1942: Labor Arbitration

National War Labor Board.

The dominant role in labor arbitration during 1942 was played by the National War Labor Board. This board, created by the President on Jan. 12 and composed of 12 members with equal representation to the public, organized labor, and employers, began operations under the chairmanship of William H. Davis. As chairman of the National Defense Mediation Board of 1941, which had virtually suspended operations at the end of the year because of the refusal of the C. I. O. members to participate in its work, Mr. Davis brought to his new post much experience with the causes of war labor disputes and the most stubborn obstacles to their settlement. Despite the formidable difficulties in its way, the board, by reason of its mere existence and the major policies it pursued, was able to make a substantial contribution to the maintenance of industrial peace.

Several factors proved of great assistance to the board. Of these the most important was the American entry into the war in early December 1941. This fact settled the entire contentious issue of war production. For, with our active participation in the war, it was clear that a large and increasing proportion of the country's industrial capacity would be converted to war uses and that increasing output for the use of our own armed forces as well as for our allies would henceforth be the major concern of the American people. In response to this situation, labor pledged itself to keep from striking and to submit all issues to the newly-established labor board. The board carried on its duties, consequently, under conditions in which strikes and lockouts were interpreted as attacks on the Government's war program.

Wages.

In handling the difficult problem of wages, the board was assisted by the administration's policy of price stabilization. On April 27, the President, in a message to Congress, urged the immediate stabilization of wages as an essential element in the program to prevent the usual war inflation and to keep down the cost of living. This policy opened the way for the board to dispose of the numerous demands for wage increases which were then pending before it. The policy also persuaded the board to abandon its practice of settling each case on its own particular merits and to adopt a general method of wage determination. This method was the heart of the Little Steel decision announced on July 16. The decision was based on the principle that the purchasing power of wages in January 1941 should be maintained. It provided, therefore, that the total of wage increases between that date and the middle of 1942 should not exceed 15 per cent, the amount by which the cost of living had risen in the same interval. Except in unusual cases, this formula was generally applied by the board and it acted to restrain the rate of wage advances.

Closed Shop.

The issue of the closed shop, the rock on which the Defense Mediation Board had split the year before, was likewise subjected to a general formula. This was the 'maintenance of membership' clause which, with few exceptions, the board ordered in all cases involving the closed shop. Maintenance of membership was a compromise arrangement. It provided merely that those employees who were members of a union when a contract was signed were required to retain their membership for the life of the contract. Thus, this device denied unions the closed shop, which would have forced all employees to become members, and compensated them for surrendering the right to strike by protecting them against a wholesale resignation of members.

Expansion of Arbitration.

Since the board had wide jurisdiction and a full docket of cases, in order to keep itself from being swamped it pursued the policy of insisting that only controversies which could not be settled by agreement should be submitted to arbitration. In many cases where the disputants were unable to agree upon a third party, the board itself would appoint an arbitrator. This practice resulted in a great expansion of arbitration throughout American industry and, in the view of some observers, closely approached insistence upon compulsory arbitration.

Authority of the National War Labor Board.

On the whole, the board's authority and decisions were rarely challenged. On the few occasions when they were, the recalcitrant employers or employees either yielded shortly to persuasion or the Government took over the plants. The most spectacular controversy of this kind arose in the dispute between the board and the Montgomery-Ward Company. Among other reasons this company refused to abide by a board decision on the ground that it was not a war industry and, hence, not under the board's jurisdiction and that it could not be compelled to accept maintenance of membership. After long private and public discussion the company agreed to yield if ordered to do so by the President as a war measure. When, at the instance of the board, the President so directed, the company signed a contract with the union embodying the provisions required by the board.

This question of the board's authority was, anyhow, settled in early October by the adoption of a price stabilization law and a comprehensive executive order issued by the President. Under their terms, the board received jurisdiction over all disputes in all industry, war or non-war, and over all employees earning less than $5,000 a year. Clothed with this vast authority the board showed no disposition voluntarily to limit its powers. But in a series of cases involving demands by municipal employees, including those of New York City, the board was obliged to rule that it lacked authority to intervene in these disputes.

