Railroads - General

PSF Railroads Subject File Box 176 Raibroads BASIC DAILY WAGE For LOCOMOTIVE ENGINEERS, FIREMEN, HELPERS, HOSTLERS AND HOSTLERS' HELPERS on RAILROADS IN THE UNITED STATES EFFECTIVE, OCTOBER 1, 1937. PASSENGER SERVICE Classification EASTERN RAILROADS WESTERN RAILROADS SOUTHEASTERN RAILROADS of Locomotives FIREMAN (Weight on Drivers) Electric Electric Electric Engineer Fireman Helper Engineer Coal Oil Helper Engineer Fireman Helper Less than 80,000 lbs $7.06 $5.34 $5.34 $7.00 $5.30 $5.30 $5.30 $7.00 $5.35 $5.35 80,000 to 100,000 lbs 7.06 5.43 5.34 7.00 5.38 5.30 5.30 7.00 5.43 5.35 100,000 to 140,000 lbs 7.15 5.51 5.34 7.09 5.46 5.30 5.30 7.09 5.51 5.35 140,000 to 170,000 lbs 7.23 5.69 5.34 7.17 5.62 5.46 5.30 7.17 5.67 5.35 170,000 to 200,000 lbs 7.32 5.77 5.34 7.26 5.70 5.54 5.30 7.26 5.75 5.35 200,000 to 250,000 lbs 7.41 5.86 5.51 7.34 5.78 5.62 5.46 7.34 5.83 5.51 250,000 to 300,000 lbs 7.49 5.86 5.51 7.43 5.78 5.62 5.46 7.43 5.83 5.51 300,000 to 350,000 lbs 7.58 5.94 5.51 7.51 5.86 5.70 5.46 7.51 5.91 5.51 350,000 to 400,000 lbs 7.66 6.03 5.51 7.60 5.94 5.78 5.46 7.60 5.99 5.51 400,000 to 450,000 lbs 7.75 6.12 5.69 7.68 6.02 5.86 5.62 7.68 6.07 5.67 450,000 to 500,000 lbs 7.84 6.20 5.69 7.77 6.10 5.94 5.62 7.77 6.15 5.67 500,000 lbs. and over 7.92 6.29 5.69 7.85 6.18 6.02 5.62 7.85 6.23 5.67 Mallets regardless of weight. 8.14 6.63 8.07 6.50 6.30 8.07 6.55 Minimum earnings from mileage, overtime, or other rules applicable for each day service is performed 7.97 6.08 6.08 7.90 5.99 5.99 5.99 7.90 6.04 6.04 FREIGHT SERVICE Through and Irregular Freight, Pusher, Helper, Mine Run or Roustabout, Belt Line or Transfer, Wreck, Work, Con- struction, Snowplow, Circus Trains, Trains Established for the Exclusive Purpose of Handling Milk and all Other Unclassified Service. Classification EASTERN RAILROADS WESTERN RAILROADS SOUTHEASTERN RAILROADS of Locomotives FIREMAN (Weight on Drivers) Electric Electric Electric Engineer Fireman Helper Engineer Coal Oil Helper Engineer Fireman Helper Less than 80,000 lbs $7.79 $5.82 $5.82 $7.72 $5.79 $5.79 $5.79 $7.72 $5.84 $5.84 80,000 to 100,000 lbs 7.88 5.90 5.82 7.81 5.87 5.79 5.79 7.81 5.92 5.84 100,000 to 140,000 lbs 7.97 6.07 5.82 7.90 6.03 5.87 5.79 7.90 6.08 5.84 140,000 to 170,000 lbs 8.22 6.25 5.82 8.15 6.19 6.03 5.79 8.15 6.24 5.84 170,000 to 200,000 lbs 8.40 6.42 5.82 8.32 6.35 6.19 5.79 8.32 6.40 5.84 200,000 to 250,000 lbs 8.57 6.59 5.99 8.49 6.52 6.35* 5.95 8.49 6.56 6.00 250,000 to 300,000 lbs 8.72 6.76 5.99 8.64 6.67 6.67 5.95 8.64 6.72 6.00 300,000 to 350,000 lbs 8.87 7.03 5.99 8.79 6.92 6.92 5.95 8.79 0.07 6.00 350,000 lbs. and over 9.08 7.11 5.99 9.00 6.99 6.99 5.95 9.00 7.04 6.00 Mallets, less than lbs. 9.62 7.11 9.54 6.99 6.99 9.54 7.04 Mallets, 275,000 lbs. and over 9.86 7.44 9.77 7.30 7.30 9.77 7.35 *Oil Differential Not to Apply on Locomotives weighing over 215,000 lbs. on Drivers. For Local or Way Freight Service, 52 cents per 100 miles or less for engineers and 40 cents per 100 miles or less for firemen shall be added to the through freight rates, according to class of engine. YARD SERVICE Classification EASTERN RAILROADS WESTERN RAILROADS SOUTHEASTERN RAILROADS of Locomotives Electric Electric Electric (Weight on Drivers) Engineer Fireman Helper Engineer Fireman Helper Engineer Fireman Helper Less than 140,000 lbs $7.66 $6.12 $6.12 $7.60 $6.07 $6.07 $7.60 $6.07 $6.07 140,000 to 200,000 lbs 7.84 6.25 6.12 7.77 6.19 6.07 7.77 6.19 6.07 200,000 to 300,000 lbs 8.01 6.37 6.12 7.94 6.31 6.07 7.94 6.31 6.07 300,000 lbs. and over 8.18 6.55 6.29 8.11 6.47 6.23 8.11 6.47 6.23 Mallets, than lbs. 8.83 7.32 8.75 7.19 8.75 7.19 Mallets, lbs. and over 9.08 7.58 9.00 7.43 9.00 7.43 HOSTLING SERVICE Classification EASTERN RAILROADS WESTERN RAILROADS SOUTHEASTERN RAILROADS Outside Hostlers $6.80 $6.71 $6.71 Inside Hostlers 6.12 6.07 6.07 Hostlers' Helpers 5.51 5.51 5.51 S1 into PSF: Railroads [1938] The White House today made public the report of the Emergency Board appointed by the President under the Railway Labor Act to investigate the national wage reduction controversy existing between the Class I railroads and certain of their employees. The Emergency Board was created on September 27, 1938, by proclamation of the President. Its members are Dean James H. Landis, Professor Harry A. Millis and Judge Walter P. Stacy. The report of the Emergency Board makes the following find- ings: 1. The wages of Railway Labor are not high even as compared with wages in other comparable industries. 2. A horizontal reduction of wages on a national scale would not meet the financial emergency of the industry, since the savings would not be distributed morely to the needy roads. 3. A wage reduction in the railroad industry would run counter to the trend of wage rates in industry generally. 1. The Cinancial distress of the carriers which has obtained since October 1937 when the last wage increases were granted, is ns yet a short-torm situation. As such, it cannot be regarded as grounds for a wage reduction especially in view of present indications of an improvement in the business of the carriers. 5. In the light of these findings, the Board concludes that the proposal of the carriers for a reduction of the wages of railway labor should not be prossed and recommends that the carriers withdrew and cancel the notices which would put such a reduction into operation as of Docember 1, 1938. THE EMERGENCY BOARD The Emorgency Board, composed of James M. Landis, Harry A. Millis and Walter P. Stacy, was created by the President September 27, 1938, under the provisions of the Railway Labor Act, to investigate and report its findings concerning a wage controversy botween the Class I railroads and certain of their employees. - 2 - HEARINGS Public hearings were held by the Board from September 30 to October 17, 1938, in Washington, D. C. HISTORY OF THE PRESENT DISPUTE On May 12, 1938 the carriers involved served notice on cer- tain of their employees of a 15% wage cut to take effect July 1, 1938. It was agreed to negotiate the matter on a national basis, but efforts at settlement were fruitless and mediation failed to adjust the dispute. The carriers then announced that the wage-cuts would take effect October 1, 1938, and the employees, on September 26, announced their intention to call a nation-wide strike unless the wage-cut proposals were with- drawn. On the following day the President, following the procedure presented in the Railway Labor Act, created the Emergency Board to in- vestigate the dispute and to report within 30 days. THE ISSUE PRESENTED BY THIS PROCEEDING The ultimate issue in this proceeding, the carriers contend, is whether under all the facts and circumstances involved the carriers' wage reduction proposal is reasonable and justified. But even further the carriers contend in the "absolute ultimate" to use their expression - - the issue is what, under ell the facts and circumstances involved, would be a fair and reasonable disposition of the pending wage controversy, with due regard to the condition, necessities and rights of both the carriers and their employees. - 3 - THE CONDITION OF THE RAILROADS The report of the Board examines closely the present condition of the railroads. It finds that the oporating revenues of Class I Railways declined from a level of approximately $6,000,000,000 during the 1921-1930 period to a level of between $2,000,000,000 and $3,000,000,000 in the 1931- 1938 period. The net income of the roads, the report finds, "which stood in 1929 at $897,000,000 has doclined seriously since then," and although net income showed an upturn in 1936, the first six months of 1938 have re- sulted in a deficit of $181,253,596. The report states that in 1929 "95,75 por cent of the railroads in point of mileage were operating with a not income, whereas from 1931 to 1937 that ratio has never been higher than 61 per cent. In 1932 it stood at 32.14 per cent and for the first six months of 1938 it stood at 13.17 per cent. Both dividend rates and dividend payments have declined, B.D has the market value of railroad socurities.' The report attributes the declines in gross and not operating revenues not only to general doclines in business activity but to other causes which, the report says, "have been operative and will continue to affect the density of railroad traffic independently of any revival of businoss activity. Chief among these causes", the report continues, "has been the rapid development of new and compotitive means of transportation. The private automobile, inland waterways, the pipo line, the truck, the bus, the airplane - all have taken thoir toll. The number of passongers carried by commercial airlines has risen from 5,782 in 1926 to 1,102,707 in 1937 and is certain to incroase to even greater numbers." Express, freight and mail carried by airplano in recent years, the report finds, have also shown sharp increases. "Registration of passenger automobiles has increased 168.4 per cent since 1921", the report states, while "the revenue of the rail- roads from passenger traffic during the same poriod decreased 61.6 per cent. Much of the passenger traffic of the railroads must be recognized to have become permanently diverted from the railways. Even what is now carried is, upon the whole, carried at an out-of-pocket cost." Tractors, trailers, pipe lines and barge lines have all drawn traffic away from the railroads, the report finds, and relocations of industrial plants, the dovelopment of other forms of power and new methods of producing power have also had their offect. This competitive situation, the report states, has had the, effect of reducing railroad ratos and fares with the rosult that the average rovenue per ton-milo of froight has fallon. Morcover, a serious effect of this - 4 - competitive situation has been to produce in many instances rates which are based on the presence, or absence of competition rather than rates which are the "just and reasonable rates that should otherwise obtain." "Maintenance", the report states, "has naturally suffered as net railway income declined. The maintenance situation is described as one of "'continued skimping'". Purchases of materials and supplies have also lagged behind earlier years. The report observes that the railroads have made efforts to cut their operating expenses. "Locomotives with more power, heavier rails, better grades and better roadbeds have all contributed to improving the productivity of the railroad plant", the report states, adding that "this Board cannet, of course, pass any judgment upon the question of whether the management of the reads, considering the limits of their resources, has kept pace as rapidly as it should with the possibilities of improving productivity and service to the degree that science and invention during these years have made feasible. Opinions upon such a subject naturally vary and find expression too frequently from those whose want of information is no barrier to their desire to generalize." While the funded indebtedness of the reads, in relation to total investment, has fallen, the amount of money going to pay fixed charges has increased. "In 1921, 11.2 cents of every dollar of operating revenue went to pay fixed charges. In 1937 it took 15.4 cents, low and high points for the intervening period being respectively 10.2 cents in 1923 and 21.9 cents in 1933." The percentage of railroads, on a mileage basis, in the hands of trustees or receivers, which from 1921 to 1932 never exceeded 9 per cent, rose to 27 per cent in 1935 and 31 per cent as of July 31, 1938. THE CASE PRESENTED BY THE RAILROADS The report summarizes the argument of the railways as follows: "Breadly stated, the argument is not only that the railreads are in a desperate financial condition, that for too long a time have sacrifices been demanded of ownership SO that fairness attends this request of labor, but also that the proposal is nct made in disregard of the existing level of wages of railway labor since, under the circumstances as they new exist, that level is too high when measured in comparison with wage levels elsewhere." - 5 - The distressed condition of the industry is the major argument of the carriers in behalf of & wage reduction. They cite the skrinking volume of traffic, diminishing operating revenues, declining net income, the deficits, the meager return on investment, and the many roads in receivership or trusteeship. The carriers point also to certain additional factors that make for the necessity of effecting operating economies. One of these is that increases in tax costs resulting from the Social Security Act and the Railroad Retirement Act add 5-3/4 per cent, or about $103,500,000 annually, to the payrolls. Another argument advanced by the roads is that rate increases no longer offer a possible solution, nor is there hope of an increase in traffic. The roads, too, are doubtful as to the possibility of aid from the Government. They deny the employees' claim that economies could save $1,000,000 LA day; maintenance and other expenditures, they say, are already being skimped. The one avenue open in the present emergency, in the judgmont of the carriers, is to effect a saving on labor costs. Reduction in wago rates, they feel, would afford "quick financial relief", would make possible increased expenditures for maintenance, repairs and the purchase of equipment, with consequent benefits in terms of employment. The carriers contend that a reduction in railway wage rates is just, for, they maintain, railway wages today whether stated in cents per hour, dollars per week or dollars per year are at the highest peak ever attained, while the cost of living is considerably lower than it was in 1929 or 1920. The carriers maintain that annual earnings are the most meaningful measure of railway wages, for upon their amount and the cost of living the economic welfare of the worker depends. The roads state that average annual earnings which stood at $1,796 in 1920, fell to $1,361 in 1933 and reached a level of about $1800 for 1938. Furthermore, if these earnings are adjusted to the United States Bureau of Labor Statistics "Cost of Living" index, the average weekly earnings of $33.73 in 1938 would have 4.4 per cent more purchasing power than the $31.64 had in 1936, 17.7 per cent more than the $26.10 had in 1935 and 25.7 per cent more than the $32.07 had in 1929. The carriers conclude that "a movement of over 25 per cent in real purchasing power of weekly earnings in & period of nine years is a most unusual movement. This advance of 25.7 per cont in real wages within nine years has taken place at a time in our history when other things have not been pursuing a normal upward course. In 1929 all things in general turned down. But in the face of that general depression We find these real earnings per week of railway employees showing this extraordinary rise contrary to all other trends." - 6 - THE DEFENSE PRESENTED BY THE EMPLOYEES Railway labor, according to the report, recognizes theunfortunate present plight of the railroads and their need for relief. They differ with the roads, however, as to the reasons for this condition. While recognizing the effect of forces such as competitive means of transportation and the re- locations of industries, the employees feel that the present difficulty arises in part from unwice financial practices in the past, over-capitalization, the burden of fixed charges, and excessive and unwise dividend distributions during prosperous years, the consequences of which, they state, shoùld not be imposed upon labor in the form of a demand for lower wages. Second, as a solution to the railroad problem, the employees offer in place of the proposed wage cuts a broad program for the industry. The employees pledge thelr coopera- tion in seeking (a) rate increases wherever practicable, (b) the liberalization of theGovernment lending policy, (c) equality of treatment by Congress of all forms of transportation, (d) the withdrawal of Federal Government competition in transportation, (e) restatement of the rate making rule so as to recognize the right of carriers to a fair return upon the value of their property, (f) amendment of the Interstate Commerce