwMmfc* labor* «&&. management for the reemploy­ ment and training of workers who had been displaced in the lid automobile plants* Bo successful was this plan that Mr* Hillman of the §# P* M# incorporated the Buffalo Plan into a program -designed to offset the effects of the curtailment of automobiles for civilian us© for the entire auto industry* The program worked out and agreed upon by the 0# P* M#t employers* .and unions aims at stabilising the labor supply in each ommmiby that is affected#

The plan provides:

(1) preserving seniority status on the former jobs of workers who are laid o ff and find defense work (8) pemitting employers to recall former employees upon resumption of work (5) roMring ofworkers in defense plants who have been beOcusc of priorities unemployment (4) in employing mew workers* giving preference to employees who have seniority in local industries before outsiders earn be hired

Information Bulletin* tl* S * Department of Labor, Bureau of bteor' ltltistiea, Washington, D* C*. November, 1941, “Impact of Silk Shortage upon Hosiery Workers* by Alfred Hoffman, pp» 1-4* ll6Ibi&,# September 1941, “Labor Problems Pesultin Defense Priorities* by Bobert £• B* Brooks, pp* 1-4.


(5) transferring skilled or set&X**skilled workers who practice a trade differing from a defense trade to defease jobs which cam use their skiIXs*^X^

VI VtoXm Buss*

M & t t * £§1 fMmeml

There bare b o m much controversy m& publicity in regard to the high initiation fees and dues of certain unions, and of late# the eouceutratiou of wealth In the band© of the union orgnidnntAone*

Xu normal, times suck fuestioms would bo

given little eegtcmt* but due to the defense program consider-* able opposition has developed against them*

It is believed

that work permits and high union dues are an obstacle in using all the mm power of the nation,

Opposition M e developed

against the growing assets of unions because the concentration of wealth may prove to be dangerous to the welfare of the society* On March £&, 1941, Senator Morris wrote Mr* Green and Mr* Murray, presidents ©f the A* ?# X*# and 0* I* 0* respectively* ■asiclmg the unions to curb their defense fees* The senator stated that he was continually getting letters

tvm.workingman that desired to work on defense projects* but that In order to get a job, they must join a union and pay fees as high as $&$$*

-Morris warned that such practices

will lead to general public condemnation of labor unions if mot soon corrected* and'that he would mot want Congress to

Washington* B* C,, Yol. 9 Septc

pass legislation harming labor’s cause*


following the letter of Senator Norris* am editorial e n title d "E xto rtio n a te Onion fees" appeared 1m

W -



New fork

Times of March 24* 1941, criticising severely this type of

W MSMPMlWlfe*"

unim practice as racketeering*

v •*

The editorial writer stated

that at the fort Meade camp construction project the carpenters were required to pay #$7*S0 in addition to union dues before they were permitted to work, and unskilled laborers were charged 125*

It m s estimated that the unions extracted a

total of #400,000 from the project*

The writer expressed

the view that these practices, are anti*social and are used to entrench the protected privilege of a certain group*. As a consequence.* on the one hand* the defense program is used for profiteering while* on the other hand*, the outside laborer is exploited and discriminated, a g a in s t*^ *' On March 24* 1941.*, Mr* Green* Free! dent of the American federation of labor* replied to Mr* Norris defend* lag the A*. F* 1*. unions on the ©cor© of charging excessive, dues and initiation foes on defense work#

Mr* Green pointed

that it was a customary practice for union members to pay In itia tio n fees and dues and th a t there has been no- increase in these charges because of the defense program#

union fees

and dues redound to the benefit of the members because they

The lew York ****** March S3* 1941* "Norris Asks lurfe m f m m FaSSJr pp* I and 33* The New York Times. March 24* 1.941* "Irtortionate ►ee** p* H T

are utilized in raising the status of the job through higher wages and better working conditions*

Union members of long

standing have consistently paid their regular initiation fee and dues#

These old union members would stand to suffer if

new union men were not required to contribute to those privi~ 1fitO leges which- older members had helped to establish* ; Mr* Murray, President of the 0* I* 0#, in his reply to Mr* Norris stated that "the exorbitant Initiation fee racket must be laid at the doors of the A* F* L**1^ Mr* Daniel Tobin, President of the International Brotherhood of Teamsters and Chauffeurs, affiliate of A. F* I*#i in a letter to Senator Norris on March 29* 1941, states that the A* P* 1* did mot have any power or authority to interfere with the Teamsters Union or any international union* He further asserted that his union had urged the locals to keep their initiation fees down between #33 and |S0 .in order to prevent harmful legislation*

Mr* Tobin admitted that in

some instances the initiation fee is too high, but, on the whole* he defended the fees and dues because of th© better employment conditions and added services which followed lag unionization of the teamsters*- '

March 35, 1941, "A* P* X»* Unions* Fees,Upheld," by.'&**«&, p» 19* m

I M d «» larch 35* 1941, Murray Hits A* F* L* Fees,"

P# 16* March SO, 1941, "Tobin Defends Fees Charged by Unions," p* 'Si*

1GS Another point of view la the Justification of the initiation fee and dues is that payment of such charges by a worlciagman is no different from the initial fee* required in the legal and other highly trained professions.3-5^ Union dues of the C* I, o* are as a rule eensiderably lower than those of the A* F* 1# utable to tm ©auses*

This fact is largely attrib­

As a ©raft union* the A* ?* I. usually

given many services such


insurance* sick benefits* unemploy­

ment benefits* old age and teeth payments*: services require higher dues*

All of these

The C* X* 0, unions# as a rule*

do not have so many benefits with a ©©usefuaaee of lower dues* Secondly* the matters of the A* F* JU* ©raft unions are generally more highly ©killed and therefor® better paid enabling them to pay higher dues than less well paid worker** the following are some representative examples of Ot I* 0* and A* F. X># dues and initiation feess

The 0* X, 0*

Steel Workers Organising Committee ©barges a $8 initiation fee and #1 monthly dues* have an initiation


The 0*. X* 0. Waited Automobile Workers

of f& and monthly due® of fl*

In the

C* X* -0* Textile Workers Union* the locals set their own ©barges# but there is a #1 initiation fee and dues of $1 for the International Union*

For the Q* X« 0* United Office and

Professional Workers there Is a limit of #£ on the initiation fee ant ou&tomary dues of fS*

In the 0* X* 0* Amalgamated

X£& C g a g r w l o y l Digest, ¥©X. SO* April* 1941* "Should Congress lass I S u 5 » T o 8 o a t r o i labor Bagaged in National Befens©** by X* A, Budl e£ al. pp. 185-8*

Clothing Workers there is a siidine seal© for dues ranging from SS cents to 50 cents per week depending on the earninga of the members*

the initiation charge ean not exceed fXQ*

The A. F* L« International Brotherhood of Electrical Workers, M m York local, charges #100 initiation fee and #10 quarterly

dues*. In the A* F« 1*. International Garment Workers, the locals may determine-their own initiation feel ■generally they range from $1 for- the unskilled workers to 1100 for the highly skilled# The A* F* h* longshoremen1© Association charge® #85 Initiation foe and #5 quarterly due®*^2* In February* 1041, the A* F* 2»« prompted by the criticism of high Initiation fee®- began to give attention to the removal of the adverse anti-labor sentiment#



A* F# &* executive council meeting at Miami* Florida.,, the council want on record In its desire to set maximum Initia­ tion fees for all workers applying for defense-jobs*


Am F* 1* Building Trades department was the,first international

union that reported It had set maximum fees*

The International

Building Trades, asserting its authority over the local unions, set $S5 -fee for unskilled laborers and #50 for ©killed eari£5


Again in April* 1941* the A# ?# 1# Council of

Building and Construction Trades Department® pledged that; (I) it would mot collect any permit or privilege money, (8) that it would mot collect Initiation fees or other charges

^ %ualne»e Week*, August 17, 1940, "How Much to b© a tfmlon Man?* pp* 54-6* IS* SMatey .trtaM*, totwr Matter, Washlagton, D. C., February 15 and 88, 1941, p. 1#

from non-union workers exoept when they join the union* and

m m them,

charges would be kept low*



The latest dispute occurred with the release of the Vinson Committee report (the House Ji&v&l Affairs Com­ mittee) showing the results of an investigation into the finances of labor organisations and reeonme&ding certain legislation to- be applied to them*

The report revealed that

117 labor organisations with a total membership of 6,0-65,632 Increased their assets from #71,915,66$ on October 1, i960,

to #62,594,9*9 on March 31, 1941, representing an increase of #10,679,894*

Several of the affiliates of the A* ?* L* and

C* 1# 0, had experienced over 500 per cent increase In assets* *Tbe tremendous financial gains made by labor organisations during the defense effort and the vast amount of funds and assets in their treasuries ' present m aftoundlng picture of the concentration of wealth* **8f

The committee felt that such large funds la the hands of the unions have caused many of them to strike and delay the. defease program-# ft recommended legislation requiring all labor unions to register with the government and at certain times to furnish information concerning their financial affairs, members,:- and officers#

On f m w u p y 88, 1948,- Representative

Vinson Introduced a bill tH* 1* 6444) Into Congress embody­ ing these recommendation©♦

February 15, 1941, p. 1; Ibid.. April 5, 1941, p. 8. 12? te&SZ Halations Sgportigr. Vol. 9, January 26, 1942, pp. 574-6.

JLGb Mr* William Oreea, President of the A* F* X,* in reply to the tineon report stated, that it was an wexpression of anti-labor bias* and misrepresented the facts for the following reasons? 1)omission of the unions f liability to members for insurance benefits amounting to a considerable figure; z) funds earmarked for unemployment benefit® hare accrued due to the improved employment situation,. 3) because of the paucity of strike# by A* F* 1. unionst only a small amount has been needed-to pay out strike benefits j 4) the rapid expansion of union membership*


In conclusion, the government ha® avoided many of the errors of the last World War by the creation of a coor­ dinated labor program from the very, beginning*

The labor

legislation developed in the interim between the two major conflicts did much to a lle v ia te '.in d u s tria l unrest*


bility for the prevention of labor stoppages was placed principally upon the Federal Conciliation S ervice which has been successful in mediating controversies before overt action ensued* nevertheless, it was soon deemed necessary to create a National Bcfessc Mediation Board to handle recalcitrant disputes in defeats industries* The policy pursued by the Board was persuasion backed by an informed public opinion*

In only six instances

were the decisions of the Board disregarded* In five of them the government applied its emergency powers of commandeering

1£% b 2 £ Bel&tlong S w o rH er, V o l. 9 , February 2 , 1942, p* 609*

and the like; in the sixth case, the Captive Coal Hines dis­ pute, the President submitted the case to arbitration.


the withdrawal of the 0* X# 0# member® from the Board because of disagreement over the closed shop issue* it became impera­ tive to formulate a ® m labor policy.