1941: Labor Arbitration

National Defense Mediation Board.

The wave of strikes, affecting both defense and non-defense industries, which featured the year 1941 caused the creation of new machinery for settling labor disputes not long after the beginning of the year. Although the administration in Washington had been consistently sanguine over the capacity of existing governmental agencies to keep peace in industry, numerous and prolonged stoppages in machine shops, airplane factories and shipyards aroused both Congress and the public and forced the President to act. On March 19, the President, acting under the terms of an Executive Order, set up the National Defense Mediation Board and appointed its members. The Board was composed of representatives of the employers, the unions and the public. The President designated Clarence A. Dykstra, president of the University of Wisconsin, as its first chairman. He served until mid-June when he was succeeded by William H. Davis, a New York patent lawyer and chairman of the New York State Mediation Board.

The powers under which the Board operated were vague and ill-defined. It was obviously not empowered to engage in compulsory arbitration. To force the discontinuance of existing strikes or to prevent strikes from being called, it had to rely mainly on its ability to win the support of public opinion. Cases came before the Board only on the certification of the Secretary of Labor. Disputes, therefore, as a rule passed through several stages of mediation and conciliation before they reached the Board. And it did not possess, at its inception, a set of principles to assist it in arriving at an effective and generally acceptable war labor policy.

Closed Shop Issue.

On the matter of labor policy the Board made a vital decision in its first days. It agreed then not to seek general principles but to judge each case on its merits. Aside from the fact that this procedure tacitly, if not explicitly, involved the development and application of general principles, it exposed the Board to the danger of making contradictory decisions on the same or similar issues and thus weakening the Board's authority with first one and then the other of the parties to a dispute. This was the result of the Board's method of dealing with the most difficult and contentious issue of the closed shop. In several cases, in which the closed shop was the principal issue, the Board, much against the employers' opposition, undertook not only to mediate the question but in substance brought the full measure of its prestige to bear on the employers and forced them to accept the closed shop itself or some modification of that device. But on Nov. 11, the Board by a majority vote ruled against the United Mine Workers in their demand for a closed shop in the coal (captive) mines owned and operated by the steel companies. The decision was immediately followed by the resignation of the C.I.O. members of the Board, the refusal of all C.I.O. unions to submit cases to the Board, and a more or less general boycott of defense agencies by C.I.O. advisers and officials. These were obviously effective measures and they shortly brought to an end the brief life of the Defense Mediation Board.

Wage Issue.

The wage issue raised similar difficulties. Beginning early in the year unions made demands for considerable advances in wage rates. Employers, while not averse to raising wages somewhat, opposed the increases demanded on the score that they were excessive and would, if unregulated, lead to inflationary price movements. Public opinion, likewise, was directed toward the threat of inflation that inhered in unrestrained wage rises. But with wages as with the closed shop the Board was unwilling to take a position on the basic policy of wages and, hence, became a party to the wage policies pursued by organized labor during 1941.

Government Intervention.

On the whole, the Board's experience was not a happy one. Although it participated in settling many strikes, the aggregate number of stoppages and the time lost through them remained high in the face of the Board's activities. At the same time the Board was severely criticized for the part it played in cases that terminated in the Government's taking over plants and operating them. In the case of the North American Aviation Company, manufacturer of war planes, the Government seized the plant because of a strike called while the dispute was under consideration by the Board. Government intervention in this form was roundly condemned by many union spokesmen, though it was generally approved by public opinion. In the Federal Shipbuilding case, on the other hand, the shipyards were taken over and operated by the Government because the company, a subsidiary of the United States Steel Corporation, refused to accept the Board's decision ordering the company to enforce a modified form of the closed shop. Again, in the case of Air Associates, the Board, acting on the complaint of the union that the firm's management was antagonistic to union labor, had the plant seized by the Government and returned to its owners only when the company's president retired from his position.

Proposed Legislation.

These episodes and the disruptive effects of the large number of strikes turned the attention of Congress to new legislation. Many proposals were made in both houses. Some proposed the outright prohibition of strikes. Others prohibited strikes during specified periods, generally designated cooling-off periods. Still others were aimed more generally to regulate the activities of labor unions. But, although there was considerable sentiment for legislation, the Administration was opposed to legislative action and successfully barred the passage of new laws.