Act so as to give the Commission greater power over state rates, (g) amend- ment of the Revenue Act to exempt railroads from the Undis- tributed Profits Tax and certain state taxes, (h) surrender by the Federal Government of its land grant privileges, (1) enact- ments of suitable statutes of limitations as to claims of shippers for reparations, (j) insistence that the relocation of bridges resulting from the improvement of navigable waters should be built at Federal expense. The employees' program for the industry further claims that wastes aggregating $1,000,000 a day are capable of being eliminated. This program of "proventable wastes" was advanced by Senator Whecler, Chairman of the Senate Committee on Interstate Commorce. The employees contend, in short that the railroads should, in those ways, put their house in order before they entitle themselves to call upon labor to make a sacrifice. Third, the employees attack the proposal of reduced wages as being unwise in that it fails to meet the real needs of the carriers. A horizontal pay reduction of 15%, the employees assert, would not the carriers as a whole estimated savings of $250,000,000. These savings, however, would be distributable to the various roads in proportion to their pay- rolls and not in proportion to their needs. - 7 - To illustrate their point the employees divide the roads into three groups - those in receivership or trusteeship, those that are problem roads in the sense that continuing prosperity is a condition of their remaining above water, and those whose strength is such that even in these times of adversity no pressing need attaches to them. The estimated savings of $250,000,000 would be distributed among those three groups in the following fashion: Some $60,200,000 or 24.1 per cent of the total savings would go to rouds in receivership or trusteeship, roads that in 1937 had a net deficit after fixed charges of $100,161,909. Some $48,150,000 or 19.3 per cent of the total savings would go to a group of roads not in receivership or trusteeship but which have been designated by Chairman Splawn of the Interstate Commerce Commission as problem roads. The balance or $141,650,000 representing 56.6 per cent of the total savings would go to roads not within these classes. It may here be observed that of this $141,650,000, some $92,150,000, or 56.6 per cent of the total savings, would 60 to roads which have either had net income after fixed charges ior every year from 1929 through 1937 or roads having such continuous net income except for a net deficit in the year 1932. It may further be observed that of this $92,150,000, some $84,300,000 would go to eight roads within the above category, which eight roads would receive 33.7 per cent of the total estimated savings to be produced by the proposed wage reduction. Fourth, the employees assert that the present wage scale is justifiable because of the increased productivity of railway labor and the increased responsibility that it is now required to assume. They assert that during the last 17 years there has been a steady decrease in the number of employees per mile of track operated, in the number of hours worked per mile of track operated, and in the total compensa- tion of employees per mile of track operated. This lowering of the cost of labor's services, the employees insist, justifies their resistence to any wage reduction. Moreover, they state that substan- tially the same mileage, and approximately the same tonnage, is moved over the rails today us was moved in 1920 by approximately half the men. Fifth, the employees express the opinion that recent improve- ments in general business conditions and in the volume of traffic militate against a wage reduction. Sixth, the employees maintain that the proposal for a wage reduction was hastily conceived and without regard to its effect upon wage level movements in other industries. They maintain that a rail- road wage reduction would inevitably be followed by wage cuts in other industries; that it is contrary to the present sound national policy - 8 - to maintain wage rates and to bring low wages up to a tolerable level; that if railway wage reductions were followed by wage reduc- tions in industry generally, it would bring a further loss of jobs on the railroads. Seventh, the employees maintain that, contrary to the statements of the carriers, railway wages do not compare favorably with wage levels and trends in othorindustries. The only fair measure of earnings, they state, is the hourly wage. The average hourly earn- ings were 70, 50 221 IND and 1ell 30 Γ. low of 59.04 in 1923. Although they reached 66.91 in 1931, they Tell again in 1933 to 60.94. For the first half of 1933, the average hourly carnings were 73.14. This was 8.5% higher than in 1936, 20% higher then in 1933, 12.34 higher than in 1929, but only 2.6% or 3.74 higher than in the second half of 1920. in object in Your used by the carriers. they contend how only than under subsits cannot properly measure the cost of livins, but that the nuglect "the most important element in considering costs of living", she added cost to the family of new items which have since come into the customary standard of living of wage earners. - 9 - Findings and Recommendations of the Board In its report, the Board makes the following findings and recommendations: Proposed legislative programs. - "The Board has had presented to it programs, more or less specific, for the relief of the railroad industry. "Those programs have boen offered as alternativos to the pre- sent proposal. Whatever their inoffectivoness may be in affording the 'quick financial relief' which the carriers claim is their present need, the ovidence before the Board has impressed it with the necessity that now rests on Government for a complete and thorough-going reconsidora- tion of the relationship of the railroad industry to our national woll- boing." * * * "Tho hoarings before this Board have thoroughly impressed it with the fact that both carriors and railway labor have now a vital and common concern in the working out of an ndequato, national trans- portation policy. Both cooperation and imagination can be expected to be forthcoming from railway labor as well D.S from the carriors. What- ever may be the disposition of this prosent proccuding, the oxisting willingness to work togothor for what is fully roalized to be a common end daro not be lost by strifo ovor C. question ossentially small in the light of the ultimato bonefits that aro bound to accruo from somo botter answer to the gonoral railway problem." * "Ono cautionary word, however, doserves to be said. Concorn over the railroads is tripartito in character. To the intorest of management and of the mon must be added the interest of the public. In somo of the proposals that have boon advanced, the public intorost seoms not to have been fully approciated. It must be remembored that it is this third party that in the lost analysis supports the ontire structure, for the railroads oxist for the public and not the public for the railroads." * * "This Board is also hopoful that the outlinos of a moro vigorous, more farsooing financial policy can be pursued by managoment with the cooporation of Government 80 as to avoid not only the financial lossos of the past but also the croation of corporato struc- turos with too little flexibility inherent in them to pormit thum to survive & periód of declining business notivity. Those and kindred considerations, it is true, do not promiso the "quick financial relief' - 10 - offered by a wage reduction. Some of the proposals, however, foreshadow relief in the not too distant future. And others, though the relief they may afford will take longer for realiza- tion, have, perhaps, an ultimate significance to the welfare of the railroad industry of such importance that their realization should not be jeopardized by discord between men and management over the means for securing immediate relief. Both men and management must realize that after this Board shall have discharged its function, whatever its decision, they will still be living with the railroads. Their livelihood, their success, will depend upon how ably each can grasp the problem of the other." * * * The prevention of "wastes" as a substitute for wage reduction. It was asserted before the Board that wastes aggre- gating $1,000,000 a day could be provented and that the pursuit of such a course by the carriers would obviate the need for effecting savings through a wage reduction. The elimination of such waste, however desirable, the Board finds, constitutes a long-term measure which affords little in the way of immediate relief. * * * The relevancy of the increased productivity of labor. "There has been increased productivity of railway labor. This may have resulted from several causes, among them increased efficiency of the employees and modernization of plant and equip- ment. Insofar as the increased productivity is shown to have resulted from the increased efficiency of labor or to have caused heavier responsibilities or secrifices to rest upon the employees, this should be recognized in their compensation. Insofar, however, as the increased productivity is shown to have resulted from the efficiency of management or from inVestment of capital in modernized plant and equipment, that is not true except as additional sacrifice or responsibility is incidentally imposed upon the workers. Rather, such gain should go to the carriers insofur as necessary to yield a fair return, beyond which it should go to the public through better service and lower charges." -11- Relevancy of the cost of living. - The Board is inclined to believe that, on the whole, wage earners and other consumers find that the same incomes go somewhat farther today than in 1929 or in 1920 in meeting normal wants. These considerations become relevant, however, only when a reduction of wages is justified on other grounds. Comparative relevancy of average hourly, weekly, and annual earnings. - The Board, when drawing conclusions concerning trends and comparative levels of pay, places main reliance upon average hourly earnings. Trends in wages and earnings of railway labor and of labor in other industries. - "No evidence is found that railmy employees have benefited more than have employees in other industries takon as a whole. Indeed, their gains in hourly earnings have been not quite as large." Current rates of pay of railway employees and of other compar- able workers. - "No general assumption can be indulged in * * that wages of large groups of railway labor are on a level that is higher than wages for such comparable class of labor that we have been able to find." General Conclusions. - The Board observes that "the suggestion that has been enter- tained by some of suspending for a period of time, more or less dependent upon the volume of traffic, the wage increases granted in 1937 would in- troduce a somewhat inequitable element, assuming for the purpose of illus- stration that a reduction of about that percontage should be made. This flows from the fact that difforentials in wage rates among the various groups of railway employees exist. That the differentials prior to 1937 operated too favorably in behalf of the more highly paid employees seems tacitly to have been admitted at that time, for the increases benefited percentagewise the lower-paid groups of employees more than those in the highor brackets. Consequently, to suspend these increases would be to operate according to the analogy of regressive rathor than progressive taxation making the burdens fall with undue woight upon those least able to moet thom." - 12 - rocesses/reorganization. of The unusual percentage of carriers "Some adjustments are now taking place through the now in receivership or trustecship thus need not necessarily disturb one. It may, indeed, be desirable from a broad stand- point that that percentage should increase, provided only that the processes of reorganization will result in real and not make-shift readjustments. No sacrifices of note need be asked for to preserve values that already have been long dead and finance." whose burial is now mercly a matter of the proper amenities of **** "We have thus far dealt with the problem from the standpoint that the carriers' inability to pay is characterized by a short term aspect. To date it is SO. The employees emphasise the fact that an upturn in the volume of business has already taken place. *** Naturally, we cannot rest our conclusion merely upon & prevalent but possibly unwarranted optimism. It may, indeed, eventuate that operating revenues will fail to return within a reasonable period to 1937 levels or thereabouts.' If the occasion should arise for the carriers to re- duce wages, the Board believes it would be well for them to consider these drawbacks of wase reduction upon a horizontal national scale. (a) the failure of such a proposal to distribute the benefit of the savings to the needier roads; (b) the fact that a horizontal wage reduction falls alike upon all classes of labor, upon the better paid and the less well paid alike. "Examination of the data above detailed leads us con- sequently to the conclusion that the lovel of Wages of railway labor is not high when compared with wage levels in other in- dustries. Nor do wage trends show that railway wages have advanced proportionately greater than wages in other industries. Instead they seem to show & slight lag, though on the other hand, they show greater resistance to decline than wales in other in- dustries. Furthermore, no justification arises for a wage re- duction from the current wage situation in other industries. There, no general movement to reduce wages has made its opear- ance. These considerations lead us to the conclusion that the carriers' proposal can derive no sustenance from the contention that railway wages as a whole are too high." "We conclude that no horizontal reduction upon a national scale of the wales of railway labor should be pressed by the carriers at this time." file PSF: Railroads LOUIS B. WEHLE FIFTY BROADWAY NEW YORK April 20, 1938. Dear Bill: You asked me this morning to send you my draft of April 12th of suggestions for a railroad guaranty; and I shall do 80 below. This draft resulted from the talk on April 4th between you, Sam Rosenman and myself. The trial draft of message I made on April 12th dealt with three points: taxation, railroads, and public works relief. This letter, sent you in duplicate, can carry the suggestions on the two latter points for what they may be worth to our friend to whom you will be handing this letter. I. The suggested railroad guaranty was predicated upon an earlier paragraph in the imaginary message in which there was acquiescence in a substantial modification of the undistributed profits tax. If there is to be no such modification, I doubt whether the railroad guaranty should be undertaken; because, under those circumstances, the guaranty would have to be larger and longer to bridge over to a period of traffic re- covery; and I would not be willing to sponsor railroad guaranties in larger amounts or over such a period of time as to make them a habit. However, at your request, and for whatever use their suggestive value may have, I am sending along the railroad guaranty suggestions, and they were as follows: " Second: The railroads. They collectively constitute our greatest single employer of labor and our greatest buyer. They are languishing from want of traffic, their most crucial immediate need. The rail- roads' long-range problem must be dealt with comprehensively after a Hon. William C. Bullitt. -2- April 20, 1938. reasonable period for study and consideration. In the meantime, the im- mediate problem is to safeguard them from further collapse while the larger problem is being worked out. Our stimulation of business including railroads through R.F.C. loans, and our practical removal of the tax on undistributed corporate profits, should within the present calendar year bring about a large in- crease in business activities, which should, in turn, bring traffic to the railroads as great, or perhaps greater in volume than did the year 1936. But in