Strike legislation

appeared to be a certainty until the actual involvement of tb© Baited State® in war with Japan, Germany* and Italy fore­ stalled it through the new unity between capital and labor. A new War labor Board was created differing from the old on© primarily la.the possession of power of final disposition of disputes and the use of compulsory arbitration#

Although it

was necessary to replace the National Defense Mediation Board, it did make a contribution at the point of proving that a. voluntary cooling off process can be successful* In respect to the problem of labor supply, the government has attacked this- issue by a comprehensive pro­ gram Involving principally the Baited States Isployment Ser­ vice and the vooational training of worker®*

Success Is

demonstrated by the fact that over two million worker© have been prepared for needed defense jobs# Although great progress has bean mad© la the solu­ tion of the -country*© labor problems, much remains to be accomplished la utilising the maximum productive fore© of the nation*

Strikes and loss ©f efficiency will occur a©

long as audftdJufltaoMmt* exist In the economic process*

Chapter XXX

LABOE U m M3 «HB WHSStt SftOOftAX With over ninety-five billion dollars appropriated for expendItwre on the defense program from M y X* 1940# to February XT# XfSt* labor fills a strategic role in the suc­ cessful completion of this gigantic task*

Labor as ©mil so

capital deserves Its jmt share' of the proceeds #f this pro­ gram* As stated many times by President B.o©seveXi# no seefelon of the eltlseery -should us© the present emergency for personal, gain# 'tot all should be willing to sacrifice w * eervcdly for the preservation of tbs Ideals which the de­ fense program is purported to save-* During the past few years many labor laws hmm been passed in an endeavor to ef­ fect tetter’labor conditions in society* Mthough these laws M m encountered some criticism and opposition daring pease tinea an the whole# a surprising adjtmfenieat has been made by both capital and labor to the new legal situation* Bine# the beginning of the national emergencyt there has been the opinion in some quarters that the labor laws should be relawed beeawee of their effect in. lessening defense effort* Brigadier General Philip B* Fleming# former administrator of that the Waited States most maintain its labor laws*

The following

comment ©f Mr* flemlag is pertinent? ^Soae people speak of social gains as though they were-nothing but little luxuries* like cigar­ ettes mod lipstick# which we should all be willing to give up In the m m of patriotism**.. But they are not little Xmftrlee* They are essential to the nation*® health and well-being* and by and

large they are ale© the standards of Industrial

efficiency***1 fhe lational Defense Advisory Cossmiaeioa on august 51* X94G* adopted the following.labor policy which m s ap* proved bj president tooeewelt on September 15* 1940*, ill work carried, on as part of the defense prcgram should comply with federal * stats# m d local statutes affecting labor ref­ lations * hews Of work.*, wages*, workmen*© compensation* safety#, sanitation*, ate# In. addition* the t t m m i m l m reaffirmed the principles esMsrats# by the Ordnance department of the mite# States tossy during the world war In' its order of lorember 16* 1W17* in respect to the relation between labor standards an# efficient -production*^ attorney General * Hebert Jackson * stated that?

wfhc findings of the lotions! Xabor EclatIons Board that an employer Is In violation of the national labor Eolations Act are binding and ecu* elusive upon the other agencies of the executive branch, of the government unless and until the findings are reversed by a court of competent jurisdiction*,-“SThis opinion Implies that an. employer remains in. violation of

the national labor lelations m t during the satire period pending a court* s reversal of the Board* m findings# The federal lam which are of primary concern to management and. labor comprise*


■*The American labor legislation Review, vol* XXXI* June, 1 •

%aS S£ B«l«.tl0B 8 1222EI2E* Vo380*07* pp.

s«pte®i>«r 9, 1940, pp.

Reportw . Vol. 7, Oetobor 7, 1940,


the national Labor Kelatious Act


fhe Fair Labor Standards Act (fbe wag© and Hour

BUI) &»

1!h« Walah-He&ley Aot (fhe Public 0ontract Mil)


l1io Mcon-Davis Act


fhe Sight Hour Law


fhe Eic&-Baek Aot


f&e Buy American Acts


Employment of Altana |£g iatlonal lahojp SSSSHStt sal the Bat Iona1 Labor Eolations Act approved on July

S> If35* was designed to diminish labor strife by removing the causes of labor disputes hindering or obstructing inter* state and foreign commerce*

Has basic assumption of the law

was that conflict between employer and employee rested In the unwillingness of management to bargain fairly thus affecting Interstate commerce by causing labor disputes and aggravating business depressions by reduction of wages and purchasing power*

In order to equalise the bargaining power* the law

granted the employees the right to self organisation and col­ lective bargaining through representatives of their own choos­ ing and forbade the following unfair labor practices! 1*

to interfere with* restrain* or coerce employ­ ees in the exercise of their right to organise


to dominate or interfere with the formation or administration of any labor organisation or con­ tribute financial or other support to it


to discriminate In hiring or tenure of employ­ ment or any other condition of employment be* cause of membership in a labor organisation


to discharge or discriminate against m employ* oo because be into filed chargee ©p given testi­ mony under the lot


to refuse to bargain collectively with employ* ooa* representatives * It was provided that the representatives of the

majority of a group of employees should be the exclusive bargaining agent for all the employ### with regard to the basic terms of emplopienb*

Individual workers* or minority

groups* however* were permitted to present grievance,® to the


emolovers * w wrnygr

#r ^


In order to carry out the provisions of the let* a Board was created* known as the National labor Eolations Board# it# functions being*

(1) to prevent employers from on*

gaging in unfair labor practices* and {2} to conduct elections among employees In order to ascertain which representatives should have the right to bargain collectively* A s Board was given powers of procedure and the court# the power of enforcement*

After full hearings* if the

Board decides that an employer Is guilty of an unfair labor practice* it la authorised to issue a cease and desist order* In the mm% of a refusal cm the part of the employer or ®m* ploy## to comply with the order* the Board may petition any federal circuit court of appeals for enforcement of the order* If either party is aggrieved at the decision of the Board* it may also appeal to the circuit court# for review* modification or setting aside of the order*

Final appeal may be made to

the Supreme court of the t&ited States**

A c Board’s findings

*U« g* Statutes at Large, 74th Congress* 1935-1936* Vol. 49* pp* 4¥9*4W* ISJBiTc Mo* 198* S. 1958.

17g however, if supported by the evidence presented in the re* cords of the hearings , are to he final* It is believed by many reputable authorities that the 9* L* R* A a is an outstanding fa© tor in piloting our national defense program, because it removes one of the prin* eipal causes of ©tribes, namely, refusal of the ©mployer tobargain ©ollectiveiy with unions of the workers * own choice, 4t and because It fosters good will among employees thereby pro*, meting their efficiency*-. m

was noted on page 95, there has been a sharked

trend toward reduction of unfair labor practice® in the cases handled by the Betlonel labor 'Eolations Board and an increase . in certification cases which indicates that both management and labor are more willing to abide by the national labor Re* Xations act#

ft would appear that this fact would be proof

that the I# L* ft* 1* la of primary -importance in reducing ill feeling and the resulting strife* 3&* Barry a* Mills, chairmen of the national labor Relations Board, In an article appearing in the Washington • Star-,. Jaimary $§, IMl, comparing the labor situation during the last world war with the present defense program stated that the Wagner act had contributed greatly t© the country* s productiveness;' by removing the underlying organisational con* troverslea that affected labor relations during the period of the World war#

luring 19l7*l$L8 management and labor were not

accustomed to the practice of collective bargaining*


the first part of the war management refused to bargain col* lecfcively thereby seriously retarding the war effort*


i?S collective bargaining was finally forced upon management, both employers and employees were unfamiliar with its prac* tlee with resultant misun&ers tending#

But today with five

years of experience with the procedure of collective bargain*

lug and with the clarification of the law by many court de* cisions, both management and labor know the proper course of action open to them#® If the refusal to bargain collectively, as stated by former Chief Mastics Hughes, is the most prolific cause for labor disputes, then collective bargaining as legalised In the Wagner m % should minimise strikes#® A consideration of the drawbacks of the I* L# B# A* in the national defense program Indicates three principal criticisms*

Cl) the Act tends to slow down the defense pro*.

gram because of the failure of some of the key corporations to abide by the law* {%} the Act tends to foster union rival* yy thereby causing labor disputes} (8) labor has taken ad* vantage of its rights under-the Wagner Act in pressing for unreasonably high wages and the closed shop# In regard to the first criticism Hr« Sumner H* Slichter asksi Should the people of the country be deprived of important shipyards, steel mills, or automobile plants because a particular employer violates a law, no matter how reprehenalwe his aoilont And should.


Slab©r EclatIons Reporter, Wei* 7, January 87, 1941, p. ******

®07 SGI 68$ (19S7), National labor Relations Board versus Jones and l^aughlin steel Corporation*11

±74 a firm which demands a court review of a Labor Board decision be regarded as a law violator?*? xr# Slighter contends that during the emergenay the govern** meat should not use the *«hot gun* method of enforcement of the Act by the refusal to $pant contracts to those -companies in violation of the Act#

He feels that the law should be m ~

forced but without penalising a company for insisting upon a court reviews!* as shown on p*

it Is interesting to note in this respect, 89# that the government has in acme cases

.granted defense contracts to several large firms as* for «g* ample, the Ford Motor Oosspsny* the Bethlehem Steel O m p m y # despite the fact that they continued to flout the t* 1* B# A# In consideration of the second criticism* It must be admitted that the Act does foster unionisation which often leads to union rivalry#

However*, this type of dispute has

not been frequent when compared with other causes of strikes# In 1940 only three per cent of the total number of strikes was due to union rivalry*- Xcfc this type of strike does have a disproportionate Importance* because It Is confined chiefly to large defense Industries*

President Roosevelt has in*

slated that the American Federation, of labor and the Congress of Industrial Organisation must cease their union wars during the present emergency and atop raiding each other for member* ship*

Organised labor* a recent truce *te live and let live*

under the impetus of the actual entrance of the Halted states into- th# war and the pressure of the administration may prove

?fbs Atlantic Monthly# May# 1941# "habor and the War** by S w & F S.*"IficEbir* pi §61#

to mark the cessation of organisational disputes for the dt** ration of the conflict* In the third place, criticism ,is being levied against both labor and the government officials f because labor has taken advantage of its right of collective bargain­ ing and union organisation granted in the I* L* B* a* to exact unreasonably hl$i wages and the closed shop# XMraftft* writing In the jr* Ji* g*F»