The upshot of these various circumstances was that the Defense Mediation Board was forced to go out of business. The entrance of the United States into World War II, after the Japanese attack on Pearl Harbor on Dec. 7, radically changed the complexion of labor relations and afforded employers, labor and Government an opportunity to reconsider the machinery of arbitration and mediation. Accordingly the President called a joint conference of employers and unions to propose a plan for preventing strikes and lockouts. The conference split on the issue of the closed shop. But it reached a partial agreement on the appropriate features of some labor agency and thereby paved the way for the creation of a new war labor board to replace the National Defense Mediation Board.

Captive Coal Mine Dispute.

The issue of the closed shop in the captive coal mines (the rock on which the Defense Mediation Board split) was not settled by the Board's findings. The miners' union ordered its members in the captive mines on strike and the whole dispute then passed into the hands of the President. The strike defied all of the President's efforts at a settlement. His handling of the matter also introduced new features into public arbitration. Although the President had stated in a published communication to John L. Lewis that no public agency would force a man to join a union against his will, he was persuaded by the continuance of the strike to set up a new board to arbitrate the closed shop issue in this particular case. The members of the board were Fairless, president of the United States Steel Corporation, Lewis, president of the United Mine Workers, and Steelman, chief of the United States Conciliation Service. In order to make this an unofficial agency, Steelman resigned his position for the period of the arbitration, to resume it again at its close. The members of the Board divided and Steelman, in the deciding vote, granted the captive coal miners the closed shop.

Railroad Wage Dispute.

Similar difficulties in performing the duties of composing labor disputes were encountered by the Railroad Fact-finding Board, appointed by the President in the early fall of 1941. This board was created, under the provisions of the Railway Labor Act, to avert a strike authorized by the railroad unions in furtherance of their demand for wage increases. After lengthy hearings and scrutiny of evidence, the Board issued its report proposing increases averaging 12.5 per cent, with greater advances for the lower- than for the higher-paid employees, and recommending that the increases terminate at the end of 1942. All railroad unions rejected the Board's findings and, after taking a strike vote, ordered a strike for early December. Again the White House intervened. It sought to bring railway management and the unions together for further negotiation. When these efforts failed to produce a settlement, the Board was recalled to Washington. It refused to review its findings of fact, but consented to act as an intermediary between the parties. This method succeeded and a new wage settlement was arrived at which raised the average increase to approximately 15 per cent. While a strike was thus averted, this experience did much to damage the prestige of railroad arbitral procedure and generally to impair the authority of public arbitration agencies. See also CONGRESS OF INDUSTRIAL ORGANIZATIONS; LABOR LEGISLATION.

1940: Labor Arbitration

The problem of settling labor disputes through arbitration was raised in its most compelling form in 1940 in connection with the defense industries. The increasingly important part which these industries began to play in the American economy, as well as the vital function they were called upon to perform, raised anew the question of the existence of requisite machinery and legislation for preventing and settling strikes. The comparative quiet of 1940 failed to allay fears of trouble in the future. Consequently, much new machinery was set up to deal with labor disputes and many additional plans were proposed and debated.

The most extensive machinery of arbitration and conciliation was established by the labor member, Sidney Hillman, of the Defense Advisory Commission. This was of two types. The first took the form of a labor advisory committee, composed of presidents of leading C.I.O. and A. F. of L. unions, whose principal function was to use its influence with organized labor to prevent issues and grievances from breaking out into strikes. A second type consisted of a species of supermediation service, aimed at bringing to bear on both parties to labor disputes the full weight of the authority and prestige of the Defense Commission. A third departure, for the present limited to the shipbuilding industry, and modeled on a similar machinery existing in this industry during the World War, took the form of a three-party board, representing labor, industry, and government.

An elaborate proposal by Philip Murray, president of the C.I.O. and the Steel Workers Organizing Committee, was directed toward creating similar boards in the basic defense industries. In Mr. Murray's opinion, such agencies, by enlisting the cooperation of organized labor, would not only reduce the chances of strikes but would go a long way to solve existing problems of production. This proposal was submitted to the President in December. By the end of the year, it had not been acted upon.