the meantime, before such a degree of recovery can take place, their credit must be maintained and supported to a reasonable ex- tent to prevent lay-offs and to check the dangerous demoralization of the railroad bond market. I therefore urge Congress, as an emergency measure at this Session, to peg the railroads' position with a limited guaranty. Such a guaranty with an outside limit of, say, $500,000,000, should, on conditions presently outlined, operate in two ways. First, it should guarantee to every railroad which in the calendar years 1934- 5-6 had an average annual operating deficit, against incurring in the calendar year 1938 an operating deficit greater than its average deficit in those test years. Second, in the case of every railroad which did not in those three years have an average annual operating deficit, the Government should guarantee such railroad against any operating deficit in the year 1938. But such guaranty should be subject at least to the following four conditions: The first condition should be that the Government's liabil- ity to any railroad under such guaranty shall be reduced to the extent that in 1938 such railroad's expenditures for capital improvements or for maintenance shall be greater than the average annual expenditure for Hon. William C. Bullitt. -3- April 20, 1938. such purposes in the three test years. This is to prevent a railroad's fattening itself indirectly out of Federal funds. As a second condition, the Government's liability as guarantor should be reduced to the extent that in 1938 the state and local taxes accrued and paid shall exceed the average of such taxes in the three test years,- this to prevent the Federal guarantee being employed indirectly to enrich states or munici- palities. The third condition attached to the Federal emergency one- year guaranty to any railroad should be, that payment under it shall be reduced pro rata to the extent that the aggregate of wages and salaries in 1938 shall exceed the aggregate expended for such purposes in the year 1937. There seems reason to believe that the estimate of $500,000,000* represents the outside figure which the Federal Government might be called upon to pay under such a guaranty. The Act should set the aggre- gate limit at this figure; and should provide, as a fourth condition, that the amount payable under the collective guaranty to any railroad may be reduced pro rata, in order that the aggregate paid to all railroads shall not be in excess of the stated limit. For the amount of any moneys paid by the Government pursuant to such guaranty, the railroad should be required by the Act to give its unsecured non-interest bearing note payable on or before, say, fifteen This amount of maximum guaranty was predicated upon a relatively early business recovery to be accelerated by tax adjustment. If these ad- justments are not to be made, the improvements in traffic which may come will not be due to the recovery of business and the revival of more normal traffic volumes. Therefore, the suggested amount of the guaranty would be inadequate; yet, I would be unwilling to suggest a larger or longer guaranty because of its cbvious advantages and dis- advantages. Hon. William C. Bullitt. -4- April 20, 1938. years from date. Such note should under the Act be entitled to the sovereign's priority over any debt other than a preexisting mortgage debt of the company. Under the terms of such note, the railroad should be limited in its reserves and prohibited from paying stock dividends while any part of such note remains unpaid; with the further proviso that if and when the railroad, (or its successor after reorgan- ization), shall have had the ability over a period of, say, three suc- cessive years, to serve fully all its outstanding bonds and any R.F.C. loans, the Government-guaranty note, or such part as is then unpaid, shall thereafter, 80 long as such ability shall continue, carry inter- est at 3% and shall be amortized at the annual rate computed on the num- ber of years of the note's remaining life. Thus, of the maximum amount which might be paid out by the Federal Government under its emergency guaranty, a substantial proportion may come to be repaid. Let me remind you again that in my opinion the foregoing sug- gestions on the technique of a railroad guaranty are intended for con- sideration only when such a guaranty is advisable; and unless, through tax and other ad justments, there should be a stronge chance of early spon- taneous resumption of business, I would not consider the guaranty advis- able. II. As a further part of such a message, you and Sam and I were inclined on April 4th to recommend a statement discountenancing the use by labor of dangerous weapons. When I started in to draft such a state- ment, I found that it could best be made incident to the public works program and as part of a symmetrical limitation, both upon labor and Hon. William C. Bullitt. -5- April 20, 1938. upon capital. Hence the following draft: "Third: Public works relief. We must for the present continue to resort to public works for reduction of unemployment. Its chief advan- tages over any form of direct relief need not be discussed. Made work is better than no work. Another advantage is that public works give em- ployment for beyond the works themselves,- in the mines, forests, and heavy industries where the materials are produced. I am asking the Congress to appropriate $ for public works to help in tiding over what should be a short period of acute unemployment. If in November, 1938, that period should threaten to be prolonged, we can then take any further action at a special session of Congress. Strong preference should be given under the statute to self-liquidating pro- jects, and to works to which at the outset the states and the municipal- ities contribute a substantial proportion of the cost. But we have learned that public works relief must be flexibly geared go that when conditions improve there may be a quick shift of man-power and of working capital into normal private industry. We must avoid the creation of any vested interest in emergency makeshifts, and it seems that such vested interests can be avoided only by reducing the profit motive both of labor and of capital as far as practicable in con- nection with public works relief. I therefore urge that under the Act compensation to labor employed on public works be on a basis 15% lower than the compensation being paid in the locality as certified by the Department of Labor; and that prices paid for certain classes of mater- ials shall be strictly competitive and shall be at least 15% lower than the commercial prices either obtainable in the locality as certified by the Federal Trade Commission, or as estimated by it as being obtain- Hon. William C. Bullitt. -6- April 20, 1938. able there for similar quantities. Such a price limitation should apply especially to prices paid, whether by way of purchase, (or of rentals for construction equipment), for all forms of steel or steel products; for copper, bronze and other metal products; for pipe, plumb- ing, electrical plant, machinery, cement or other road and construction materials; for stone, sand, brick, lumber, flooring, roofing and composi- tion materials of all major classes. Another form of protection to the community should accompany hence- forth any extension of our emergency public works relief, especially if both wages and prices in public works are to be keyed to current standards obtaining in outside private work. On the one hand, the Federal Govern- ment should sternly check illegal combinations for artificial fixing of commercial prices, not only of the materials above referred to, but also of the necessaries of life. Such practices, especially at such a time, cannot be tolerated. They must be promptly and severely dealt with either under existing laws or new ones,- a matter which must in due time be considered by us outside the scope of this message. On the other hand, we cannot condone, either, the pursuit by labor of illegal means for arbitrarily enforcing its demands, whether in con- nection with the public works themselves or in connection with private works. The Federal Government has now created administrative agencies for the peaceful settlement of labor disputes; and this Administration is pledged to extend further its projected system for establishing fair labor standards throughout all industry. There can be no public ac- quiescence in the illegal seizure or occupancy of property of an em- ployer to force the granting of labor's demands. To condone such practices is to legitimize for all purposes the use of violence, and to Hon. William C. Bullitt. -7- April 20, 1938. surrender the fundamental principles of our civilized order. The Federal Government, and the states as well, should meet this evil by the stern enforcement of existing laws." III. The needle will, in general, point north in spite of magnetic disturbances. But we must give the needle what chance we can. The true north is Justice, and the ship is Democracy. Now and then the ship can get too far off her course for safety. The purpose of such policies as are suggested above would be to clarify the motivations that affect the atmosphere around the binnacle. Yours, HBW Hon. William C. Bullitt, The Anchorage, Washington, D. C. PSF: Raibroads The so-called Managers' Committee representing the railroads has power of attorney binding every reilroad in the United States, with possibly three or four exceptions, none of the exceptions being trunk lines. No other railroad officers can represent or speak for the railroads. The best Clement, Gray and Norris can 6.0 is to consult with you anicus curiae, and then, if the labor people will give you assurances of their willingness to recommend E certain settlement to their associates, the three officers you have called in will then be in a position to use their influence with the Managers' Committee, who alone can settle it for the railroads. hoss earnings. fuly 1938 # ry9.600.000 " 1933 293.700.000 Last 3 months 1936 # twist 3 " 1937) 2,750,000,000 PSF: Railroads free A. There is reason to believe that the two parties can be brought to agree if the basis were suggested by the President. B. There need not be a reduction in wages. Suspension C. There is every justification, however, for a for which there is emple precedent. Men and management voluntarily agreed to a suspension mutice of 10% effective February 1, 1932, and this suspension continued by common con- sent until June 30, 1934. At the suggestion of the President it was further continued for an equivalent of six months, being restored gradually through a period of nine months. suspension So that this alcern of 10% was actually effective for a period of 35 months. D. Through collective bargaining wages were in- creased 5 cents per hour August 1, 1937 for non-operating employes, and on October 1, 1937 wages of train service groups were increased 411 cents per day. E. While the negotiations were proceeding, traffic began declining until it reached approximately the level of 1933. Some of the railroads already bankrupt and barely meeting payrolls, with three or four exceptions they are all in financial difficulties; forces have been cut deeply and unemployment drastically increased, an inevitable result in the circumstances. Forces should be increased, but cannot be, because of the necessity of balancing income with outgo. It is suggested that the President send for the labor leaders first, and make it as his suggestion that they agree to a suspension of the amount of the increases granted respectively on August 1 and October 1, 1937, preserving how- ever any minimums recently provided by law, the suspension to remain in effect until the gross traffic of the railroads for a period of six successive months reaches the level of a test period which would include the last three months of 1936 and the first three months of 1937, which would bring it to the level of the period at which the negotiations for an increase in wages were inaugurated. F. The President can say with the utmost propriety that he has not discussed this matter with the railroad managers, but would be perfectly willing to do so and to urge it upon them if labor itself will agree. files PSF: Railroads ROBERT A. lovett 59 WALL STREET NEW YORK CITY April 20, 1938. PERSONAL The Honorable William C. Bullitt, The Anchorage Apartments, 1900 "Q" Street N.W., Washington, D.C. Dear Bill: You asked me on Monday night to send you a short memorandum on an emergency program for certain borderline railroads which we discussed briefly when I had the pleasure of seeing you in Washington a week or so ago. The memorandum which I enclose gives merely the roughest outline of the background against which to view the suggestions, and it sets out the suggestions themselves in condensed form. Since the program itself can be changed in detail with considerable ease, I merely touched the high spots, and have mentioned those elements which seem to me to have a particular appeal at this time. You will quickly see that the suggestions are not in finished shape, and that "plan" is really too big a word to apply to these ideas. On the other hand, there may be some part of the idea which would fit in with other more orderly efforts being made by competent men in Washington. Therefore, my natural reluctance to send you an incomplete job has been quieted by the hope that it might prove useful to you, and by warning you in advance of my fear that there may be flaws in it which might be dis- closed if I had time to give this more careful study. The opinions I have expressed in the attached memorandum are purely personal ones. There has been no real opportunity to check them with railroad officials, and there is nothing in writing about these suggestions except this memorandum. Since I am not a railroad expert, my views are not worth much and I offer them with very real humility at a time when the desperate illness of the railroads seems to be infecting everything. Adele and I enjoyed your party a great deal the other night. It was fun to see you again, and I hope we will have another opportunity soon. Meanwhile, with my kindest regards as always, I am Very sincerely yours, Bob April 20, 1938 MEMORANDUM TO W.C.B. RE: EMERGENCY PROGRAM FOR CERTAIN RAILROADS Background These suggestions are made on the theory that the problem of certain rail- roads in the present circumstances should be treated from an emergency point of view; that any emergency program should be based on the sound principle of reduction of top- heavy capital structures; that the introduction of the principle of sinking funds is desirable as suggested by this Administration; that the discussion of labor scales may have to be left to more normal times in the case of certain distressed railroads; that any program should require a minimum of Congressional action, and finally, that Government should not be asked to do more than it has done and is now doing for other depressed elements in the national economy. It is felt that effective handling at this time of the problem presented by borderline railroads in need of financial reorganization will go a great distance toward restoring the confidence of investors in all types of senior securities. While inadequate freight rates and excessive operating personnel wage scales during & time of depression have had obvious influences on investors, one of the principal contributing factors to the fears which have frozen both the senior and junior capital markets is the growing realization by investors that seniority of mortgage position has not meant much under the policies developed by many Trustees in recent years. The tendency to pamper the stockholder at the expense of the bondholder has no doubt to some extent made possible certain abuses which have grown up through the medium of rail holding com- panies. Outlined below are the bare bones of & program which might be considered by competent Government authorities in connection with any plans they may make for treat- ing the problem of the borderline railroads. In order to have a specific example for use in this explanation, let us take one of the hardest cases -- that of Baltimore & Ohio -2- Railroad Company as representing one which appears headed for receivership or bank- ruptcy. The present indebtedness of the B.