May 23, 1941, believes

that the full wage demand conceded to the 0 * X# 0 # United Automobile Workers by the Rational Defense Mediation Board in the new 9* X# 0* agreement with Oeneral Motors was an in­ dication that President Eoosevelt was unable or unwilling to . deal with the C« X« O* and that the granting of the entire wage increase was incongruous with the government*’a effort to prevent Inflation* *Mcw that labor has achieved the ri$ht of col­ lective bargaining, what Is labor doing with its m m m t c power? 2s it exercising self-restraint in a national crisis or la It out to get all It can, Irrespective of the effect on the rest of the eltlsexnf Hrshappily, the answer must be that labor*a leaders arc abusing their economic and po­ litical power**## the definition of ^collective bargaining* in this case can plainly be written today as collective bludgeoning— a complete sur­ render by saemagement to whatever wage rates labor happen® to dmKtfu,**** Although lab o r in some Instances may be d riv in g fo r unreasonably h ig h wages, i t must bo remembered th a t many firm s can w e ll a ffo rd to pay a h ig her wage ra te as shown by th e ir record earnings#

them to o , la b o r coats in some eases

^Bawld Lawrence, jr* s# lews* 0 0 * eit** May 23, 1941, *Our First Defeat,® pp# 26-87*

176 cantribute only 25 per cent or less of the total cost of the product* The criticism is also made that labor is taking ad­ vantage of Its rights under the Wagner let to attempt to force the closed shop upon industry Instead of using it as previously as a trading point*


Walter B* Fuller,- President

of the national Association of Manufacturers, says, ^Denial by government* by employers, by other employees of the work­ er*® right to work Is un-American and a long step toward die-tatorshlp*®^

Mr* Fuller further contends that discrimina­

tion of employment at this time will curtail the defense pro­ duction#

In the Captive Coal Mine dispute of Wovenber, 1941*

the closed shop issue.was again, condemned severely*


steel operators in their statement said, ®Ths issue in this case concerns one of the fundamental American freedoms— the freedom to work*11^ The Fair Labor standards Act The Fair labor Standards Act (Wage and Hour Bill} enacted m

24 * 1938, was deigned to provide better

labor standard® in employment affecting Interstate commerce* The law assumed that current labor standards were detrimental to the maintenance of the plane of living necessary for health, efficiency, and general welfare of the workers thereby causing*

9lbid** July 11, 1941, p# 36, »0rive for closed Shop* Its B f f e W on Indue try*® *%abop Halations Reporter» Vel, 9# lov* 24, 1941, p. 297*

(1) Interstate commerce to perpetuate low standards among the states


retardation of Hus


of goods

(3J ©etsMlshmeni of unfair competition with inter* stats ammme (4) labor disputes and stoppages.

(5) interference with orderly mmI fair marketing of goods in interstats eommeri#* $h* act is divided into thro# main categories f (1) minimum wages*.(f) aafttattt hours* (3) child labor*


respect to minimum wages* every employer in interstate ««a»^ mcrce# with some exceptions, must pay not loss than th# following rates?

im purmg i w e * 4#

1 thereafter 0

m cent# per hour so cents per hour SO seat# par hour

With regard to maximum-, hours# every employer in in* terstate e#mm#g*e#* with son# exceptions* is respired to abide by the following work hour# unless employee# are paid time and 0n#*h«lf for overtime? 44 hours per waste EJ DUPln*? 1939

42 hours ner we air

1and thereafter

40 hours per weak

fhe following exemptions apply to both the wag# and hour requirements? (1) persons in executive* administrative * profes* sional* local retailing positions* or people in the capacity of outside salesmen* provided certain requirements’in the set are met; (2)

engaged in retail or service establish­ ments provided the greater percentage of their time 1# devoted to Intractsto business!

(5) seamen?

(4} employees of a carrier by air?

i?8 (5) employees engaged i» seafood and fishing opera* lions | (6) agricultural tf&ateaa*#) (?) learner#, apprentices, messengers, handicapped . workers* (8) weekly #iad*m#tel7 newspaper employees pro# ■ vlded that the publication has a circulation .of less them three thousand and that 'the great# er part of the distribution takes place within the country where it la printed and published! it) street railway and motor bus eaployeeitf (It): workers ®within the area of production® perform* ,ing certain duties which pertain to agrieultur# al and horticultural commodities* cheese, butter, and other dairy products* In addition to these

the dot provide#

several exemptions for the maximum hours limitation# prodded agreement is .mad# by collective bargaining between employer and employees* (1) %*#tbab no employe® shall be employed more than one thousand h o w s during any period of twenty# six consecutive weeks, (fi) «**that the employee shall not be employed more than two thousand hours during m f period of flfby#bwO consecutive weeks-, or (5) for a period or periods of not more than four# teen work weeks in the aggregate in any ealen* dar year in an industry found by the AdminIstra# tion to toe m seasonal nature*®!! If the employer works M s employees, in any of the above instances,, in excess of twelve hours In any day or more than fifty##!* hour# in any waste* he must pay at the rate of time and g4*|

Oongr**«, 1938, Vol. 68

Xu regard to the child labor provisions of the Act, the law prohibits shipments of goods in Interstate coheres on which oppressive child labor has hem- employed*


siwe child labor Inelu&es work of any minor between the years of sixteen and eighteen In hasardoms occupations which are detrimental, to the health*

Exceptions for children between

fourteen and sixteen years of age are provided In jobs not considered dangerous* in order to carry out the provisions of the Act# a Wag# and lour Plvielen was created In the Beparimeni of ,Labor and governed by an Administrator, a Presidential appoint©## who In turn selects Industrial eomlttoes to facilitate the

Much affirmative and negative argument is to be found in respect to the relation between the Fair Labor Standards Act and the defense program#

the main reasons for

the enactment of the law were to raise extremely low wages# reduce long hours of work# and to put more people back to work through the penalty of overtime wages*

It is believed

by many authorities that the environment In which the Act was passed Is now entirely changed and that# accordingly, the law should be altered to meet the new situation#

It is not denied

that the Act has been beneficial In putting the Idle resources of the country back to work#

Sidney Hillman on May £# 1941#

stated that about 300*000 unemployed have returned to work

12Ibld.» pp» 1000-68.

each month sine© the beriming of the defense program*


large pMmmtmq* of this increase m y be attributed to the Wage and Hour law since it is cheaper for management to m~ ploy additional men rather than to work the existing ones more hour#*^

With impeding full employment and the grow*

lag shortage of labor* It would appear that the value of the law in this regard is no longer tenable* In respect to the problem: of wages* the argument that the Act is needed to maintain minimum wage standards. would mm to he unjustifiable in the light of the rapid ad* ' wane# in wage levels sine# the beginning of the defense program as noted


p# 126*

the contention that management can

hear the 'burden of the overtime wag# rates* because increased production reduces overhead costa thus causing the margin of profit to he maintained or increased is believed to toe true up to the point of maxiansa productivity*'

However* after the

optimum point la reached as 1m# happened already in many de­ fense industries * a point .of decreasing re turns will set In. Higher wage costs mmy then too expected to reduce profits*


management 1# working on government contracts * the higher costs in many Instances' may toe recuperated through the esca­ lator clause contained in the agreement*

But if nondefena#

goods are toeing produced* higher prices may not toe obtained if such prices are included among those to be freest**

^CNHteral Philip 3# Fleming* Administrator of the Wage and Hour Division* to* 3* Department of labor* Washington* d* C** te A* 10*

states there Is little known as to what la the actual length of the week for maximum productivity*

It is believed that

the conditions of work during the last World War and today are so vastly different that no safari ten is possible*


too, the speeding} which has accompanied mass production in the United States is greater than in Great Britain, require lag a higher degree of concentration which tends to reduce the length of the maximum output week* Walih^Eealey jjjjJ (Public


tee Walsh^Bealey Act, approved on t a s 30, 1900, Is an act *t# provide conditions for the purchase of supplies and the making of contracts by the United States and for other purposes**1 B&e Act sets minimum standards for wages,, hours, child labor, safety, and sanitary conditions In eon* tracts undertaken with the government **for the manufacture or furnishing of materials, supplies, articles, and equipment in any amount exceeding §10,000*

On Hay It, 1.98®, the Act

was extended to the construction, alteration, furnishing or equipping of naval vessels*27

tee Act applies, however, only

to vessels that are constructed for the Wavy Department*


Act does not apply to construction contracts or contracts for the erection or installation of materials and equipment on the government site*

contracts for personal services are not

1■ j^atf»*ys?£

rm* 74-th Congress, 1935*36, vol* , pp* @036*9040*


roe, 75th Congress, 1938, Vol* 58, , pp. 401*408*

subject to tee Act, except services that are Incidental or a part of tee manufacture of equipment, supplies, and material under tee Act Itself*

Contract® fur tee rental of personal

property are within the jurisdiction of the Act* but real property is mot*

Contracts for items produced by assembling

miscellaneous parts purchased by others are subject to tee Act*2® Other exemptions provided by tee Act are open mar* ket purchases of materials* supplies, articles* or equipment* perishable foods such as dairy* livestock* and. nursery pro­ ducts* agricultural or farm products processed for first sale by tee original producers j contracts entered into by tee Sec­ retary of Agriculture for 11the purchase of agricultural com­ modities m products thereof| • nor to contracts for carriage of freight or personnel by a common carrier subject to tee Communications Act of 1934* Contractors under the Act must agree to tee,.fellow* ing representafcions and stipulations i

tee contractor must be

tee manufacturer of or a regular dealer in tee materials * supplies*, articles * or equipment to be manufactured or used in tee performance of tee contract*29 If in accordance wite the regular practice of tee industry tee manufacturer buys materials, supplies* articles *

^Division of public contracts, 0* $* Department of Labor* ,* M * J* mish-lealey Act* Washing•* pp# 18—13*

8®S« &» items* it l*rrn, 74tb Cong*esa, 1938-1936, Vol. 49, Public Ho, 846, S 3088, pp. 9036-2040.

or equipment for tee production of tee contracted article, tee vender or subcontractor is not subject to tee Act,*


a manufacturer bee assumed a contract under the Act* he can­ not he relieved of tee labor standards by shifting tee work to a substitute contractor*

teen a contract- under the- Act la

made wlte a regular dealer who In tern contracts with a manu­ facturer for delivery of materials, supplies, -articles, and equipment stipulated in the contract, tee. dealer is held, to be an agent of tec manufacturer f but teen a regular dealer under the Act contracts with a mmmimtmm tec in turn sup­ plies to a subcontractor to complete tec work m tec contract and then ship® tee article to tee government, tee subcon­ tractor tec makes shipment comes udder the jurisdiction of teelaw,s® Employees under the jurisdiction of the WalshHealey Act have tee right to organise and bargain collective­ ly through representative® of teeir own choosing*