The extensive interests of various government departments in the defense program led, in addition, to the creation of a more or less informal machinery which, among other duties, performed the function of supervising labor relations. Thus the War and Navy Departments stationed many of their representatives in plants working on government contracts. In the War Department, Edward F. McGrady, formerly Assistant Secretary of Labor and one of the most experienced arbitrators of the country, was assigned to the assistant secretary's office, presumably to act as 'trouble shooter' in labor disputes.

As in previous years, however, the greatest burden of settling strikes fell upon the Conciliation Service of the United States Department of Labor. This service, greatly expanded and competently managed by its present Director, Dr. John R. Steelman, has intervened in most disputes and has settled the great majority of them. Of the remaining Federal labor agencies, the National Labor Relations Board is widely credited with averting strikes by promoting the practice of collective bargaining and the making of collective contracts between industry and labor. In an increasing number of industries, also, the joint agreements provide for arbitration machinery within the industry, similar to the plans in force for many years in the clothing and anthracite coal industries. An important example of this is the arbitration machinery organized recently throughout the unionized plants of the General Motors Corporation.

In spite of much discussion of new legislation on strikes, there was no consensus as to the wisest and most effective course of action. Of the many proposals advanced during the year, the most popular appeared to be some measure, similar to the provisions of the Railway Labor Act, which would require a waiting period of fair duration, during which the issues of the dispute would be submitted to a public agency for adjudication or report and the parties would refrain from precipitating a strike or lockout. See also articles on CONGRESS OF INDUSTRIAL ORGANIZATIONS; STRIKES; TRADE UNIONS; WAGES, HOURS AND WORKING CONDITIONS.

1939: Labor Arbitration

The largest strikes of 1939 were settled by informal mediation and conciliation and without the intervention of formal arbitration. Since no machinery similar to that provided for the railroad industry by the Railway Labor Act is afforded to the remainder of American industry, it must rely for the settling or averting of disputes either upon direct negotiations between employers and employees or upon the intervention of public and private mediators. It was through a combination of these two methods that the strikes of coal miners and the employees of the General Motors and Chrysler Corporations were terminated.

In spite of the existence of a largely expanded Federal mediation and conciliation service and many local boards and agencies serving a similar purpose, the settlement or prevention of particularly stubborn strikes has required the intervention of public personages, who were able to bring to bear upon the dispute the prestige of their office and personality. Thus the way was paved for the settlement of the coal strike by conferences between representatives of the United Mine Works and the coal operators and the President of the United States. The present Mayor of New York City has often performed the same service and a layman, like Edward F. McGrady, former Assistant Secretary of Labor, who has shown great skill in mediating industrial disputes, has been drafted as a conciliator or arbitrator on many occasions. See also STRIKES.

Local Agencies.

With the spread of collective bargaining agreements in American industry, there have been set up numerous local and industry arbitration boards, similar to those which have for a long time existed in the men's and women's clothing industries and in the anthracite coal industry. These agencies, because of their continuity and familiarity with the specific situations with which they deal, succeed in reducing the number of strikes. But they have often found it impossible to avert or settle major and critical issues, out of which the most serious and prolonged industrial conflicts usually grow.

Federal Agencies.

Aside from the National Mediation Board, whose jurisdiction is restricted to transportation, the leading Federal agencies for the settlement of labor disputes are the Conciliation Service of the United States Department of Labor and the National Labor Relations Board. Of the two the Conciliation Service is, for this purpose, by far the more important and it plays some part in handling the majority of serious disputes. The mediation and arbitration activities of the Labor Relations Board are performed as a by-product of its function in enforcing the Wagner Act.

During the last year there has been some discussion of the need for a stronger Federal mediation and arbitration machinery and even of new legislation which would, like the Railway Labor Act, provide for the postponement of strike action. But these ideas have not yet passed beyond the stage of discussion. See also UNITED STATES: Supreme Court Decisions.

1938: Labor Arbitration

Operation of the Railway Labor Act.