&O. is about 670 million dollars, includ- ing the obligations to the R.F.C. and the P.W.A. Its mortgage and debenture debt amounts to about 643 million dollars (excluding equipment trust certificates) which requires annual interest service of 33 million dollars, or an average of approximately 4.75% During the past seven years, it has earned its very heavy interest charges in three out of the seven years and failed to earn fixed charges four times. On the average, during the period it covered its fixed charges 0.97 times. To enable us to use round figures, assume its fixed charges were 32 millions and that as a result of this 1 million reduction it would have earned its fixed charges on the average over the seven-year period 1.00 times. The present interest charges are manifestly beyond its capacity to earn, even over a period of years. But suppose the interest charges were cut from 32 million to 18 million annually. It would then have earned interest requirements almost two times on the seven-year average. Therefore, if the interest rates could be substantially reduced by, say, one-half, the B.&O. would have earned, on the average, 18 million dollars for interest and have 14 million left over. The plan suggested below is designed to bring about a) reduction in fixed interest, b) creation of a surplus of earnings now going to interest, which would be diverted to a sinking fund, c) which would be used to purchase in the market below par, or to call at par, the funded debt of the railroad. Suggestions 1. - Form an agency to be called, say, "Federal Railroad Mortgage Corporation", to be capitalized at, say, 50 million dollars. The R.F.C. would then subscribe to the capital stock and the F.R.M.C. would be authorized to borrow up to, say, 100% of all its assets used as collateral with the R.F.C. It would be complementary to, and not competitive with, the R.F.C. and would perform only a specialized service. It would have to work as an arm of the R.F.C. and its assets would generally be contracts from the reorganized railroad to pay F.R.M.C. the agreed total interest, or alternately, bonds for which it has exchanged its own obligations. -3- 2. - The function of the F.R.M.C. would be to assist in the reorganization of railroads conforming to standards and regulations to be laid down by it and to under- take guaranties or to issue its own securities against obligations of railroads who would agree to a program of voluntary capital reorganization. Any railroad which would agree to a voluntary reorganization along certain es- tablished lines would then be in a position to have its bonds either endorsed by the F.R.M.C. carrying a substantially lower rate of interest, or to turn its present bonds in to the F.R.M.C. and exchange them for bonds of that Corporation. For example, assume the B.&O. went to the F.R.M.C. for reorganization. The first step would be for the F.R.M.C. either to guarantee by endorsement X% interest on the existing B.&O. bonds or to issue its own obligations in exchange for them. This would permit the first mortgage bondholder, for example, to receive a guaranteed obligation bearing interest at, say, 3%, the second mortgage bondholder to receive a bond bearing, say, 2% interest, and the junior bond debenture holders might receive, say 1 1/2%. If the total of this fixed interest charge did not exceed 18 million dollars, there would be on the average over & period of time, an additional 14 million left over from the B.&O. earnings. This additional 14 million dollars would be set up as a cumulative fixed charge on the B.&O., payable to the F.R.M.C., which, in turn, by the terms of the agreement, under which its guaranty was given, would use it for purchase in the market or call at par of bonds and debentures until they retired. Taking the past seven-year average as a base, the effect of this sinking fund operation on the basis of call at par with interest on called bonds accumulating for the sinking fund, would be to retire the entire top- heavy funded debt (670 millions) of the B.&O. in about 35 years. This period of time is substantially less than that for which railroads try to borrow money. 3. - Obviously, as the funded debt is retired through sinking fund, the pre- ferred stock and common stock which now have almost no value and would probably be wiped out through reorganization, would acquire a value through the progressive reduc- tion of debt. This would be the inducement to the equity owners of the property -4- But since the plan depends on the give-up of current income by the funded debt holders, some way should be provided to permit them to regain some portion of the interest which they have abandoned. This could easily be done through giving them warrants to buy common stock at some equitable price, since the retirement of their own debt and the foregoing of interest by them make the creation of an equity value possible. In theory, if the procedure were mathematical, bondholders would be paid off by the end of about 35 years and the preferred and common stock holders would own the road, with no funded debt. This would, of course, be unjust to the old funded debt holders. 4. - It is felt that rail labor, the majority of institutional investors, and rail management in these distressed cases would be favorably disposed to some such plan. Insurance companies, savings banks, etc., are vitally interested, not solely because of the dollars they may have in a particular trouble-case, but also because in their own and in the public interest it is essential to have them as buyers if a capital market is to be restored. The rail security problem is hanging over the entire long-term capital market. The voluntary nature of the program is one of its weaknesses. But here, in contrast to such programs in the past, a valuable quid pro quo is offered to the consenting security holders -- the guaranty of a third party. Furthermore, the weight of public opinion might well swing strongly against any group which obstructed the guaranty program and forced involuntary receivership through suit or otherwise. 5. - Figures used in this informal memo are very rough and contain many guesses. They are given only as approximations and should be used as such. Short summaries of figures for the B.&O. and Southern Pacific Systems are attached as exhibits giving the figures of those roads relating to gross revenues, balances available for fixed charges, interest requirements, etc. 4/20/38 BALTIMORE & OHIO RAILROAD COMPANY The Baltimore & Ohio would benefit particularly by the treatment out- lined for the Southern Pacific in the accompanying memorandum. The present in- debtedness of the Baltimore & Ohio is approximately $670,000,000 including the obligations to the R.F.C. and the P.W.A. Rates of interest range from 4% to 6% and the average interest rate is approximately 4.75%. With this relatively high rate of interest the Baltimore & Ohio would show a large saving by an exchange of its bonds for bonds guaranteed by a special agency of the United States Govern- ment bearing an average interest rate of, let us say, 2 1/2%. The annual fixed charge of the Baltimore & Ohio amounts to approximate- ly $33,000,000. Over a period of years the earnings of the Baltimore & Ohio have been as follows: (000 omitted) Gross Bal. for Surplus after Fixed Charges Year Revenues Fixed Charges Fixed Charges Fixed Charges Times Earned 1937 $169,436 $31,463 $32,184 721 (d) 0.98 1936 168,993 37,432 32,893 4,539 1.14 1935 141,843 29,758 32,939 3,181 (d) 0.90 1934 135,539 28,516 32,341 3,826 (d) 0.88 1933 131,792 33,650 33,445 205 1.01 1932 125,883 26,788 33,123 6,335 (d) 0.81 1931 172,753 35,584 32,156 3,428 1.11 Average 149,463 31,884 32,726 842 (d) 0.97 (d) Deficit. The Baltimore & Ohio has approximately $643,000,000 mortgage and deben- ture debt including obligations to the R.F.C. and P.W.A. but excluding equipment trust certificates. If this indebtedness were to be exchanged for the above men- tioned guaranteed bonds there would be an annual saving of approximately $13,700,000. It will be noted from the above table that in the 1931-1937 period the Baltimore & Ohio failed to earn its fixed charges by an average amount of nearly $1,000,000 a year, thus the potential saving of $13,700,000 & year should be reduced, therefore, to $12,700,000. Over a period of years it should be possible to count on applying this average annual saving of $12,700,000 as a sinking fund for the purchase of the pro- posed bonds if available in the market at less than 100 or for redemption at 100. For conservatism, let us assume that all bonds acquired for the sinking fund are ob- tained at 100. Let us also assume that bonds acquired for sinking fund continue to draw interest for the benefit of the sinking fund. With such a sinking fund it would be possible to retire the entire funded debt of the Baltimore & Ohio of about $670,000,000 stated above within a period of thirty-five years. April 20, 1938. SOUTHERN PACIFIC COMPANY This road has been particularly hard hit by its inability to reduce expenses sufficiently rapidly to meet the decline in business. More- over, it has recently suffered from flood conditions in California. The following table showing the earnings record of the Southern Pacific Company and Transportation System Companies combined indicates that over a period of time--year in and year out excluding such abnormal years as 1932 and 1933-it has been able to earn more than the amount of its fixed charges. It also indicates that average earnings over a period of years, including the bad years, have been in excess of the total amount of fixed charges. (000 omitted) Gross Balance for Fixed Surplus after Year Fixed Charges Revenues Fixed Charges Charges Fixed Charges Times Earned 1937 $225,017 31,460 $30,708 757 1.02 1936 204,339 45,525 30,577 14,948 1.49 1935 163,360 34,376 30,579 1934 3,797 1.12 149,193 55,037 31,006 4,031 1.13 1933 129,861 25,891 30,882 4,991d. 0.84 1932 142,597 25,583 30,673 5,090d. 0.83 1931 198,642 45,325 30,586 14,739 1.48 Average 173,287 34,742 30,715 4,027 1.13 (d) Deficit. NOTE: Above figures do not include deficit of separately operated solely controlled affiliated companies. What this road has been able to do in the past it should be able to do in the future. On December 31, 1937 the Southern Pacific Company and Transportation System Companies combined reported $698,409,937 funded indebtedness outstanding in the hands of the public. The mortgage, debenture and secured indebtedness (excluding equipment trust certificates) bore rates of interest ranging from 3 3/4% to 5%. The average rate of interest was 4.20%. The actual amount of this debt was $654,031,435 and the annual interest requirement on it was 827,557,357. If-the - $654,031,435 indebtedness mentioned above were to be exchanged for bonds guaranteed by a special agency of the United States Government bearing an average interest rate of, let us say, 2 1/2%, the annual requirement of this portion of the debt would be only $16,350,786. This represents a saving of $11,206,571 annually over the present payments. SOUTHERN PACIFIC COMPANY - 2 As indicated above, it seems fair to assume that the Southern Pacific during the coming years should, on the average, be able to earn 'at least the full amount of its fixed charges. It should be possible, therefore, to count on applying the above-mentioned saving of $11,206,571 as a sinking fund for the purchase of the proposed bonds in the market if obtainable below 100 or, if not so obtainable, for redemption at 100. For purposes of conservatism, let us assume that all bonds to be acquired by the sinking fund are obtained at a price of 100. Let us also assume that interest on the bonds so acquired for sinking fund is allowed to accumulate for the benefit of the sinking fund and is added to the annual instalments of such fund. It is computed that within about thirty-eight years this sinking fund would have been sufficient to retire the entire funded indebtedness of the company stated above of $698,409,937 on December 31, 1937. PSF: Railroads s1 THE WHITE HOUSE WASHINGTON We personal 9/21/38 MEMO FOR THE PRESIDENT George Harrison telephoned and asked me to give you a message. He says that the six gentlemen have by mutual accord agreed that just as soon as the wage question is out of the way, they will start right in at work on the job you gave them. Said he wanted you to have this word because some press reports, particularly the New York Times this morning, were very misleading. Says the six are in accord. MHM the PSF: Raiboads 318 November Chicago, Keith Illinois. 12, 1941. Bldg. The President, The White House, Washington, D. C. Dear Ir. President: In our letter of November 7th your atten- tion was directed to the action taken by the General Chair- men of the five transportation brotherhoods rejecting the recommendation of the Emergency Board in connection with the wage dispute between these organizations and the railroads. In view of the fact that the employes are now compelled to pursue the only course left open to them or ac- cept unfair and unjust treatment, unless the employers can be prevailed upon to acknowledge the rights of the men, dates have today been designated for a strike to become effective. The employes represented by these organizations are to engage in a strike on approximately one-third of the railroads at 6 All Sunday, December 7; one-third at 6 All Monday, December 8; and the remainder at 6 All Tuesday, December 9, action. 1941. We feel that you should be personally advised of this Respectfully yours, Grand Chief Engineer, BLE. Assistant 68309f President, on amo President, Hw/raser ORC. *IHA 'queptsons *VNICE mayong's BRIGHT, THOMPSON & MAST ATTORNEYS AT LAW SOUTHERN BUILDING WASHINGTON, D.C. FRANK S. BRIGHT TELEPHONE HUSTON THOMPSON NATIONAL 0133 OSCAR P. MAST CABLE "BRIGHT" November 11, 1941. Major General Edwin M. Watson, The White House, Washington, D.C. My dear "Ed": Personal and Confidential. Following my conversation with you over the phone yesterday and your suggestion that I prepare a short memo for the President, I am enclosing the same in this letter. Cordially yours, Huclon Thompson Huston Thompson Enc BRIGHT, THOMPSON & MAST ATTORNEYS AT LAW SOUTHERN BUILDING WASHINGTON, D.C. FRANK S. BRIGHT HUSTON THOMPSON TELEPHONE NATIONAL 0133 OSCAR P. MAST CABLE November 11, 1941. BRIGHT" Honorable Franklin D. Roosevelt, The White House, Washington, D.C. My dear Mr. President: I am in receipt of correspondence which Wayne L. Morse, Chairman of our Emergency Board, has sent to you. In addition, I am suggesting a few thoughts about procedure. In confidential talks they wanted was a strike, so I am sure that there will with Whitney and others they all said the last thing be an approach to you, after the meeting of the Fourteen Non-operating Unions, November 13th. May I suggest you. that the approach come from the parties rather than from I suggest the calling in, in advance of any conferences with the parties, of Joe Eastman and perhaps Claude Porter. Both sides seem to have complete confidence in Eastman. Porter has given me confidential approval of the report. He is a member of the Finance Board and by rate increase. would be able to tell what moneys would have to be raised bring them together again. separately at first and learn their inmost feelings and then I think it would be perhaps wise to see the litigants I have roughly estimated the following. If the percentage of the Five Operating Groups was raised from our figure of 72% to 81% it would mean an increase of approxi- mately $7,500,000. If the Fourteen Non-operating Groups were raised from 9d to 10d 1t would mean an increase of Groups are offered by our findings a raise in terms of approximately $121,000,000. The Fourteen Non-operating percentages of 1320 on their wages and 1½% for their vacations, with a total 15% increase. Thus our total over all raise for both groups 1s above 10%. Hon. Franklin D. Roosevelt. Nov. 11, 1941. In arriving at our percentages a majority of the Board considered carefully the following, among many subjects: (a) Increased cost of living; (b) Comparison of the wage scale of the operating groups and the higher ones of the non-operating groups as compared with other industries. The white collared man, the preacher, the lawyer, the doctor, etc. all were lower; (c) The fact that many middle class people had their investments in life insurance based to a considerable extent on railroad securities; (a) Increased cost to the public if rates are increased. The impetus to inflation of too high a raise; (e) The loss of railroad business in raising rates through the competition of the trucks, airplanes, and other means. Cordially yours, Huslon Thompson Huston Thompson THE FOURTEEN COOPERATING RAILROAD LABOR ORGANIZATIONS November 13th, 1941. Dear Mr. President: The representatives of more than 800, organized railroad workers, members of the Fourteen Standard Cooperating Rail- road Unions, today unanimously expressed their dissatisfac- tion and complete disappointment in the report made to you on pending national wage dispute. A more complete statement in this respect is attached. It is the purpose of the railway employes to pursue the present controversy over wage rates, etc., until a satisfactory adjust- ment is reached. Respectfully yours, V. V.O.Lardmer.) 