Ho employ­

ee Should be discriminated against in employment because of union membership or union activities,

Employees must be paid

tee prevailing minimum -wages for tec Industry a® determined by the Secretary of Labor,

$h* Secretary is required to be

guided by tec prevailing rate® for similar work in the par­ ticular locality concerned#

Due to the fact that it is a

difficult task to determine tee many local rates and to in­ corporate teem in tee various Invitation® for bids, the

®%liSSS. S3S IfttorproUttoaa. Ho. £. m»i?jj£&Ug M £ » op* Jit*, pp* 1S-19,

190 requirement of locality-has become non&ppUeable under the Act, although section I Cb> of the Act specifies it*51 Bmpioyees under the Aot are not permitted to work In excess of eight hours a day and forty hours a week unlese overtime la paid which has-been set by the Secretary of Labor* the overtime rate, unless it Is changed by the secretary of Labor, must be time and- one-half of the regular basic hourly rate*' this rule applies even to part-time employees on ©asmmereial work*

Should c^loyecs be paid a bonus or premium

on the quality or quantity of their work* it must be Ineluded in calculating the basis hourly rate*


other federal

and state laws or private agreements permitting longer hours of work without the penalty of overtime pay cannot alter the obligations of an employer under the W&Xah-Healey Act*ss tla&er the provision of the Act* the followingclasses may not be employed!

male persons under sixteen,

female persons under eighteen, and convict labor.* Ho part of the contract will be performed under unsanitary, hazardous* and dangerous conditions*

Compliance with the safety* sani­

tary* and factory inspection laws of the state is deemed suf­ ficient for meeting the requirements of the Act*®3, Violation of the Act will render an employer subject

a* fcpartment of .Labor* Monthly labor Review* Wash­ ington* D# €** July* 1941* tiCOmparlsmof^Ee Davis-Bacoa and Walsh-Healcy Acta** by Arthur padlan* pp* t»10* a8g. s. StatSTfttoa at Layge, 74tb Congress, 1935-36, vol. At* p*B£®7;n r a g g s and ISterpretations* No* 2* walsh-Healcy Act, pp* IB anise*

**2' &• StHMVk s i lsssa» la s* £ ii»

to several penalties including*

J1J cancellation of contract

and liability for additional costs resulting therefrom, (£} liquidated damages of tea dollars per day for each person, violated under the child and convict labor provisions, {3} payment of the difference between the wage rat© paid and that, prescribed In the Act* hmmm® the restrictions are of a narrow mtepmf * Boweeer* the ©niemt to ifeiefe the law has keen ©arried ©war into gorerisient and noagorswnent work

not requiring legal specifteatioms is becoming a menaa© in

< •

asM.etin^i the

war effort*

S* federal Security Agency* Social Security Board* Bureau.of .Baftloystent Security*' | t r i e t l ^ ^ e ^ ia|| ^ p s ^ to workers *wag&in^fotu H * 4*3*

In addition to the-federal laws regulating 1abor



many states have legislation controlling the

hours of fork fm mm and wonaa*

®e 1 mm referring to the

employment of asm mm limited in seep® applying* for the meet part* to work in mmmtlm with public ■work©.* transportation,

and partloularif SMplefsMfta* m&mMmmd dangerous* Over one**' half of the state® provide- an eight hour day on public works; twe**thlr&« of the states limit *the hours-of work of employ** ees engaged &o transportation on railroads m

Infra-state eea***

mere#* • for this typo of work moat of the states provide a limit of sixteen hours per day followed by eight to twelve < oonaeoutlve root I w i *

d majority of the states has leg!#*

lotion limiting the hour® of work for hue and truck drivers* ranging -fmm. ten'to twelve hmm per day*

In over twelve

states* there are lew® limiting the hour® of later in mine®* ssmeltors* and other haaardou® place® from eight to ten hour® per day*

4 few states have enacted law® regulating the hour®

of work in laundries* electric light and power plant®* cotton and woolen

esSablistmiemts* earner!®® * and the

like# Ihe law® regulating the M u r e of work for


much mere extensive than for men#


all hut four state®

(Alabama* -Florida* Iowa* and ®eet Virginia) have enacted some legislation on M u r ® of employment#

About ©ne«*half of

the state® limit the working day to eight hours; twenty state® have a mine hour -day; and thirteen states have em* acted tm hour laws*

BmmmX of the state laws provide for overtime work generally a$$lie*b$* ■$&$&& the rush season in the eas* neries and during the itsrastmsii. holidays in the retail stores* lost states# however* limit fehe.ammmt of overtime and re*

tolre higher rates of pay* Eighteen states, have laws pro* hibitlng night worfe for women in eopteln industries or ooenpatlons*

Bo- state prohibits night mwk for


Almost, all the states have Mm prohibiting m

eltineas. from

certain. oesupations or dlserimlnai**

log against them in some way* .fMs is parfclooloriy true .on ,. gsti&tp e M i « : ■Stwafc tea states rsfp&re oitiseaship for the esoapallon# of arshiteet*- engineer* and sorvoyer*

Other ©e*

empatioiir sat professions- banning aliens* eeeordlug to state e&lofc# lne£ud*i , .teaching*, optometry* fearberlrg* deteetlv# m h * .raft ln*iaf&nee#®$ Several states have lavs prohibiting the practice, of ^stgfbaoto,*^

$he following provisions In the lew Jersey,

state lee ere tnlte typical for this type of legislation! "Whenever s& sgreems*it for the of personal eervte# requires that werteen engaged in its p w f s w in o # shall be paid the prevailing rate of wages*. it s M l l he unlawful for' any person 4either: for hteself or any other person* to wwgaewt# Itwiii or either before or after snob wortaan la engaged# that sueh workman pay b*efe* retmm* lamb#* esnbrltmfe# or give any part or all of -mm mwlmm*® wage®# salary, or thing of vain##. 'to any person* open the- statement# representation*

legislation'-' in

September* 1^40* "Hoars of labor tabs®.#* pp* 547-350*

or understanding that failure to eaaply with such request or demand will prevent sweh wormian fro© procuring es? retaining employment* she violation of the provisions of this s m t lea shall ©onstitut® a misdemeanor $ and any person who diroetXy or in­ directly aids# requests* or authorises any person to violate any of the provisions of this aection shall he guilty of a,violation of the provisions thereof^Od fhe state of lew fork #&*$$* the eolleetlon of -dues by labor organisational Maine prohibits the return of any part of tbs compensation f Pennsylvania and Washington prohibit the em* pleyer from engaging la eert&im wag# payment praetlesa*^ Several states have set up #XltbXe wagnar lots® for dealing with unfair labor practise®.

For sowspl** Hhode

Island* lew fork# and Wisconsin prohibit certain -unjust m«* tlm s and protect employees against ooereien#

fhe fcabop He*

letions lets of Michigan* Minnesota * and Georgia require « toeHhg Off period before a strike or lookout may be de* dared*

Ifimteeoia requires a las day period | Georgia* *

thirty day damtittmf Michigan has a thirty day period for da* fens* industries and five days for noadefens© work#**


thou^i a number of states do mat require a waiting period# nevertheless many have ©Basted mediation laws for the arbl* tratiom of labor disputes as noted om p#i2l #

S* iNspirkaeni of labor, Xf&f* Washington# D* C«# «Anti*J tew# op. pit.* May# 1939# nAntl~Klek~

She state of Texas 1ms m antltpicketlag law which makes it a penitentiary offense for any person to prevent or attempt to prevent by mesne of picket log -an employer from carrying on his business#

The state of Oregon also outlaws

picketing#®1? > Because of the meed for greater-we production# lew 101% sad l&asaClmsotte have passed hills authorising the euflspeosioft ef restrictions on hears of work in war industries* ether states ere also,considering similar setim*


vshis suspended the. foriy*#our,hoar work week for mmm in ear industries*

lew fork has granted authority for the

fens# industries .to work a seven day week and employ womenon a three shift basis as mil m waiving restrictions on hours of ea^IeymeBt*®®

In response to this trend, the

Beeretary of hahor has recently issued the following sri* teria to guide the states in their regulation of woridhg hours*

If it kOMse* neeeesegyr to relax the restrictions

on hours,, social gains that are not Inconsistent with the de~ t m m m needs Must be minfcained*

The sole test to be applied

to labor standards m e t be their affeet on 'the efficiency of the e^loyee*

fo this offset state laws and regulations

should preserve the following principles* (1}

forty^eight hour week,

(B) eight h m m day# n nw n m w .iiinn

87 Xt»ia.. yol* S, April 14, 1941, P. IBSj Vol. 7, Oct. 01*- ibloj, P* 1V9#



7ol« 4* s*®* * • * 10tt* »* 723*

(3) one

rest in seven,

{4} adapting regulations of work to age and sax differences, {5} adequate steel and rest periods.,. {6} proper safeguards for health and safety, (V) no dtserlwlnfttlon m the basis of sex# ■fhas# principles should net be relaxed unless it is deemed geeaeeary to achieve mzteaa total war production*®® 1b order to increase the productive effort during the war crisis, treat -Britain has found it necessary, to rale# the hourly went limit# as well as to dilute the- skilled ©rafts by ssa&*akflXe& and quickly trained workers, to allow >■


scores of w«*en to enter' industry, to install mass produce tian method# whereby a larger number of semiskilled laborers eould he utilised, to lower age limit®, ate# unions offered mmh opposition*

it first the

This was abated with the as*

Mxm&mm'of gy* Bovin that union customs and prerogatives . '. ' . ■ * ' ■ abandoned during the war would be restored at the end of hostilities*

A B#fe»#e Hogul&fciois Issued In Jtee, 1940,

provided f a n %*#reoepding departures from any trade practice or custom in re&peat Of employment, non~e®pl0y~ Meat* conditions of employment, hours of work or working sedition© of any per»»*;f,W Agreements:between th# union# end anplegrera have made pos* sibla a relaxation of the rigid customs so jealously guarded

6% s £ # .m& m y .MaWjrtear* ■V#i* B, Feb* 8# 1040, pp. 77*78* 7^ n s a l a e a s M B s£ i s a a£ l a t e J& *»*»** Britain. SSL* elt«. p. 96*

i s t e srnSt

314 by labor during peace ttoe* In conclusion, eom® amendments in the labor X&we may 0® empeeted duo to the notional emergency*

® e prln*

oipal &mmn% problem le, that of obtaining, the greateet poeaibXe production in t o ei^Pbeeb amount of time*


important change* nova .already gone into effect including the auapmMe?* of the light m&m tam9mm$t&®m of camera and packers tmm the everblm# prewieion*. of the $alah«&e&ley let. on goverumeM% confejmc'to# ej:oMptlono of t he learners t^m the minimum w&$e pmvi&i®m of the fair labor ■Standards act*, etc*, then full employment la. attained and when a general 1 shortage of skilled labor appears*. it may M

Meeesery' for

the achievement of madtmnm production for final victory to . modify the' houre limitations of the.fair M b e r standards; lot and the- waMh«Be&My lot-#, Bwswer* labor may bo ea©* peeled bodoggedly resist m$h a change* for It' would mean

a reOoeefpet. in its ss&nlxigs*

$ho' sa3yadJwtoonS® in th#

aoolotf likely to follow would probably be mm& than, the previous problems*

fho long struggle culminating in the re*

coat federal M o o and the-, prodigious effort m the part of labor- to. secure a larger -Share in the fruits of the ©conem* i© system eaxsaot he given up without a conflict# Moved that without Mhor*s M l

it is be*

cooperation any Male change

la the labor M w s will prove detrimental to the society*


tn this chapter the writer is primarily concerned with the solution of the problem of inflation us it affects the laboring class#

Prior to an examination of the problem,

it Is important that there he a clear understanding of* (1) the meaning of inflation and its causes, {&} the effects of ^controlled prices on the wag® earner, (3) the role labor Is playing in the upward spiral of prices# Mflation.