The most highly developed machinery of mediation and arbitration in American industry exists in the railroad industry, where the Railway Labor Act provides the procedure for the settlement of labor disputes. This machinery was invoked as the result of a demand for a 15 per cent reduction in the rates of pay of railroad employees, made by the carriers on May 12, 1938. Negotiations between the management and the unions failed to produce an agreement. In accordance with the requirements of the Railway Labor Act, the National Mediation Board attempted to mediate the dispute. This, too, was unsuccessful, and the Board proposed that the parties submit the question to arbitration. The carriers were willing to arbitrate, but the unions declined. On Aug. 31, the Board formally notified the parties of the termination of its services. The effect of this notice was to create a period of truce of 30 days, during which neither party could take any action. With the formal notice from the Board, the carriers notified the unions that the reduced wage scales would become effective Oct. 1. The unions thereupon took strike votes and, when the votes were counted, announced that they would call a nation-wide strike unless the notices of a wage-cut were withdrawn. As the next step in this elaborate procedure, the National Mediation Board informed the President of the United States of the existence of an emergency; and the President, under the powers of the Railway Labor Act, appointed the Railroad Emergency Board on Sept. 27, 1938.

This Board is neither an arbitration nor a mediation agency. Its function is to weigh the facts and to report its findings within 30 days. The members of the Board — Walter P. Stacy, Chief Justice of the Supreme Court of North Carolina; James M. Landis, Dean of the Harvard Law School; and Harry A. Millis, Professor of Economics at the University of Chicago — held public hearings at which representatives of the roads and the employees and other interested parties appeared and presented their cases. On Oct. 29, the Board published its findings and the conclusion that 'no horizontal reduction upon a national scale of the wages of railway labor should be pressed by the carriers at this time.' A few days later, Nov. 4, the roads withdrew their demand.

Railroad Boards of Adjustment.

On the railroads less important disputes are constantly handled by Boards of Adjustment, composed of representatives of employees and management. If these are unable to agree, they may, and generally do, submit the issue to an arbitrator jointly chosen by the two parties. In this industry, therefore, and on commercial air lines, which were brought under the provisions of the Railway Labor Act in 1936, the procedures of negotiation are in substance fixed by the law in such a way as to avert strikes.

United States Conciliation Service and Growth of Mediation.

For the remainder of American industry, such arbitration and mediation machinery as exists is much more informal. The most active mediating agency in the country is the United States Conciliation Service, a division of the United States Department of Labor. During the year ending June 30, 1938, the Conciliation Service intervened in 4,231 situations involving 1,618,000 workers. Of the activities of the various state mediation services, which are to be found in the principal industrial states, there is no adequate record. The National Labor Relations Board is a law-enforcement agency and does not consider itself a board of arbitration. In the exercise of its functions, however, it settles many complaints before they reach the stage of a decision. Thus for the year ending June 30, 1938, the Board reported that settlements in compliance with the Labor Relations Act were obtained in 4.621 cases, or 52.2 per cent of the total cases closed. The increase in the unionization of industry and the growth of collective agreements has extended the use of arbitration in American industry. Under the older collective arrangements such as have for many years existed in the men's and women's clothing and hosiery industries, there is permanent and continuous arbitration machinery supported by the employers and the unions. Under the more recent agreements, arbitration is employed only occasionally and in the settlement of particular controversies. But it is clear that arbitration of industrial disputes has been rapidly spreading through industry.

Federal Maritime Labor Board.

Frequent strikes in the maritime industry and the disputes arising out of the conflicts between the A.F. of L. and the C.I.O. unions led to the creation of the Federal Maritime Labor Board, by an amendment to the Merchant Marine Act of 1936, approved June 23, 1938. The primary function of this Board is mediatory, and it can arbitrate only with the consent of the two parties to the dispute.

Since 1938 was a relatively quiet year, the mediation and arbitration facilities of the country were exposed to no severe test. Should the number of strikes again equal or approach the levels of 1936-37, public opinion may well demand a general arbitration law, applicable to all industry, similar in its provisions to the Railway Labor Act. See also RAILROADS; TRANSPORTATION: Railroads.