0. Gardner, President, HJarr J Carr Gen. Vice President, The Order of Railroad Telegraphers Int 1 Ass'n of Machinists, J. A. Franklin, Int'l President Roy Horn Roy Hern, General President, Int'l Bro. of Boilermakers, Iron Int'l Bro. of Blacksmiths, Ship Builders & Helpers of A. Drop Forgers & Helpers L. M. Wicklein, Gen. Vice Pres. Nonfly Int Bro. of Elec. Workers Durly, Ynt'l Vice Pres. Sheet Metal Workers' Int'l Ass'n F.H. Knight Felix H. Knight, Gen. President, Bro. Railway Carmen of America George Int'l George Bro. Wright, of Firemen, Vide President, Oilers, Round House & Ry. Shop Laborers EmHanion President E. E. Milliman, President, Brotherhood of Ry. & Steamship Brotherhood of Maintenance of Clerks, Freight Handlers, Express Way & Station Employes -2- as A. Bro. E. of Lyon, Railroad Ryan Grand President James James J. Delaney, Islany President, Signalmen of Nat'l Ore. Masters, Mates & America Pilots of America Samuel J. Hogan, President, Hogan Nat'l Marine Engineers Josh Joseph P. Ryan, P. President, Ryaw. Int'l Longshoremen S Ass'n Beneficial Ass'n Honorable Franklin D. Roosevelt, President of the United States, The White House, Washington, D. C. 1/7 UNITED STATES V 9 MIV RAILWAY EMPLOYES' DEPARTMENT POSTAGE Room 520 America Fore Blds., 844 Rush St. Fort Dearborn Station CHICAGO: 13 ILL CHICAGO, ILL. 530 PM 10 CENTS 10 AVINGS 154 Special Mail Delivery AIR MAIL BONDS AND STAMPS Hon. Franklin D. Roosevelt, via The White House, Washington, D. C. Via Special AR. Delivery Nail HA 9.0 932AM NOVIA SHING 1841 35 1841 GAON YOU THE THE OF DEL THE FOURTEEN COOPERATING RAILROAD LABOR ORGANIZATIONS November 13th, 1941 MEMO TO THE SECRETARY OF THE PRESIDENT. I would appreciate you attaching the enclosed statement to the letter ad- dressed to the President today signed by the Fourteen Cooperating Railroad Labor Organizations which I overlooked attaching. Many thanks. Stenographer. STATEMENT OF THE FOURTEEN COOPERATING RAILROAD LABOR ORGANIZATIONS ON EMERGENCY BOARD REPORT TO THE PRESIDENT, NOVEMBER 5th, 1941. The refusal of the President's Emergency Board to grant an increase in pre- vailing contract wages (except as to certain minimums), and recommending only tem- porary additions to wage payments for a limited period of time, is most disappoint- ing to the employes. The clearly established facts show that wages of these railroad workers, on the average, are but 6324 per hour and are 35% below wages paid similar workers in other comparable industries. Railroad wages have not been increased since 1937. Every person informed of current developments knows that wage scales throughout American industries have been rising. If railroad workers are to be denied an increase in their wage levels during periods of industrial activity, then there is no possibility of improving their posi- tion. If railroad workers cannot raise their wage levels in periods of industrial activity, then it might be appropriately asked: "When can wage standards be raised?" The Board admits wage standards in other industrios are rising, but complote- ly ignores this fact in its recommendations. While the Board pays lip-service to the "system of orderly procedure" required by the Railway Labor Act in the consideration and disposition of controversies over wage changes, it substitutes "compromise" for "justice" in the interest of unanimity among the Board Members. Orderly procodure as a substitute for economic warfare cannot survive unless it produces justice. While the Board states another factor influencing its decision is rising food prices, at the same timo it denies any relief to the employes of short line railroads except a minimum wage of 40$ per hour. The recommendation of the Board completely ignores its own findings that economic changes are occurring rapidly and are unprodictable. The Report points out that wholesale prices of 28 basic commodities have already jumped by more than 55% and will follow this general trond. since August, 1939, and that retail prices and living costs have risen substantially In spite of those facts, the astounding suggestion is made that railroad wage lovels continue unchanged and that & temporary bonus of 9$ por hour bo provided to meet this condition. of wage fixing and introduces a new element that the Board itsolf denounced in dispos- The proposal for temporary additions to wage payments ignores all past history ing of the carriers' proposed bonus plan. ed by railroad labor. A bonus plan in any form is no answer to this question, nor can it be tolerat- it entiroly ignores other admitted facts disclosing that railroad wages are far bohind Not only is the Board's suggestion inadoquate to meot its own conclusions, but those in other industries. -2- While the Board dwells at length upon the virtue of an adequato minimum wago, it dismisses this problem with the indefensible recommendation that employes of trunk line railroads be paid a minimum wage of not loss than 45¢ and employes of short lines 40 ₫ por hour. If this is the Board's view of an adequate minimum wage, then there is little difficulty in understanding how it ignored its plain duty in the goneral wage issue. The recommendation of 6 days' vacation with pay is a disgrace to an industry that gains a large share of its business from vacation activities of the people. The record in this case abundantly shows that industry generally grants more liboral vacations, but the Board makes the amazing suggestion that the employes should sacri- fice some of their normal working conditions to permit application of this slight concession. This is wholly unsatisfactory. The facts and the record in this case warrant an increase in contract wage rates that will give to railroad labor equality of treatment with other labor of similar skill and minimum wages in line with those established through collective bargaining in other major industries. The railroad employes want freodom of op- portunity to protect themselves against rising prices and to participate in general- ly increasing wage levels. This cannot be done in view of the restrictions suggest- ed by the Board. Railroad employes believo in orderly procedure, but they are not willing to accept injustice. They are determined to press their demands for oquitable consid- eration and relief against present intolerable wage standards and to gain reasonable vacations. UNITED UNITED RAILWAY EMPLOYES' DEPARTMENT STATES STATES POSTAGE POSTAGE Room 520 America Fore Bldg., 844 Rush St. Fort Dearborn Station CHIP B CHICAGO, ILL 186 5 CENTS 5 5 CENTS 5 SAVINGS AIR MAIL SPECIAL DELIVERY AIR MAIL BONDS AND STAMPS Special Delivery . Air Mail DELL THE Secretary to the President of the United States, The White House, SECURITY Washington, D. C. ATP MATE BETTA STAM v + I O' All SELL 1944 PSF: S Phoposed Release Washington, D. C. Nov. 15, 1941. MEMO TO: Secretary McIntyre, The White House. FROM: The National Mediation Board. At your request, the National Mediation Board submits the follow- ing in connection with the rejection of the Emergency Board Report by the Chief Executives of the Five Transportation Brotherhoods. PROPOSED RELEASE il The Chief Executives of the Five Transportation Brotherhoods, Engineers ,CONDUCTORS, Firemen, Brakemen and Switchmen have advised that they have rejected the find- ings or conclusions of the Emergency Board I appointed under the provision of Section 10 of the Railway Labor Act (the report was made public Nov. 5th) and that Enginemen, Trainmen and Yardmen, will begin a nation-wide strike December 7, 1941.' "The Chief Executives of the rourteen non-operating railroad labor organ- izations, i. e. Clerks, Shopmen, Telegraphers, Maintenance men, etc. have re- jected the findings of the Board, but have not threatened a strike or set a date." The Railroad Managements have accepted the Emergency Board Report." "I have asked for further coal parleys and I now ask for further railroad parleys. There must be no railroad strike. All disputes in the railroad in- dustry have, for 15 years, been settled under the law -- the Railway Labor Act, and it must not fail now." "The Railroads cannot operate without coal and the coal mines cannot operate without the railroads. The National Defense Program is dependent, on both the railroads and the coal mines." "I have requested the representatives of the railroads and the employees of to meet at Chicago, Monday, November 17, 1941, and hold further conferences in consideration of the Emergency Board Report, and in the event the parties do not come to an understanding, to arbitrate under the legal provisions of the Railway Labor Act, so that orderly democratic principles may be followed." "It may be, if the three groups named in the proclamation creating the Emergency Board are not successful in settling the dispute or disputes, that several arbitration plans will have to be discussed under the provisions of the Railway Labor Act. " Respectfully submitted, THE NATIONAL MEDIATION BOARD. MEMORANDUM To: Mr. Marvin H. McIntyre, Secretary to the President. From: National Mediation Board. Date: November 15, 1941. Subject: Background Observations on the Current Railroad Labor Situation Basically, the appointment of the Emergency Board, in whose recommendations both groups of railroad labor organizations--those representing the operating employees and those representing the non- operating employees--are now voicing their disappointment, had to be created by the President because of the inability of the parties con- cerned to compose their differences in direct conferences or in medi- ation. The railroads were willing to arbitrate, but the labor organ- izations were not, electing instead to precipitate the creation of an Emergency Board. Under these circumstances it is not unfair to hold that the employees should now abide by the recommendations of the Board. This, however, they appear to be unwilling to do, alleging all kinds of faults with the report of the Board. In this connection, it might be recalled that when Mr. George M. Harrison some time early in September discussed the railroad labor situation with the President and indicated that his group of labor or- ganizations would not find it feasible to agree to arbitrate their differences with the railroads and that, as a consequence, a presiden- tial Emergency Board might have to be appointed, he suggested that this would be preferable since the government would then be telling the parties what would be expected of them. The leaders of the train and engine service or operating em- ployees have now authorized their constituents to strike beginning December 7 for the purpose ostensibly of forcing more favorable con- sideration from the railroads than recommended by the Emergency Board The non-operating employees and their labor organizations have, however, simply "rejected" the report of the Board but have not indi- cated what they have in mind by way of securing more favorable con- sideration from the railroads. The railroads, on the other hand, while also expressing their disappointment in the awards of the Board, have nevertheless indicated their willingness to accept its findings. As matters stand at the moment, therefore, the reactions of the principals irmediately concerned with the report of the Emergency Board are all in and the position of each is clear. The problem, therefore, is what should be done with respect to the situation from now on. Chicago, Illinois. November 12, 1941. Mr. Robt. F. Cole, Secty., National Mediation Board, Washington, D. C. Dear Sir: Herewith, for the information of the National Mediation Board, copy of communication we have this day addressed to the President of the United States. Yours very truly, Grand Chicf Engineer, DIE. Assistant egzopf President BLINE. President, Hw rasen ORC. President, AWhitney BRT. thind intediation Doard D&B REV 1941 DAD THE President, SUOINA. Encl. Chicago, Illinois. November 12, 1941. The President, The White House, Washington, D. C. Dear Mr. President: In our letter of November 7th your atten- tion was directed to the action taken by the General Chair- men of the five transportation brotherhoods rejecting the recommendation of the Emergency Board in connection with the wage dispute between these organizations and the railroads. In view of the fact that the employes are now compelled to pursue the only course left open to them or ac- cept unfair and unjust treatment, unless the employers can be prevailed upon to acknowledge the rights of the men, dates have today been designated for a strike to become effective. The employes represented by these organizations are to engage in a strike on approximately one-third of the railroads at 6 AM Sunday, December 7; one-third at 6 AM Menday, December 8; and the remainder at 6 AM Tuesday, December 9, 1941. We feel that you should be personally advised of this action. Respectfully yours, Grand Chief Engineer, BLE. Assistant Egzopf BLF&E. Hw rasin President, ORC. President, A., BRT. President, SUDINA. TO SECRETARY FOR OFFICE STAMP National idediation -Board MIT RECEIVED OSB GVB NOV 1 3 1941 GAC ACB DJL KACO REPERRED RFC Office of the Secretary INFORMATION Please read and relay to next mem- ber promptly. Date Forwarded Mr. Mr. Lewis Deyor CODE Mr. Cook gae Gae"/13(4) "/13/41 PSF: Railroads BROTHERHOOD OF RAILWAY AND STEAMSHIP CLERKS FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYES SUNSET LODGE No. 55 Road B R REFERRED AFFILIATED WITH THE AMERICAN FEDERATION AND OF LABOR matm New Orleans La. November 8,1941. - Hon F. D.Roosevelt, Pres, Unites States, White House, Washington D.C. Dear Mr. President; The emergency fact finding board appointed by you, For the railroads have rendered their decision, which if put to a secret ballot I am sure that a majority of the railroad emp loyees will accept. I was and am still Division Chairman, that handled the taking of strike ballot in March on the vacation issue and in September on the increase in pay the ballot was 100 per cent at that time for strike, since the board has rendered their decision, the same ones that vote for strike are in fav or of abiding by the decision of the board. I would suggest in the interest of the old employ еея, that have been working for the railroad- 30 and 40 year= that before the Union Learders are allowed to call out these men that you force them to take a secret ballot that will be taken on the Company property, and that a member from the Uni on and 1 compant employee count the secret ballot. The older railroad employees during your adminis tration, received the Railway Labor Act, Railroad Retirement, and unemployment Insurance, and they all appericate these in provements over past conditions, and at the present time I feel that we can not let you down and tie up Defense Produc tion and we do not want to go on a STRIKE. Yours Sincerely. Division Chairman Sunset Lodge #55 Union Card #65 Texas New Orleans RR L.A.McWhirter 4202 Dauphine st New Orleans La. New Orlean - 1601 GRLE 3 01 AON wr MAN = Ibel is LA. is IN ORLINN STATES POSTAGE CENT 1 Hon F.D. Roosevelt, 1 President, United States White House Air sin Washington D.C. NEW ORLEANS. LOUISIANA MEMORANDUM FOR FILE. National ECEIV Modiation A ED Board 1941 OSB GAC MDL C ACB KMBffice NOV 1 of 4 the Secretary RFC At the suggestion of Chairman Lewis long distant call was placed to Mr. L. A. McWhirter, 4202 Dauphine Street, New Orleans, Louisiana, to ascertain whether a letter dated Novem- ber 8, 1941 addressed to the President of the United States unsigned, but showing his type written name as the writer, was authentic. Mr. McWhirter advised that the failure to sign the letter was an over sight and that the letter was legitimate. He also advised that it expressed practically the unanimous sentiment of all the men with whom he had discussed the rec- ommendation of the President's Emergency Board. November 13, 1941. PSF: Raibroads THE WHITE HOUSE WASHINGTON November 19, 1941 MEMORANDUM FOR MR. DAVID LEWIS: To read and take into the Pres- ident; and leave with him. THE WHITE HOUSE WASHINGTON 11-18-41 MEMORANDUM FOR THE PRESIDENT: B.B. 