Its Cause*

Inflation as used in this chapter signifies that the quantity or the velocity of money and bank credit is increasing at a faster rate than the increase in. the volume of goods#

If the production of goods is increasing at appro­

ximately the same ratio as the rate of money income, there is mot much likelihood of inflation#

When the supply of goods

and services lag® behind the supply of money, the danger point is them reaefced#

At such a time people receiving higher

incomes are then faced with a contracting supply of goods which causes an automatic bidding up of prices#

The upward trend

in prices stimulates further bidding up of prices in order to obtain the scarce goods* tion gets underway*

fhus the upward spiral of infla­

the increase in the money incomes in the

hands of the public Is derived principally from*

(a) higher

wages, (b) an increase in employment, and (o) larger disburse­ ments of profits In the form of dividends*

Higher wages and

profit® la turn are attributable chiefly to increased busi­ ness activity resulting from the us© of 141© resources or from th© stimulus of rising prices# higher wage rates# or longer hours worked#

Regardless of the eause of the increase

la money income, it is conducive to a "seller*© market* resulting in rising prices#^ It is seedless to ask whether the United States is facing inflation*

increased prices and the control of inflec­

tion are % m of the most widely discussed problems at the present time*

Th© following percentage price increases from

August# 193$, to January, 1948# are an evidence of the infla­ tionary movements "Cost of living - 11*6 per cent; prices paid by farmers - 38*7 per cent; retail food - 84*1 per cent; wholesale prices - 37*6 per cents basic commodity rices - ©3*4 percent; prices received by farmers 9*3 .per cent#*2


The Rational Industrial Conference Board has estimated that for the coming fiscal year beginning July 1# 1948# the con­ sumer will have two dollars of purchasing power for every one dollar of civilian goods*

This represents an Inflationary

wedge of fifteen to twenty billion dollars#®

Price increases

since the beginning of the war have shown a close parallel to those of the last World War#


, A





Many of the same forces which




















^Xowa Business Digest* Bureau of Business Research# State University oflow© EowauTty # Iowa# February# 1948# p* 3*

were responsible for the 1914-1918 inflation are In existence today as* for example# the huge spending program# the growing shortages of goods# and factors of production*

Some encourag­

ing factors include the surpluses of some commodities# Idle resources# and the.extsbane-e of a price eenseiotisneee on the part of the citl&enry and government officials against an upward surge in prices*

Unfortunately*, it appears that idle

resources and the surpluses of eommadltiae rmy soon he diminished* In a great m j n m t

program there are always

certain price distortions caused by the government suddenly entering upon the market for all kind® of military equipment* This type of selective price advance is not the primary interest of this discussion- hut rather a general pries increase evidenced by sharp advances in the cost of living*

It® cause

is largely due to the augmented purchasing power in the hands of the public coupled with the failure to produce goods to keep up with the increased spending* 2 mM V MtmtM. Prices g8a8k8 HMWBiSB Labor t M B W £of 38$ Uncontrolled S saaSSSOtOBS $


The increased cost of living was on® of the chief causes of industrial unrest during World War 1* as Indicated in Chapter X*

leal wages# on the whole* lagged behind prices

until almost at the close of the war*

Although real wages

are keeping ahead of living costs during th® present defense program# nevertheless labor, fearful of continued advances in prices# will resist every effort leading to diminution in

the purchasing power of its wage#-

Recent studies by the

Bureau of Labor Statistics os the spending and savings of wag# earners and clerical workers hay# indicated that 35* § per cent of total, wages are emended on food alone* 10*7 per cent

for clothing* and 17*1 per o m t for housing*4

The necessities

of life* which hare experienced the sharpest Increase in prices* thus take 41*3 per cent of the pay envelope*


trolled price® are also conducive to profiteering as large profit® are caused in part by the ability of naaagsment to sell its product at a higher price than the cost of raw material® and the labor necessary to profuse it*

So far in

the defense program the Increased profits do not ® e « to be due to the marking up of selling prices out of proportion to the cost of tie production* but rather to tie increased volume of business w i l d las reduced overhead costs*


is shown by tie fact that between August* 1959* and fun#* 1941*. raw material prices advanced 25*7 per cent and wage costs 14*4 per cent will© prices of manufactured products rose only 12 per o#nt«s Although, it is believed that .management as a whole has not taken advantage of increased mrk. ups on its product#* it is doubtless true that there are exception© to the rule*

finally* the question of price inflation is of vital

^Monthly Labor levjffir* 0* $• Bureau of Labor Statistics* Vol* TW'Sl*'’WSSngton* B* 0#, "Spending ®®d Savings of Wag© lamer® and Olerioal Workers in Large Cities," p, 52* g Jacobstein* Meyer and Kouitea* Harold G** Iffeots of the

importance to labor la the post war period of readjustment* further consideration of this aspect of the problem is pre­ sented in Chapter Y#

Howbeii* the experiences after the-last

World War should be of significance to the United States in Its endeavor-to curb-inflation*

The price declines In the

19$$*» and 1991*8 leading to the depression in 1921 and 1922 caused much unemployment and general derangement in the econom­ ic system# fljjift IffijUt gg Jjgljgg gg

gg ££&8S|

Although labor cost® in some industries contribute only about one-fourth to the total cost of the product* nevertheless* when consideration is given to the successive 'stages of the product from, the raw material to the finished article* the labor expense- looms large and the problem of wages taken In the aggregate becomes Important in a program for the solution of inflation*-

The national Industrial

Conference Board*® index of average factory weekly and hourly earnings of twenty-five industries indicates that from August* 1939* to December* 1941* weekly earnings advanced 32*2 per cent and hourly earning® 20*6 per cent*®

During the year

1941 hourly and weekly earnings were much higher than in any other year in the country*® history*^

The average work week

has risen from 37*9 hours In August* 1939, to 41*1 hour© in

sSee Tables YXXX and II* pp. 341-342* % g w s Belongs HI #1224, national Industrial Conference Board* rSruary v7 1942* p* 3*

October of 1941*

Is the vital defense industries the hours

worked per week are running much higher than the average for all Industries*

The Bureau of Labor Statistics shows the

following average hours worked per week during October, 1941 f for several vital defense Industriesi

machine tools* 51*8;

machine-tool accessories* 51*3; fircams, 50*4; shipbuilding, 45*4; aircraft, 45*2; ammunition* 44*2; electrical machinery, 43*81 explosives, 43*3*®

It is readily seen therefore that

much of the increased earnings per week for the workers are dub to the extra overtime wages*

According to Mr* Knudsen,

the overtime penalty on negotiated contracts has Increased the cost of defense material© from five to ten per cent.® Increases 1m basic wage rates* fuller employment, and employ­ ment in the higher paying industries* have also contributed to the larger pa? ewalopea.

The J s & B M t e m S5£S£b of

September, 1941, states that manufacturing labor costs per Siam hour in l w e t 1941, were 11*7 per cent higher than about the same month a year earlier*1®

Organised labor must be

considered -as a contributing force in this demand for higher wages*

The A* ?# I»* estimates that for the first four

months of 1941 employees In manufacturing and constructing

#Jt fo&bfrr Letter* Washington, B* 0*, January 3, 1942, g>* 1* iecord# 77th Congress, First Session, WmTS*, fune IB, 1941, p# 2989* Bluest* Bureau of Business Research, tge of Commerce* Stateuniversity of Iowa, Vol* 12, September, 1941, p» B»

industries received pay advances of five to ten cents per hour*

The C* I* 0* reports that Its members for the first

six months of 1941 received increased wages of over eight 11 hundred million dollars per year. Oovcmment contracts are also conducive to increased wages*

Clauses are inserted in negotiated and free contracts

for adjustments which are due to increased labor costs*


agement will pay the increased wages rather than run the risk of labor stoppages and retarded p r o d u c t i o n H i g h e r wages mean additional purchasing power if the workers* remuneration keep® ahead of the cost of living* Th® phenomenal increase in industrial production coupled with the corresponding expansion ©f employment are additional factors contributing to inflation*


production for February* 1942* is reported at 172 per cent above the prewar level { 1 9 3 5 - 1 9 5 9 } Total civil nonagricultural employment rose to an estimated 40,7X1,000 in Bovember* 1941* representing, a new all time peak and an increase of 3*182*000 over the same month a year ago#


this period' manufacturing industries showed an increase in employment of 1*782*800 wage earners*3,4 „ ,u M£sg£s,a£ 3&£ M s a a s t e s a m M s s a . Isms* as£ Proflta. pp. alt.. p., 13. 18lbld.. p. 32. lsM

2£si Isssss MAaito.* March,

p. m .

ltetteo4a of Inflation Control cntl gioif Relaliloushlp

to 3g§|g£ Many methods are now being used la an effort to

control inflation* and other® are being considered*

it is

not the purpose of this chapter to enter into a theoretical discussion of the various plans that are being promulgated with reference to their feasibility of accomplishing this end* However* as the control of inflation is an over-all problem involving not on® measure but many*, it is essential that the results of each be considered in the light of the Influence m

labor* for purposes of clarity* it might be said that

there are two general classifications for the control of prices* namely, indirect and direct*

The indirect category

aims to control inflation by the withdrawal of purchasing power from the hands of the public. by;

This would be accomplished

(1) income and luxury taxes, (2) enforced savings* {3} cur­

tailment of m m v m @ r credit, {4} sale of government securities to the general public* The direct method of* inflation control Involves*

{1} outright government interference with particu­

lar prices, (a).general prices* (3) wage control*

taAXM rt toflatlan Santal I*


Taxation has always been one of the principal methods of reducing purchasing power during war time.

In the

opinion of Mr* Eeeles* taxation is the most important single

method of controlling Inflation*

Of the various taring meas­

ures Mr* EoeXes believes that the corporation income and [email protected] profits tar is perhaps the most effective, because the corporations ere generally the first to reeeiv© the expanding defease expenditures*

Therefore, if their surplus incomes and

excess profits are diverted to the government, they will be unable to distribute them in higher wages and dividends to the public*

However, the personal income tax and excise taxes 15 should supplement the increased corporation taxes* It is

interesting to not© ,that Secretary of the Treasury Morgmth&u la a statement before the House Banking and Currency Committee on price control legislation on September &4t 1941, advocated that the most effective means of controlling inflation would be IOC per. cent tax on all corporation profits over 5 per 16 cent m invested capital* The Revenue Act of 1941 is an important step in the direction of inflation control*

This legislation raises

taxes to the highest level in the history of the United States* One of the chief features of the bill is the increase in the personal income and corporation excess profits tax*

The per­

sonal income tax has been broadened by lowering personal exemp­ tions on single persons from 1800 to #750 and for married

*^Fsder&l Reserve Bnjiistlti. U* 8* Federal Reserve Board, lashingtSn, 5T el", ' June, 1941, Marriner S, Iccles, "Financial Problems of Defense, * pp* 506-7* 15The Saw York Times. September 25, 1941, "Mortenthou*a Statement ai Fric© Hearings, * pp* 1 and IS,

224 parsons fro® #2,000 to #1,500,

have also tees changed,

The surtax credits ard rates

Surtaxes now begin with #2,000 of

taxable income instead of #4, 000*

The rates begin with 6 per

cent with the scale of rates more than doubled up to #14,000 of income; thereafter the rates gradually taper off,


change in the personal income tax is of particular interest to labor, because the increased taxes fall particularly on the lower and middle income groups*

It is expected that the

lower exemptions will add over six million people to those 17 who will pay taxes next year* Impacted additional revenue from the lowered exemptions is #303,000,000 with #40,000,000 t r m new taxpayers.

Although the new personal income tax

will aid to some extent in withdrawing purchasing power, it Is questioned if it will be of material benefit*


employment and Increased wage earnings will greatly over­ balance the small amount which is withdrawn by Income taxes* The largest share of the new tax increase fall®, on corporation® in the form of excess profits tax.

The new tax

rates were increased 10 per cent and are applicable to a much larger amount of income than previously.

This Is due to the

taking excess profits first out of the net income whereas before the mmm1 taxes had priority and what remained was is subject to the excess profits tax* Surtax rates os the weeWv«w*wwwe«wMwii>w»iw^


^ M g B g a . S M X i p | iSS$2£» Mew York, September, 1941, p. 101*

National City Ban* of

%nlte& States Mews. September 26, 1941, "Taxes You Will Pay under the kair Kates,* pp* .14-5*

regular corporation income were also boosted*

A 6 per cent

advance was levied on the first #25,000 of income and 7 per cent on all the exceed#

The excess profits tax, however,

still leaves the corporation with m opportunity to acquire earnings above a fair return on their investment.

This fact

was emphasised by Secretary Morgesthau in M e advocacy of 100 per cent tax m profits above the 6 per cent level* Continued excess profits disbursed in the form of dividends or high executive salaries not only augment the Income stream leading to increased prices but also prove a source of irri­ tation to labor causing the worker® to demand higher wages. The Bevenue Act of 1041 also provided excise and miscellane­ ous taxes on certain consumption goods which are in competi­ tion to the defense needs as well as on luxury and non-luxury Items* a year*

The expected revenue on this type of tax is #850,000,000 This tom of taxation should prove advantageous not

only in reducing purchasing power but also la conserving needed factors of production for th© defease program*

Another tax

feature was the change in the estate and gift taxes which were raised pregresslvely#

The estate tax was raised to 70 per

cent on ©states of more than #10,000,000 value whereas gift taxes were boosted to represent 75 per cent of the estate taxes*

The exemptions of #40,000, however, remain unchanged

for both ©states and gifts*

More revenue could still be

secured from both ©states and gifts by lowering the exemption limit*

This has been advocated by Mr# Bocles who also pro­

poses the closing of the loopholes in the present law which lends itself to evasion*

226 & sssaasaA fi.mftM.ft

Um iss. iitfssss* o» May

1, 1941, Professors A* G# Bart of Iowa State College and 8* A* Harris of Harvard Hniversity representing a group of 170 economists appeared before the Bouse Ways and Means Com­ mittee and proposed a flexible source-deduction individual i&oam© tax plea for th© control of Inflation during the defease program#

It m s advocated that taxation be adjusted

in relation to th© government defease spending with the rise or fall im th© cost of living*

la addition to controlling

inflation, it m s believed that a flexible tax system would overcome the necessity of imposing extremely heavy taxes which might ourtail production* lack flexibility* because:

Our present income tax laws

(Xl th© taxes are paid on the

basis of the previous year1© Income; (£) the rates that are levied represent a decision by Congress in th© previous year; ($) the law does not provide a means of changing the tax rate during the taxing year*

Th® suggested plan would overcame

the lag between th© receipt of income and th© payment of the tax as well as to provide an adjustment of the tax rate to th© price level*

Th® following are th© essential principles

of the flexible defense tax plan: (1) Souroe-deduction on individual net incomes* let income in the tom of Interest dividends, wages, and salaries would be taxed in excess of the minimum exemp­ tions at the source of th® income and at th© time when it is paid#

On income not reached at the source, the tax would be

levied upon annual returns as under the present income tax*

227 fhe souree-de&uotloa tax would b© collected i n th© same manner and with th© same mechanism as th© existing social ©ecurlty tax*

{Zl Broad tax base# Prior to 1941 th® ineom© tax has reached about 4 per e m t of th® population collecting approximately sb per ©eat of the national'income#

In order to be m effective means

of controlling inflation* th® income tax should be broadened to reach a wider group of taxpayers and to include about 50 per cent of th® national income*

Suggested exemptions may

be $SQ0 for a single person and fl#09 for a head of a family plus #400 for each dependent# {3} Adjustment of tax rates to price movements* In order to accomplish its purpose of controlling inflation*, th® tax rates should be adjusted upward or down­ ward according to a change of between *5 and I per cent per month in retail prices*

A suggested beginning for th® tax

rat® might b® a minimum of 10 per cent with an upward increase ©f %per cent until a maximum high of 40 per cent was attained* Asa effective rule may be to raise th© tax rate 1 per cent per month when the price index had risen between *5 and 1 per cent in each of the previous three months! g per cent per month when the price index had advanced th® same proportion during the following three months* and so on until m increase of 40 per cent in th© tax rates had been attained*

In ease th©

price index should go down or reverse its trend, the tax

228 rate could be lowered*^9 flie Hart Flexible fax Flam offers definite advsn** tagee o»w our customary, Inflexible tax law* It would appear to be a quick sure method of withdrawing purchasing power and checking advance© la price©* labor would bare much to gain by its comsent to such -a program* In order to protect th® small wage earner who hm little opportunity to save* some form of deferred sayings plm could also be incorporated* MSlXlsliSm&m*

M asstsiss* Mg g p .u a tl? .te Ms la sla l.

Sfparity jjSf^l Silffi* r. Albert 0* Hart Testifies Before House S^mittee lllrlljs on Defense Taxes,* May 8, 1941, 33:6, and A* &* Hart and others. Taxation foy Defense* 1941, mime©-* graph circular, pp* X~S* gQThe Dee Blister* October 1, 1941,’•Increase Aid f o r ^ e l ^ H ^ HoSSefeft,* p* 1,- TJxe limpvk Times, October 5, 1941, *B©osevelt Seeks to Put Alllocial Insurance in a Federal Peel,* pp.* I and 4?#

IX* B a f o r e a d Savinga

It Is believed by some authorities that any plan of taxation to be effective In controlling inflation must out across the stream of spending*

This means that it must

reach th© large bulk of consumer incomes*

The present tax

system. In the 'United States does not do this in spite of the broadening of the income tax in the revenue bill of 1941.


1939 out of a total of 45,000,000 gainfully employed only $,900,000 or less than.9 per cent paid income taxes#


lowering of the personal exemptions la 1940 and 1941 together with the increase in the average of incomes raised the number of taxpayers to m

estimated isf009,000.

However, as the

total number of employed has also been increased to about

5Q|00d*CK>0* less than £35 per cent are paying income taxes.


In order to keep the volume of purchasing power from out­ running production, It is essential that taxation must reach the wage earning class as well as the salaried class* A method by which the lower income group may be reached other than by taxation is through some form of *forced saving©* mmk m

the Keynes Flan, which has been adopted In

modified form in Ureai Britain#

Th© author of this plan is

y#h» Maynard Keymen, the noted English economist*


to this method, a portion of th© wages of each employee is deducted from his salary at the source and loaned to the government under the stipulation that it will b© returned

230 with interest after the war# because*

The Keynes Plan is of value

(1) it siphons off excess purchasing power; {2} it

provides the employee with a revenue after th© war thus pre­ venting th© recurrence of a post war depression; {3) it effects a more equitable distribution of wealth#

In more detail# the

plan proposes that a part of th® wages of all people except those in the very low income class should he taken by the government in th© form of a compulsory loan#

A sliding scale

would he provided which would progressively increase the deferment as the income increases*

For those families whose

income is below the minimum and which offers insufficient margin for deferment of wages# the government would offer protection in the form of allowances to children and the rationing of low priced necessities*

At the close of th© war

a capital levy would be placed on the higher incomes which would provide a means of paying th© deferred wages to th© lower income classes# Under the British Treasury plan, which is an adaptation of the Keynes Flan, the tax rates are much higher than those suggested la th© Keynes Flan and ©specially so in the higher income brackets while the income deferred for all incomes is considerably smaller#

The final inocme left after

deduction for taxes and deferred credits is much greater under th© Treasury plan than under th© Keynes plan except in the higher b r a c k e t s S o far nothing has been said as to th© &%eyaas# y©h& Maynard# How to Fay for the War, Harcourt Brace and Co*# Hew York# 1940* pp* 1-88* ^^Harvard Business Review, Autumn number# Vol# XX* 1941# Sidney Weiatraub* *Gompulsory Savings in Great Britain," pp* 60-61*

method to bo ©mplcyed in paying off the deferred parents such as the capital levy proposed by Mr* Keynes*