'phoned me and re- ported: "After a conversation last night with DAV. I believe that if nine or ten Railroad Presidents met with representatives of the Unions, something will develop. I know there is now a serious difference of opinion among the Railroad Presidents on this issue. This will take it off the President's back and I believe something could be worked out." Eneur EMW PSF: Raibwads EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF GOVERNMENT REPORTS WASHINGTON, D.C. OFFICE OF THE DIRECTOR November 17, 1941 CONFIDENTIAL MEMORANDUM TO THE PRESIDENT: Charles M. Hay, St. Louis, who represented the Brotherhoods as attorney before the Railway Mediation Board in Chicago, tells me the three things that offer possibility of preventing the strikes are, in the order of their importance: 1. Elimination of the proposal that any agreement shall be binding until the end of 1942. (This would leave the regular processes of taking up proposed changes in contracts in effect, 88 provided under the Railway Labor Act.) 2. Agreement by the roads not to bring up for mediation during the emergency period controversies over rules, which they have announced they will submit to mediation following disposal of the wage disputes. (The men apparently fear adverse changes in present rules.) 3. Some further increase in wages for the lower paid men. (The Mediation Board apparently allowed a percentage increase, based on increased cost of food, and the point is made that this increased cost is as great in the case of the lower paid men as in the case of the higher paid men and can't be a matter of percentage.) Mr. Hay reports serious concern on the part of the Brotherhood heads because a C.I.O. contract (Automobile Workers) with the Ford plant is giving certain men doing railroad work for Ford considerably better pay than the Brotherhoods have been able to get for their men doing the same work. Brotherhood heads indicate fear of a C.I.O. raid on their membership or & serious drive to take the railroad unions into the C.I.O. This is given to me by Mr. Hay as a friend of the Administra- tion, which he has been. Lowell Mellett PSF; Raibroads ASSOCIATION OF AMERICAN RAILROADS TRANSPORTATION BUILDING WASHINGTON. D. C. J. J. PELLEY PRESIDENT November 25, 1941. My dear Mr. President: This will acknowledge and thank you for your letter of today, in which you advise, as the result of conference in relation to the railroad problem, that you are, on your own motion, reconvening the Emergency Board, 28th. and have requested the Board to commence its hearings on Friday, November You may be assured that the railroad representatives will be ready to appear before the Board at that time for the presentation of their side of the case. Very sincerely yours, Honorable Franklin D. Roosevelt The President The White House Washington, D. C. THE WHITE WASHINGTON 11-26-41 MEMORANDUM FOR THE PRESIDENT: Mr. David Lewis brought in this memorandum, and says that he and the other members of his Board think it important that the President read. this before he meets with the National Mediation Board, the members of which arrive here during the morrow. The hours of arrival are so uncertain that it is believed safer to have a meeting with the President sometime Friday morning, if that meets with the President's convenience and pleasure. Mr. Eastman has also read and approved the memorandum. Emm E.M.W. MEMORANDUM To: The President From: National Mediation Board Date: November 26, 1941 Sub- ject: PENDING RAILROAD LABOR SITUATION I. From Mr. David J. Lewis, who has been attending your conferences on the pending railroad labor difficulties along with Messrs. Eastman, Meade, and Fahy, the National Mediation Board understands that you plan to meet with the Emergency Board tomorrow--Thursday, November 27--prior to the time it will rehear the parties to the controversy. Our Board also under- stands that representations have been made to you about the diversity of opinion that prevailed among the members of the Emergency Board in Chicago before they compromised their differences, that four members wanted to recommend wage increases of 15 per cent and 15 cents, respectively, for the operating and non-operating employees, that only one member was low, and that the majority yielded to this individual in the interest of making a unanimous report to you, with the result that grave injustice was done to the employees. The facts as regards this alleged diversity of opinion, as revealed by the minutes of the Board for October 28, 1941, are as follows: : Position of Each Board Member : WILLITS POWELL: THOMPSON: BONBRIGHT: MORSE Issues : I : : I Chairman 1 Proposed wage raise should be # : : : : for temporary period ending # Yes / : Yes : Yes : Yes : Yes December 31, 1942 : # : : : 2 Increase in wages for train : : 2 # : and engine service employees 2 5% to : 5% to # 7½ : 7% : 10% (Johnston-Whitney group) : 71% : 72% # : : 3 Increase in wages for non- : : : : : operating employees : 5d to : 5¢ to: 71/20 : 10¢ : 12¢ (Jewell-Harrison group) : 7-d : 724 : : : 4 Vacations with pay : 1 wk : 1 wk 2 1 wk : 1 wk : 7 days : of 6 : of 6 : of 6 : of 6 3 : days : days : days I days # 5 Minimum hourly wages : 45c : 45c : 45c : 45c : 50c 6 Date recommendations should : Sept. : Sept. : Sept. 2 Sept. : Sept. be effective I 1, : 1, : 1, 2 1, : 1, 1 1941 : 1941 : 1941 : 1941 : 1941 First, you will note that there was virtual unanimity among the mem- bers on four issues, namely: l. temporary period of wage raises; 4. vaca- tions with pay; 5. minimum hourly wages; and 6. date recommendations should be effective. Second, you will note that on the wage issue (2. and 3.) the divergence in reality was chiefly between one member--Chairman Morse--and 2. the four remaining members, the majority, who wanted to give less than he proposed. The compromise finally reached in reality, except for one item (10 cents for the non-operating employees), therefore was more than what the majority felt should be recommended. II. The Emergency Board, which sat in this case, was constituted of men of outstanding integrity and independence of thought. Its appointment by you was heralded with great acclaim, and the hearings before the Board will attest to the confidence the parties manifested in the Board. It is our view, if the recommendations of the Emergency Board are now to be reviewed by it in the light of the situation which has arisen since it reported to you on November 5, 1941, that the status of the Board as an independent judicial body voicing its own views on the record before it should be most carefully maintained. If any other impression should be created, it would, we fear, have unfortunate results for the future, and the reactions, so far as individual members of the Board are concerned, might also be dangerous. The possible creation of such an impression could be wholly avoided if a representative of the railroads--Mr. Fred J. Gurley (who has been act- ing as Chairman of the Railroads' Conference Committee)--and two representa- tives of the employees--Messrs. Alvaney Johnston and B. M. Jewell (who have been acting, respectively, as Chairmen of the Employees' Conference Com- mittees) meet at the same time you meet tomorrow morning with the Emergency Board We realize, however, that you may prefer to see the Board alone. The 71 percent for train service employes equals about 6.75$ per hour The total annual increase for these employes 1 was estimated to be: 53 or 54 million Increase this 2.254 per hour to 9$ or an Annual incr ase of 17 or 18 million The 9$ recommended for non-operators WPS estimated by Board to cost 187 million Increase $1 to 924 annual additional cost of 10 or 11 million Total Increase of 27 to 29 million Further consideration to be given to an increase in pay on or about July first If living costs have increased any substantial amount. 11-1-41 Ratmar file PSF: Raibroads November 26, 1941 The Honorable Franklin D. Roosevelt The White House Washington, D. C. My dear Mr. President: Some of the Washington correspondents indicate that you may have had the Reilway Labor Act in the back of your mind in considering how to recast and strengthen the sequence of agencies and procedures dealing with industrial relations under the Defense Program. In that case you will likely have drawn WILLIAM M. LEISERSON, senior member of the National Labor Relations Board, into your counsels. If not, let me suggest that you do. My suggestion is the quintessence of what might immediately serve you out of our six months canvass of Industrial Relations and De- fense which came to a head this month in our Graphic Special, MANNING THE ARSENAL FOR DEMOCRACY. (Attached) Last week, Mr. Lubin expressed his warm appreciation of the project; and would, I feel sure, be sympathetic also to this suggestion of mine. For Leiserson has long been mulling over the need for what he 2. calls an "articulated system" of our "meehanisms" for labor relations. We counted ourselves altogether fortunate in getting him to freshly-mint his experience and thinking in a full length appraisal of The Public and Labor Relations (page 611). In this (in advance of the captive mine clash) he reviewed the situation in which the half hundred federal and state agencies attempt- ing to deal with industrial controversies have found themselves; and the gaps and twilight zones between negotiation, conciliation, mediation and arbitration. Nor was he by any means merely negative. With the old War Labor Board as backdrop, and the Railway Labor Act as measuring rod, he analyzed tools, procedures, stages and also methods for bringing these into being that carry confidence with manage- ment, labor and the public. Thumbing it through, you would find his treatment refreshing and réinforsing. But even more, you would find him st once a canny and creative counselor as controversy in Congress may beat uponhext steps in this field, and as dour and haywire proposals may be injected into the debate if not into the legislation itself. Sincerely, Paul Kellogg pk ja e MEMO. Re - Re WILLIAM Ma LEISERSON Your contacts and confidence in his surely need no reinforcement from me, for he was serving on the Railway Labor Board under your appointment when you transferred him to the National Labor Relations Board at a critical stage in its work. Nonetheless, here are some items. X X K Years before, as impartial chairman in the garment trades, the demand for his services was so widespread that beginning with one clothing center (New York), he was covering four, as I recall it, before he was through. He had a hand in labor adjustments in World War days. He wrote the charter for labor relations under the TVA. He had handled some of the toughest situations in railroad labor relations when you transferred him to the NLRB. Z X Z But Leiserson 1s more than an 200 negotiator, conciliator, mediater or what have you. More than an effective administrator, or a deep-reaching philos- opher in this field. In his structural grasp of the factors and procedures involved, his is the clearest statescraft I have come upon. My association with him goes back to our Pittsburgh Survey days together. And in our editorial work We have repeatedly tapped his acumen. Thus in the mid-thirties, at the time of the sit-down strikes, we enlisted him to write for our Survey Graphic an article which compared the seasoned federal scheme covering labor relations in interstate commerce with frag- mentary and improvised government agencies of that sort when it came to industry as & whole. X X X Only this year, Mr. WILLIAM H. DAVIS, chairman of the National Defense Mediation Board; Mr. SIDNEY HILLMAN, associate director general, OPM; and Mr. LEISERSON were three of our chief counselors in shaping the fifth of our CALLING AMERICA series of Survey Graphie. As you will see - Mr. DAVIS leads off the number with a luminous portrayal of the organic principles and processes that offer alternatives to resort to raw force in the economic field; or raw legislative compulsion. 2. Mr. HILLMAN leads off the section on Labor with his trenshant faith in the democratic process of evolving, rather than prenouncing - labor policy. Mr. LEISERSON, in turn, leads off the section on Government with his overall analysis which concluded as follows: WANTED: A National Labor Relations System This survey should make plain that all the elements of a per- manent national policy for maintaining stable labor relations and settling disputes peacefully are now available in various agencies of the federal and state governments. What remains to be done 15 to unify the federal machinery into a national system, with state and local hook-ups. But this calls for a set of principles and policies governing mediation, arbitration, and investigation of labor disputes, together with appropriate administrative regula- tions. Congress may promulgate such a code, as it did when it imple- mented machinery for protesting organization and bargaining rights in the National Labor Relations Act. Or the task may be accomplished by administrative action of the government after agreement with repre- sentatives of labor and management, as was done in establishing the War Labor Board. The main patterns already have been drewn in the provisions of the Railway Labor Act and the New York Mediation Act. Unless a unified, articulated system of labor relations' meuh- anisms is built on these patterns, there will continue to be much "activity" in labor "situations" by many kinds of mediation contriv- ances, but there will be as many strikes as ever. Such contrivances are useful in wettling strikes; only a carefully designed system of adjustment agencies, operating on preventive principles and policies, can mettle labor disputes before they break out into strikes. Only so can We maintain peaceful industrial relations. F:Railroads Strike Folder FOR THE PRESS IMMEDIATE RELEASE DECEMBER 2, 1941 The President received this afternoon the following resume of the agreement between the President's mergency Board and representatives of the various organizations in- volved in the threatened railway strike: "December 2, 1941 "The President The White House "Mr. President: "Your Emergency Board is honored and pleased to report to you that its proposals for a mediation settlement of the threat- ened railway strike have been accepted or acquiesced in by the representatives and spokesmen for the contending parties. "It will be necessary for the representatives of some of the labor organizations to submit the proposed settlement to meetings of their general chairmen for final approval. These meetings will be held in Chicago on Ducember 4. However, your Emergency Board has been assured that the representatives of these organiza- tions who participated in the mediation negotiations will recom- mend the approval of the proposals contained in the mediation agreement. We are confident that the specific proposals for settlement of the railway dispute which we submitted to the parties will be formally approved without change by all of the parties. The railroad officials have already accepted the mediation proposals. "The provisions of the mediation settlement are as follows: "(1) All wage increases set forth in the mediation agreement shall be increases in basic rates of pay and not temporary wage increases. You will note that the Board's recommendation on this point in its Report of November 5, 1941 was that wage increases should be for a temporary period running to December 31, 1942, at which date the wage structure of the industry should be reviewed in light of the then existing economic conditions of the industry and of the country. The carriers agreed in the mediation negotiations to increases in basic rates of pay on condition that the railway labor organizations would in turn agree to a moratorium for the period of the national emergency on proposals for changes in rules. This moratorium creates. dual obligations in that both labor and management agree that they will not pross for rules changes during the emergency period. The exact details and conditions of the agreement for a moratorium are to be worked out by the parties in accordance with the terms 25 ex- pressed to the Emorgency Board during the mediation negotiations. "(2) The retroactive datus for wage increases shall be as fol- lows: (a) The employees shall receive retroactive pay for the puriod.from September 1 to Docember 1, 1941, said retroactive pay based upon the wage recommendations as set forth in the Emergency Board's Report of November 5, 1941. (b) The pay increases provided for in the modiation agree- ment shall be effective December 1, 1941; - 2 - "(3) The wage increases provided for in the mediation agreement are: (a) The Five Operating Organizations shall receive a wage increase of 9.2 cents per hour in basic hourly wage rates. Translated in terms of an increase per day this amounts to an addition of 76 cents per day. (b) The employees of the Fourteen Cooperating Organizations shall receive an increase in basic hourly wage rates of ten cents per hour, or a basic daily wage increase of 80 cents. (c) The 10 cents per hour increase for the employees of the Fourteen Cooperating Organizations shall apply also to the employees of the Ruilway Express Agency. Your attention is called to the fact that the spokesmen for the Railway Express Agency who participated in the mediation negotiations have informed the Board that the Railway Express Agency will not agree to a mediation settlement calling for a wage increase of 10 cents per hour for its employees. However, inasmuch as all of the other employer groups have agreed to such a wage increase, and in light of the fact that the representatives of the employees have assured the Board that they will recommend to their mon an accuptance of the proposed mediation settlement and the calling off of the strike, it is the view of the Board that the management of the Railway Express Agency should be requested to join in the modiation settlement. It should be distinctly understood by you that the Board makes the above suggestion simply because it believes that a balancing of all interests warrants it. It should be remembered by all concerned that mediation negotiations are characterized primarily by principles of compromise. The employee groups, as well as the curriers, made many concessions and offered many compromises which constituted rucessions from original positions. It would seem best under all the circumstances for the Railway Express Agency to become a party to the mediation settlement. However, it appears that the Railway Express Agency believes that it can muke a more satisfactory settlement by negotiations, even though such a policy may involve the risk of a strike of its umployees. We call your attention to the fact that the Railway Express Agency constitutes but a very small portion of the employer interusts involved in this dispute. Furthermore, it is to be noted that the other carrier groups dia not insist that the completion of a mediation settlement be held up until the Rallway Express Agency could negotiate what it con- sidered to be & better settlement or could SUC its way clear to join in the modiation settlement which the other carriers Were willing to accept. It also should be stated that the Railway Express Agency is a financial subsidiary in all practical effects to the carrier organizations, and hence the Board felt that there should not be any further delay in settling the major uisputes until such time as the Railway Express Agency might see fit to join in the settlement or negotiate another one. This view was shared by the other carriers. - 3 - However, as we shall state in our official Report which will be submitted to you tomorrow, there is a marked difference between what your Emergency Board has approved as a mediation settlement and what it would recommend on the basis of the formal record submitted to it by the parties at the long hearings in Chicago from September 16 to October 22, 1041, and at the two-day reargument in Washington, November 28 and 29, 1941. As the Board stated to the parties yesterday, it is still of the opinion that all of the major recommendations set forth in its Report of November 5, 1941 are amply supported by the official record, and flow from an application to that record of the "preponderance-of-the-evidence" test. Therefore, if the Railway Express Agency issue were to be determined on the basis of the formal record, the Board would reiterate the recommendation which it made in its Report of November 5, 1941. "(4) The recommendation in the Report of November 5, 1941 that there shall be a vacation of six consecutive work days with pay for all employees in the Fourteen Cooperating Organizations who work substantially through- out the year, or who are attached to the industry as a result of reasonably continuous employment, shall be approved, with the additional provision that employees in the Clerk and Telegrapher classifications who have given two years of service shall receive a nine day vacation with pay, and those who have a record of three years of service or more shall receive an annual vacation of twelve days with pay. It has been agreed by the parties that the details covering the rules, conditions, and arrangements which shall govern the granting of vacations shall be worked out by the parties in negotiations immediately following the acceptance of the mediation settlement. The parties have agreed with the Emergency Board that if they are unable to reach an agreement within a reasonable time upon all the details of the vacation proposal, they will submit all disagreements to a member of the Board selected by them, or to some other third party agreed to by them, for final settlement. They have agreed that the decision of any such referee shall be binding upon them as to vacation arrangements and as to the formula which shall determine what particular employees shall receive vacations. "(5) The wage increases provided for in the mediation settlement shall apply to all of the Class II and Class III railroads represented in the Chicago hearings by the Carrier Conference Committees. However, the wage increases shall not be made applicable to the so-called Short Lines which were not represented by the Carriers' Conference Committees, and which did not join with the carriers in a national handling of their disputes. For the most part these Short Lines were those represented by Mr. C. A. Miller and Mr. J. M. Hood. As to these latter Short Lines, the recommendations covering them as set forth in the Emergency Board's Report of November 5, 1941, shall continue to govern the final settlement of their disputes. Briefly, this means that a basic minimum wage of 40 cents per hour shall be fixed for their employees, and such other wage increases as can be agreed upon through direct negotiations between management and the employees or which are arrived at through the future operations of the procedures of the Roil- way Labor Act shall govern. The Board is satisfied that the employees of the Short Lines should receive some increase in wages at this time. But in view of the fact that there are so many differences between the Short Lines and the Class I railroads, and because in the opinion of the Board it has never had presented to it sufficient evidence or information to justify its making a specific recommendation on the amount of the wage increase which should be granted to the employees in the Short Lines, it has taken the position that the matter should be reforred to the parties for further negotiations. - 4 - "The Board is satisfied that the parties themselves should have little difficulty in reaching a negotiated wage settlement for the Short Lines, but if they should become deadlocked over it, the procedures of the Railway Labor Act are available to them. "The foregoing, Mr. President, is a brief resume of the provisions of the mediation settlement which was submitted to the parties by the Board late yesterday afternoon. It is submitted to you at this time because the Board appreciates the fact that it is important that an early release announcing the provisions of the settlement should be made to the American people. "This letter will be followed by a much more detailed report which the Board hopes to have ready for submission to you sometime Wednesday, Docember 3. The final Report of the Board will set forth the con- clusions which it reached on the record of the reargument hearings, and the conclusions which it reached in the mediation proceedings. "The partics are continuing to work with the Board in the prepara- tion of a formal mediation agreement based upon the provisions of settlement which the Board submitted to them yesterday. The formal agreement will undoubtedly be signed by the parties later on this week. "You will find attached a copy of the transcript of record which was made at the final mediation session. It contains the proposals of the Board and the committments of the parties. "It should be said that neither side obtained all that it wanted out of the mediation proceedings, but it was gratifying to see that all of them recognized that when they went into mediation it was essential that they demonstrate a willingnoss to compromise their differences and adopt a give and take policy. "Their attitudes and sincere efforts to reach a settlement which characterized all of their relations with the Board during modiation are a credit to themselves and their principals, and their final willingness to join in the settlement represents a distinct service to their country in this time of great emergency. "Mr. President, your Board awaits your further pleasure. Yours respectfully, Wayne L. Morse, Chairman Thomas Recd Powell James C. Bonbright Joseph H. Willits Huston Thompson PRESIDENT'S EMERGENCY BOARD" PSF: Railroads REMINDER EMERGENCY BOARD REPORT - POINTS 1. Addition to pay temporary - not basic, except for minimun rates. 2. Rates effective September 1, 1941 - expire December 1, 1942. 3. Five Operating Brotherhood employees 72% increase. 4. 14 Cooperating Labor Organizations' employees 9$ per hour increase. 5. Shortline Basic Minimum Wage 40¢ per hour minimum. Other Railroads - minimum wage 45¢ per hour, including Express Agency 6. Express Agency Employees increase 72$ per hour. 7. Some increase for employees of Shortlines should be agreed upon among the parties. 8. Six-day vacations for employees represented by 14 Cooperating Organizations. 9. Modification of Rules referred to parties for negotiations, etc. PSF; FiRailroads file THE RAILWAY LABOR ACT Being An Act To provide for the prompt disposition of disputes between carriers and their employees and for other purposes (U. S. Code, Title 45, Chapter 8)' Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I² DEFINITIONS SECTION 1. When used in this Act and for the purposes of this Act- First. The term "carrier" includes any express company, sleeping- car company, carrier by railroad, subject to the Interstate Commerce Act, and any company which is directly or indirectly owned or con- trolled by or under common control with any carrier by railroad and which operates any equipment or facilities or performs any service (other than trucking service) in connection with the transportation, receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, and handling of property transported by railroad, and any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the business of any such "carrier": Pro- vided, however, That the term "carrier" shall not include any street, interurban, or suburban electric railway, unless such railway is oper- ating as a part of a general steam-railroad system of transportation, but shall not exclude any part of the general steam-railroad system of transportation now or hereafter operated by any other motive power. The Interstate Commerce Commission is hereby authorized and directed upon request of the Mediation Board or upon complaint of any party interested to determine after hearing whether any line operated by electric power falls within the terms of this proviso. Second. The term "Adjustment Board" means the National Rail- road Adjustment Board created by this Act. Third. The term "Mediation Board" means the National Media- tion Board created by this Act. 1 (Public, No. 257, 69th Cong.) (H. R. 9463) : (Approved May 20, 1926), The Railway Labor Act (44 Stat. L. 577) (Public, No. 442. 73rd Cong.) (H. R. 9861), An Act to amend the Railway Labor Act approved May 20, 1926. (Approved June 21, 1934.) That Section 1 of the Railway Labor Act is amended to read as follows: (Followed by text governing carriers by railroad and related transportation agencies.) (48 Stat. L. 926.) # Title II, (Public, No. 487, 74th Cong.) (S. 2496), An Act to amend the Railway Labor Act. (Approved Apr. 10, 1936.) That the Railway Labor Act, approved May 20, 1926, as amended, herein referred to ns "Title T" is hereby further amended by Inserting after the enacting clause the caption "Title I" and by adding the following Title II. (Followed by Title II governing air carriers.) (48 Stat, L. 1185.) 