At th© present

it is believed that the compulsory savings are no different M than increased taxation*

¥fhmMr* Keynes visited th© United States la th© spring of 1941* he proposed his plan of deferred payments to this country as a mean© of avoiding inflation*

A© yet this

■government has mot used his method although consideration is pig being given to it by many economist a and government officials, ' The Keynes Plan is subject to criticism on th© ground® that the people of the United State© are not accustomed to compul­ sion# ' On the other hand* any method of tarnation is obligatory* Under a plan similar to that of Mr* Keynes* labor benefits more than under outright taxation*

During previous wars govern*'

manta have financed their military efforts in large part by the sale of bends to the public*

Th© wealthier constituency

of society has been the principal buyers of these bond®*


small m g © earner has been unable to purchase these bonds either because his ©alary was insufficient or because higher living coats absorbed his wage*

Therefore* th© laboring group

ha® unjustly carried a disproportionate share of the burden of th© war inasmuch as the more privileged group has held th©

Times* April 8* 1941*. ^British Income Tax - %r‘ — 1941, editorial, wow How ^Budgeting Against Inflation**, p* 24* Before

May 13* 1941* *Mr. Keynes Proposes Inflation In TJ* S#** p* 2*

national debt receiving Interest payment® from taxes torn by the less privileged section or the society*

The Keynes

Plan tends to equate the financial responsibility for carry­ ing on the m r between the elements of the populace while at the same time it serves to kmp the cost of living down* Another by-product of the plan would be in improvement in the living conditions of those persons who had been existing on a subsistence level*

III. Curtailment of Consumer Gre<

S t Installm ent Is tiB S *

°® August 9,

1§41 President Roosevelt issued an executive order authoris­ ing, the Board of Governors of the Federal Reserve System: w••*t© regulate the terms•and conditions under oh credit repayable in installments may be extended for purchasing or carrying consumers1 durable goods. On August RI* 1941* the Board of Governors adopted a regula­ tion entitled ^Regulation W* which became effective on September 1* 1941*

In explaining the regulation* chairman

leele# of the Federal, Reserve Board said* *81Viliam demand for good® must be adjusted as closely as possible to supplies available for consumption. Regulation of installment credit 1® a necessary measure to 1*1® end. By deferring civilian demand at this time we can help avoid In­ flation, w© can aid in defense, and we can store up a backlog of buying power that will help offset a post-defense

slump *

"Consumer Credit Regulation ^Consumer er, 1941, p. p 825* taftwai S w a m BH.iiLsl.fe>

p* 829*

23S The regulation covers primarily son Burners’dura'ole goods and not aon-durable or apparel goods which have no competition with defense needs*

Eighteen months is the maximum maturity-

on loans covered fey the regulation with the requirement that they must he repaid in equal Installments at regular inter­ vals mot exceeding one month*

A mlnlmtsa down payment was

stipulated on all installment sales as well as m loans £@ secured fey listed goods* However, an amendment to Pecula­ tion W f which became effective Becomher 1, 1941, eliminated the dom. payment on purchases of two dollars or 1©bs%®* Beginning January X, 194&# the borrower is required to fill out a signed "Statement of Necessity* before any extension of an installment loan is granted#3® 3 m ® measure of the magnitude' of Installment buying

is indicated fey the fact that an estimated six billion dollar® will fee extended in 1941 which is about double that of 1938* Installment buying is resorted to* for the most part, by the lower wag® earning group, and in so far as it succeeds in cur­ tailing purchasing of goods, the regulation should help to curb i&flatlom*

The national City Bank of lew Tork City in

It© Bank Letter of September, 1941, stated5 "Th© regulations do not require a® drastic tightening of the sailer®1 terms recently prevail­ ing , either with respect to percentage of down

Bovenbftr* 1941, "Amendment pp* 1064-S*


t Mwas* aaaattag usmsmm ** »«**«*»*** **«#

Credit** pp* T-Ht

let ^^ZsSstiL Safina M ls UIn* a . Consumer Credit Regulation 1941, p. 829* Banking Conditions ,* S optmber, opt m b

.834 payment® or maximum maturities, as many expected* Bether they adopt, la th© mala, th© terms that th© more eanscrvahiv© finance companies have already h e m employing, and compel all lenders to conform to them*0® Because of the increased in©case of wag© earners, the addi­ tional earnings may overbalance the restrictions on credit# It is also possible that the purchasing power diverted from durable goods will be spent in non-durable goods not included in the regulations thus stimulating a price rise in this area* Th© shortage of oonsuner durable goods due to defense priority may prove to be a more effective regulator than the terms of credit sales*


fo be effective,, it would seem that installment regulation* should also be extended to consumersf aoa-dur&ble

goods* thil© more rigorous restrictions would be effective in curbing inflation* they would be unfair to labor in that there would be a release of more goods and credit to the higher income groups* it might also give the personal loan agencies or loan sharks an opportunity to thrive on the small wage earner#^ I











1041* the Federal Reserve Board issued an order to th© reserve banks to raise their reserve requirement® on Movember 1, 1941*

. 3%atlonal g t o Baste kettag, on* ©it** September, 1041, p* 100* 5gIbia.» p. 100} felted States Hays. August 89, 1941, ^Restriction® on Instalment Sales; will They Help to -Check Xaflahiomf* p* IS# 34Aaerloaa Federation!st. October, 1941, William Green, Iditorl&l* pp* liky*

Th© reserve for time and saving deposits in all member banks was raised from 5 to 6 par cent and on checking deposits fro®

12 to 26 per cent depending on the size of the city*


new- order is expected to reduce the idle money in member bank© from $5*200*000*009 to $4*090*000*900*

$uBt how

effective this measure of credit control will be in reducing customer borrowing is difficult to say#.

The National City

Bank of 'Hew York City in its monthly review of business for October.,, 1941* pointed out that th© effectiveness of restrict­ ing credit in order to prevent price inflation is doubtful because it plays but a secondary role to that of the huge borrowings of the government for financing defense need©* Then too, credit control will not overcome such things as shortages* labor unrest, and subsidies to agriculture#


the other hand,, an increase In reserve requirements reduces the bankaf reserves thus lessening their competition in the market for government securities*

In the past the banks*

excessive buying of government issues has tended to cause bond yields, to become m a t tractive to the general investing public, thus reducing the sale of government bond© to indi­ vidual investors*

This automatically revert© the bond

©ales back to the banks, leading to a further expansion of

National ffity Lfffier* Th© national City Bank, of Hew YorlVwS^be?, 1941, PP* 1X1*131 Chicago ife^iijr Tribune* September 24, 1941, “Banka* Reserve ReiulSentsTlftedlo limit,* p* 2?*

236 The increase in tlie reserve requirements for tanks is of interest to labor primarily in its indirect effect in forestalling rising prices*

Th® new policy may facilitate

this goal by (!) reducing the expansion of bank assets and (2) stimulating the sale of bonds to the general public through more attractive bond yields* v.

IT« Ste M S 2Z Spyyjmffltfe, .Securities to t£g EubXlo Insofar as the increased money income in the hands

©f the public is diverted to the purchase of government securi­ ties, a curtailment of forward buying of goods is accomplished* thus checking th© rising price level*

During the last %rld

War the Whited States financed a considerable part of th© war by the selling of its obligations to th© public and th© banks* In the sale of government bonds to th© public* th© practice of permitting the public to borrow the money from the banks to purchase the securities only stimulated further inflation by the creation of new money in the form of deposit currency* This method of borrowing* instead of Increasing savings, diminished them and counteracted the efforts of the government to control prices*

In the sale of government securities to

th® banks the government accepts a deposit on the books of the banka from which It draws from time to time*

As it spends its

balance* the ownership passes into the hands of the public which in turn deposits th© money in the banks*

By this process*

the banks experience a sharp increase in their cash reserves which leads them to expand their loans and investments in order to maintain their normal reserve ratio*


237 from tii© banks thus tends to eftpaaA the quantity of credit, causing a further advance la the price level through th® release of more money, During the present defense program the Halted States is endeavoring to avoid the mistakes in respect to war borrowlag by the sale of saving bonds in various denominations to the public and by prohibiting their purchase through bank credit*

This method encourage® savings and results 1m m

automatic check on spending*

On May 1, 1941, the treasury

began offering the sale of defense saving securities includ­ ing bonds and saving stamps*

The defense saving stamps are

issued in small denominations ranging, from ten cents to five dollars and may be converted into a defense bond on the accumu­ lation of a sufficient number*

Much publicity is being given

to inform the public of the desirability of this form of Investment and to appeal to the patriotic duty of every per­ son to Invest for defense* vided for their purchase*

Convenient places have been pro­ The defense bonds and stamps are

on sale at post offices* banks* and saving and loan associa­ tions*

The stamps may also b® purchased at retail stones

where an opportunity is given the customer to accept stamps in exchange for th® balance of his pur chase,

in many factories

and business establishments voluntary pay-deduction plena are

S6H«rdy, Charles 0., Wartime Control gf Prices, The Brookings Institution* Washington, 1 * C*, 1940, p m 22-3* Durbin, B* F* M*f Sgg jtt £§X £ 3 & i&f SS£* souree-deto© bien plan in conjunction with a f o m of the Eeyne®: -deferred caving plan should be adopted to absorb ex­ cess imrahasihg' power, to reduce high, industrial profits*, to establish mbetter distribution of the wealth, and to pro­ vide a reservoir of needed funds after the war* Many of labor*® problems have been thrown into Mghralief due to the world conflict*

Labor has often had

a strategic vole® at the conference table because of its indispensability in the war effort*

©eloquently, according

to present trends it appears that labor will find it® status greatly improved after the war, and there will need to be a

314 determined effort to held and enlarge these gains for the working people*

Perhaps one of the fortunate by-products of

the war will he the extension of government activity in mat-* tore affecting health* safety, and comfort of Its citisens* While our country is fighting In the name of democracy, our leaders should see the ^horne front11 In the preservation of the democratic way of life in America and should strive to achieve for the working nan and woman a larger share In the national income and a more abundant life* the problem, of preventing post war economic die* location Is nevertheless urgent even though less Immediate than the necessity of successful termination of hostilities*Ameliorating factors will be the accumulation of huge short­ ages of consumer goods m€ large saving# in the form of de*

tmm stamps and bonds which ’may be released as purchasing power*

However, the problem of placement of workers and

soldiers into, normal peacetime pursuits will be no sinecure* To relievo the pressure of unemployment,, there should be a gradual tapering off of war contracts*

neutralised and co­

ordinated planning for the post war period is needed In order to avoid application of offort and to possess legal author­ ity necessary for 'the development of plans*

It is recom­

mended that a federal agency or tmmlmlm be established for this purpose and that it be given the authority t© take over the work of the other governmental services#

Any blue­

print for a pest war economy must take into consideration the centrality of government planning and activity and must be integrated with the wider world economy*

BIBLIOGRAPHY A* Government Booameats

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teg3£ l a c a SaAtea. M* £* f&sszl MssmEg, t e l B* S# federal Reserve Board, federal Reserve Bulletin, fume, 1941, Tel, 27, PP* 506-510, financial ■ problems of defease* August, 1941* V«i* 27, pp. 739-730, The tax saving plan. September, IMA, Vol. 27* pp* 825-836, Consumer ; credit regulation and banking condition®. September* 1941* fol* 27* pp. 875-877* H. S. savins ■ bonds and tax anticipation notes* HevflBber, 1941, Vol# 37* pp. 1084-1086, Amendment of comsumer credit regulation# famuary* 1942, fol. 28* pp. 7-11* Consumer credit*

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g a i g M laUalto

H* B * Public Information Committee on Official " ’fulletia, August *4, 1919, pp* 1-8, H* A* Garfield named full controller by Presidents anthracite price flared* Bteember 27, If19, pp* 1-2, taking over of railroads is *A great national necessity,* President' Wilson tell® public* February 11* If10* pp* 9-14, Beport.and recommenda­ tion# of fresident’s' medif.tors on the underlying cause® end remedy for labor unrest* March 4* 1910, p» 1* Reorganization of War .Industries Board, with 'Mr* Bernard M* Baruch chairman# anbounced by President* April M $191S, p * 3*. Sweeping- terns of the Sabotage Act analyzed' by Department of Fustic©* May 11, 1918# pp* 9-16* Service® of advertising men in wir work given fullest recognition at luncheon la this city, {Address by Secretary of labor e£ £l*) May IS, 1918, p* 14, labor Department seeking stan­ dardized wag© scale*.

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321 U* 3* President* l^o.~~©ncy Management Office, Office of Pvoduetioa Management* Labor Division, 1941* Minorities in Defense, pp* 19* 0* S* President, ’feevgency Management Office, Office of Production Management, Labor Division, Press Belease on Labor Discrimination, January 9, 194B* 0# S# President, national Resources Planning Board, January, 1941* Development of Resources and Stabilisation of Etopleymei&t in the U» 8*, (Also published a© Congress, 1st .Session* H* Doc* HO. .1411* Part

I The federal Program for national

fart II Part III

Develops a&t* pp* 101* Regional Development Plans pp* 885* functional Development Policies, pp* 59*

U. S* President, national Resources Hanning Board*

fcsa-lspa im am &m at teM.s?.al> » U i. Safes* *Tun ef 1941* pp * y2 •

0* S* Presid-ent* national Besourees Plaitning Board* w MSM August, X941, pp. IV* D* S. President, National Resources Planninc: Board* After tfoe Wfer^Fujl Implovmc&t* January* 1948 « pp

!• S.* is& lilti s i I^bbs aaA £am& tern 0. S, statutes at Large 52ad Congress, Tel. £7, Act of August, 1882, p. 340 62nd Congress, Tol. 37, Publlo Mo, 199 «H, 8. 9061} 64th Congress, Tol. 39, Public Mo. 391 (H. R, 80632} Public No, 860 (H. S. 13453) 65th Congress, Tol, 40, Public No. 41 (B. R. 4961} Public Ho. 1S1 1*7, December 8* 194 n£ B & S a g AlrszMi

§MM IsHE I b M M i pp* 347-348* Vol# 7, December 16, 1940 Labor la jftdgballdiay# pp , ■371-378* Vol#' fi isc-Her S3, ■1940, teaar , pp* 401405E* ■ Vol# 7, January BO, 1941, beeline in Strikes# pp# ©17—51®*; v®it^*'/aBuary,i®* if41* il3S4Sa 3£l 1# PP* 490—491* .* 7, *T O 3 V 87, 1941,. Cloaed-Siien.Str! >*J Strike Botio^' rices*- on* 553-555s ^ Igl^gj telgpgri2^g|£» p*'5Sb. Vol*:7, February Kru&ry 10« 1941*■ Bniona Held M p p * -697*5981 . d Sl ttmlfo PP# Vol#- % Mareb if^l *■Reports on 1$$ Ctt Xtt£« P»!W«! > S£Slj£2 MffilMlffl 1 H I & la #• »•• W , ‘ reb 17, 1941, fater-Pnloa £Ufm?J« & -pp*. 58-59*: 1, 1941, on 2j&, P* ■1X8$ ,-lBl.-lS3* of #45#000^000 rob ®4,: 1941, £si Stettt* pgt £ • _ tueas®, ~^cxr-~ pp* ™ 84-86* Vol* ©* Z ^ S T m , 1941, Mlis-Ofoalmers Contract* Old and Hew* pp* 188*195* Vol#

8| Say 8, 1941, M te J$M i i i B*S& H i M M ISSIffis

PP* ©14-SI8* Vol# 8, lav IB, 1941, i t e m Lar^e i& p« 363. y 19, 1941, IJ, — 5* fionrt r-—z -&£ — ■ -.-r- -___ Metrict

j& &• ?• t*li» I* .leyeea SsSla* at the Maryland Plant ige* j¥# Same# $oa» Tljffg S i,

Vol. i, lay 19’, 1941, Bboae X»l»4*» little Wanner Aot, pp. 411-412. Vol. 8, 1u&e 2, 1941, SuooleBiftnt. P • 4. Vol* 8, Juae 2, 1941, The President Sayfl "£a Defense Strikes.9 pp. 808-500. Vol. S, June 9, 1941, Strlleg ia 1940s ,Saag£g £Si Results. p. 538.


Vol. 0, July 21, 1941, Bttla Pacts a M Jra£ Labor Ml&Z.'. pp* 732-733, Tol* 9X September 1 $ 1041* laualiziiy? Conditions iii 11 S M ilil

.Shipyards* pp* §5-59* Vol. 9, September 82, .1941, Ship Strike Briaag Govgja„ B B | M 3 S E a » P* 85. , Tol* 0, September 29, 1941* Aircraft Wag© Case to asaaMffl a m . gg . loe-iov, , Vol. 9, Koreaber 17, 1941, Case of Bltamincma Coal rs* pp* ^ 287-289'* 287— at Zero OTtttiber.84* 1941* Mine Hour# pp* 296-2991 Sapp, meut* p* 4, TolJ December 1, 1941* Congreag %r& s on Strife© Bllls^ PP* 351—332* Tol* 9, Deeea&e? 8, 1941* Cass© m Satere1liar Tractor go* * pp* 371-37S s -foyxfr o f Siltl USE op* 388-369* Tol* 9.* December 15* 1941* habor Foil elas Bgder the t H£ yg3?* PP# 393-39?^ Arbltra^ion.>*T n v o l y ^ _


tire Coal Mines *■ pp* 4Q0-4GS, •eettfeer 22* 1941* A Pivotal Q q m ^ raao® I*03? elatlons* pp* 4 m J Szt7 ,* »f jJeeenfee? 29 jtrlfee Cases* op• January ^fater-gnlon Peaces 5££SS Wind. y. 486. I, January 19, 1942, "Copatltutloa* o£ War Labor Boara. pp. 536-S3S. Vol. 3, January 19, 1942, Trails Blazed & Mediation Board* pp.* §38-541; Supplement * p* 4. Vol. 9, January 20, 194i>.Two Proposals for A. £. 4 , fi*. £. 0. Peace, pp. SVfl-gfTi ^Temmental WarnJlags «g. 00. 873-876; ggg the War Labor I S T wTil t# PP* 509-BTC*

4* £• 4*




g t e l a S S M . PP* 637-038. Wafffr and Hour

£* £*

Tol* 3* Avgust 5* 1940* on Boors* p* 332* Tol* 3, December 9, 1940* 'Wx^3tlon& for. Te&etable Backers* pp* 539-540* Tol* 16, ’JL# 1. Seeember AV | 1940, Hayyjs Attack on WalshHealey Act* pp* 551-553*

331 Vol. 4, *Fanuary 13, 1941 f Bgfeag® Work Weak. pp* 10-11* Tol. 4, Ja&u&ry 27, 1941 f Idmalatratliig Walsh-Easier M t » pp* 36-56. )X. 4, Ap, April 7, 1941, gabooatraeter Bui® Explained, pp. 162-163. Tol. 4, April 14, 1941, Modified on Tralaiag Couraeg. pp. 177-179. Tol* 4, tfune 9, 1941, Arm? Asks Ixamfriea for Oasmia& w llai* p * **5. Tol* 4, June 16, 1941, Exemi>tio&% Grouted* pp. 313-314# Tol* 4, 1941,: (Ima ~50}» ^^ S TJpourfgIS^wir-fime Brltalzu pp, 349-360* Tol.'4,‘''Baeembsr 29, 1941, Sour laws Selaxod* p* 723, Tol, 5, February 2,'1942, BiooorSb for WjTfylag State S E B teE* pp* 77-73, B M S E gjAsM,!?. fe s te iSSISEt S ^ iM S S l* £ • £• April 5, 1941 February 15, 1941 February 82, 1941. January 3, 1942

'•IflWMKI York September 11, 1040, p. 11* Hareh 23, 1941, pp* 1 and 33, March 24, 1941, p. 16. March 35, 1941, pp* 16 and IB# March 50, 1941, p. 65* April 9, 1941, p. IS* May 2, 1941, p* 33* Qotobor 6, l t d , pp. 1 and 47. September '£3* 1941, p. 12. September 50, 1941, p. 19* September 30* '1941, pp* 1 and 19. April B, 1941, pp, 1 and 14* April 9, 1941, p. 84. '

S te M

S M w SastoSE September 86, 1941.,. p. 8* October 1, 1941, pp. I sad 7, Oetefeer 8, 1941, p. 18*

OMemiie Bally fribuae September 24, 1941, p*27* Ootobor 20, 1941, p. 10* January 13, 1942, pp* 1 aud 10 and p. 15#


American Federation of Saber* Washington, B* C*, Setter to James S« Youtsler from William Green, November 14, 1941* Economic Defense -Board, Washington, B, 0*, Setter to James S* Youtsler from Mile ferklas, Sorember 22* 1942# Hart, Am G»§ and others* Taxation for defease* Mimeograph circular* 1941, pp* 8*. national Industrial Conference Board, lews Belease IB #1282, January# 28, 1942# Haticaaal- Industrial Conference Board# Hews lei ease HI #1284, February 7* 1942#



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