116869-37-1 2 3 Fourth. The term "commerce" means commerce among the several States or between any State, Territory, or the District of Columbia commerce or to the operation of any carrier growing out of any dispute between the carrier and the employees thereof. and any foreign nation, or between any Territory or the District of "Second. All disputes between a carrier or carriers and its or Columbia and any State, or between any Territory and any other their employees shall be considered, and, if possible, decided, with Territory, or between any Territory and the District of Columbia, or all expedition, in conference between representatives designated and within any Territory or the District of Columbia, or between points authorized so to confer, respectively, by the carrier or carriers and in the same State but through any other State or any Territory or by the employees thereof interested in the dispute. the District of Columbia or any foreign nation. "Third. Representatives, for the purposes of this Act, shall be Fifth. The term "employee" as used herein includes every person designated by the respective parties without interference, influence, in the service of a carrier (subject to its continuing authority to or coercion by either party over the designation of representatives supervise and direct the manner of rendition of his service) who by the other; and neither party shall in any way interfere with, performs any work defined as that of an employee or subordinate influence, or coerce the other in its choice of representatives. Rep- official in the orders of the Interstate Commerce Commission now resentatives of employees for the purposes of this Act need not be in effect, and as the same may be amended or interpreted by orders persons in the employ of the carrier, and no carrier shall, by inter- hereafter entered by the Commission pursuant to the authority ference, influence, or coercion seek in any manner to prevent the which is hereby conferred upon it to enter orders amending or designation by its employees as their representatives of those who interpreting such existing orders: Provided, however, That no occu- or which are not employees of the carrier. pational classification made by order of the Interstate Commerce "Fourth. Employees shall have the right to organize and bargain Commission shall be construed to define the crafts according to collectively through representatives of their own choosing. The which railway employees may be organized by their voluntary majority of any craft or class of employees shall have the right action, nor shall the jurisdiction or powers of such employee organi- to determine who shall be the representative of the craft or class for zations be regarded as in any way limited or defined by the provisions the purposes of this Act. No carrier, its officers or agents, shall of this Act or by the orders of the Commission. deny or in any way question the right of its employees to join, Sixth. The term "representative" means any person or persons, organize, or assist in organizing the labor organization of their labor union, organization, or corporation designated either by a choice, and it shall be unlawful for any carrier to interfere in any carrier or group of carriers or by its or their employees, to act for way with the organization of its employees, or to use the funds of it or them. the carrier in maintaining or assisting or contributing to any labor Seventh. The term "district court" includes the Supreme Court organization, labor representative, or other agency of collective bar- of the District of Columbia; and the term "circuit court of appeals" gaining, or in performing any work therefor, or to influence or includes the Court of Appeals of the District of Columbia. coerce employees in an effort to induce them to join or remain or This Act may be cited as the "Railway Labor Act." not to join or remain members of any labor organization or to SEC. 2. Section 2 of the Railway Labor Act is amended to read deduct from the wages of employees any dues, fees, assessments, or as follows: other contributions payable to labor organizations, or to collect or to "GENERAL PURPOSES assist in the collection of any such dues, fees, assessments, or other "(1) To avoid any interruption to commerce or to the operation of contributions: Provided, That nothing in this Act shall be construed any carrier engaged therein; (2) to forbid any limitation upon free- to prohibit a carrier from permitting an employee, individually, or dom of association among employees or any denial, as a condition of local representatives of employees from conferring with management employment or otherwise, of the right of employees to join a labor during working hours without loss of time, or to prohibit a carrier organization; (3) to provide for the complete independence of car- from furnishing free transportation to its employees while engaged in the business of a labor organization. riers and of employees in the matter of self-organization; (4) to provide for the prompt and orderly settlement of all disputes con- "Fifth. No carrier, its officers, or agents shall require any person cerning rates of pay, rules, or working conditions; (5) to provide for seeking employment to sign any contract or agreement promising to the prompt and orderly settlement of all disputes growing out of join or not to join a labor organization; and if any such contract has been enforced prior to the effective date of this Act, then such grievances or out of the interpretation or application of agreements carrier shall notify the employees by an appropriate order that such covering rates of pay, rules, or working conditions. contract has been discarded and is no longer binding on them in any way. "GENERAL DUTIES "Sixth. In case of a dispute between a carrier or carriers and its "First. It shall be the duty of all carriers, their officers, agents, or their employees, arising out of grievances or out of the interpre- and employees to exert every reasonable effort to make and maintain tation or application of agreements concerning rates of pay, rules, agreements concerning rates of pay, rules, and working conditions, or working conditions, it shall be the duty of the designated repre- and to settle all disputes, whether arising out of the application of sentative or representatives of such carrier or carriers and of such such agreements or otherwise, in order to avoid any interruption to employees, within ten days after the receipt of notice of a desire on 4 5 the part of either party to confer in respect to such dispute, to specify a time and place at which such conference shall be held: conviction thereof the carrier, officer, or agent offending shall be sub- Provided, (1) That the place so specified shall be situated upon the ject to a fine of not less than $1,000 nor more than $20,000 or impris- line of the carrier involved or as otherwise mutually agreed upon; onment for not more than six months, or both fine and imprisonment, and (2) that the time so specified shall allow the designated con- for each offense, and each day during which such carrier, officer, or ferees reasonable opportunity to reach such place of conference, but agent shall willfully fail or refuse to comply with the terms of the shall not exceed twenty days from the receipt of such notice: And said paragraphs of this section shall constitute a separate offense. provided further, That nothing in this Act shall be construed to It shall be the duty of any district attorney of the United States to supersede the provisions of any agreement (as to conferences) then whom any duly designated representative of a carrier's employees in effect between the parties. may apply to institute in the proper court and to prosecute under "Seventh. No carrier, its officers, or agents shall change the rates the direction of the Attorney General of the United States, all neces- of pay, rules, or working conditions of its employees, as a class as sary proceedings for the enforcement of the provisions of this section, embodied in agreements except in the manner prescribed in such and for the punishment of all violations thereof and the costs and agreements or in section 6 of this Act. expenses of such prosecution shall be paid out of the appropriation "Eighth. Every carrier shall notify its employees by printed for the expenses of the courts of the United States: Provided, That notices in such form and posted at such times and places as shall nothing in this Act shall be construed to require an individual be specified by the Mediation Board that all disputes between the employee to render labor or service without his consent, nor shall carrier and its employees will be handled in accordance with the anything in this Act be construed to make the quitting of his labor requirements of this Act, and in such notices there shall be printed by an individual employee an illegal act; nor shall any court issue verbatim, in large type, the third, fourth, and fifth paragraphs any process to compel the performance by an individual employee of such labor or service, without his consent." of this section. The provisions of said paragraphs are hereby made a part of the contract of employment between the carrier and each SEC. 3. Section 3 of the Railway Labor Act is amended to read as follows: employee, and shall be held binding upon the parties, regardless of any other express or implied agreements between them. "Ninth. If any dispute shall arise among a carrier's employees as "NATIONAL BOARD OF ADJUSTMENT-GRIEVANCES-INTERPRETATION OF AGREEMENTS to who are the representatives of such employees designated and authorized in accordance with the requirements of this Act, it shall be the duty of the Mediation Board, upon request of either party to "Sec. 3. First. There is hereby established a Board, to be known the dispute, to investigate such dispute and to certify to both parties, as the National Railroad Adjustment Board', the members of which in writing, within thirty days after the receipt of the invocation shall be selected within thirty days after approval of this Act, and it is hereby provided- of its services, the name or names of the individuals or organizations that have been designated and authorized to represent the employees "(a) That the said Adjustment Board shall consist of thirty-six involved in the dispute, and certify the same to the carrier. Upon members, eighteen of whom shall be selected by the carriers and receipt of such certification the carrier shall treat with the repre- eighteen by such labor organizations of the employees, national in sentative so certified as the representative of the craft or class for scope, as have been or may be organized in accordance with the pro- visions of section 2 of this Act. the purposes of this Act. In such an investigation. the Mediation "(b) The carriers, acting each through its board of directors or Board shall be authorized to take a secret ballot of the employees involved, or to utilize any other appropriate method of ascertaining its receiver or receivers, trustee or trustees, or through an officer or the names of their duly designated and authorized representatives officers designated for that purpose by such board, trustee or trustees, in such manner as shall insure the choice of representatives by the or receiver or receivers, shall prescribe the rules under which its rep- employees without interference, influence, or coercion exercised by resentatives shall be selected and shall select the representatives of the carriers on the Adjustment Board and designate the division on the carrier. In the conduct of any election for the purposes herein which each such representative shall serve, but no carrier or system indicated the Board shall designate who may participate in the election and establish the rules to govern the election, or may appoint of carriers shall have more than one representative or any division of the Board. a committee of three neutral persons who after hearing shall within (c) The national labor organizations, as defined in paragraph ten days designate the employees who may participate in the election. (a) of this section, acting each through the chief executive or other The Board shall have access to and have power to make copies of the medium designated by the organization or association thereof, shall books and records of the carriers to obtain and utilize such informa- prescribe the rules under which the labor members of the Adjust- tion as may be deemed necessary by it to carry out the purposes and ment Board shall be selected and shall select such members and provisions of this paragraph. designate the division on which each member shall serve; but no "Tenth. The willful failure or refusal of any carrier, its officers, labor organization shall have more than one representative on any or agents to comply with the terms of the third, fourth, fifth, seventh. division of the Board. or eighth paragraph of this section shall be a misdemeanor, and upon 6 7 "(d) In case of a permanent or temporary vacancy on the Adjust- "Second division: To have jurisdiction over disputes involving ment Board, the vacancy shall be filled by selection in the same machinists, boilermakers, blacksmiths, sheet-metal workers, electrical manner as in the original selection. workers, car men, the helpers and apprentices of all the foregoing, "(e) If either the carriers or the labor organizations of the em coach cleaners, power-house employees, and railroad-shop laborers. ployees fail to select and designate representatives to the Adjustment This division shall consist of ten members, five of whom shall be Board, as provided in paragraphs (b) and (c) of this section, respec- selected by the carriers and five by the national labor organizations tively, within sixty days after the passage of this Act, in case of any of the employees. original appointment to office of a member of the Adjustment Board, "Third division: To have jurisdiction over disputes involving or in a case of a vacancy in any such office within thirty days after station, tower, and telegraph employees, train dispatchers, main- such vacancy occurs, the Mediation Board shall thereupon directly tenance-of-way men, clerical employees, freight handlers, express, make the appointment and shall select an individual associated in station, and store employees, signal men, sleeping-car conductors, interest with the carriers or the group of labor organizations of sleeping-car porters, and maids and dining-car employees. This employees, whichever he is to represent. division shall consist of ten members, five of whom shall be selected (f) In the event a dispute arises as to the right of any national by the carriers and five by the national labor organizations of labor organization to participate as per paragraph (c) of this section employees. in the selection and designation of the labor members of the Adjust- "Fourth division: To have jurisdiction over disputes involving ment Board, the Secretary of Labor shall investigate the claim of employees of carriers directly or indirectly engaged in transportation such labor organization to participate, and if such claim in the of passengers or property by water, and all other employees of car- judgment of the Secretary of Labor has merit, the Secretary shall riers over which jurisdiction is not given to the first, second, and notify the Mediation Board accordingly, and within ten days after third divisions. This division shall consist of six members, three of receipt of such advice the Mediation Board shall request those whom shall be selected by the carriers and three by the national labor national labor organizations duly qualified as per paragraph (c) of organizations of the employees. this section to participate in the selection and designation of the (i) The disputes between an employee or group of employees labor members of the Adjustment Board to select a representative. and a carrier or carriers growing out of grievances or out of the Such representative, together with a representative likewise desig- interpretation or application of agreements concerning rates of pay. nated by the claimant, and a third or neutral party designated by rules, or working conditions, including cases pending and unad- the Mediation Board, constituting a board of three, shall within justed on the date of approval of this Act, shall be handled in the thirty days after the appointment of the neutral member investigate usual manner up to and including the chief operating officer of the the claims of the labor organization desiring participation and carrier designated to handle such disputes; but, failing to reach an decide whether or not it was organized in accordance with section 2 adjustment in this manner, the disputes may be referred by petition hereof and is otherwise properly qualified to participate in the selec- of the parties or by either party to the appropriate division of the tion of the labor members of the Adjustment Board, and the findings Adjustment Board with a full statement of the facts and all support- of such boards of three shall be final and binding. ing data bearing upon the disputes. "(g) Each member of the Adjustment Board shall be compen- " (j) Parties may be heard either in person, by counsel, or by other sated by the party or parties he is to represent. Each third or representatives, as they may respectively elect, and the several divi- neutral party selected under the provisions of (f) of this section sions of the Adjustment Board shall give due notice of all hearings shall receive from the Mediation Board such compensation as the to the employee or employees and the carrier or carriers involved in Mediation Board may fix, together with his necessary traveling any disputes submitted to them. expenses and expenses actually incurred for subsistence, or per diem a (k) Any division of the Adjustment Board shall have authority allowance in lieu thereof, subject to the provisions of law applicable to empower two or more of its members to conduct hearings and thereto, while serving as such third or neutral party. make findings upon disputes, when properly submitted, at any place "(h) The said Adjustment Board shall be composed of four divi- designated by the division: Provided, however, That final awards sions, whose proceedings shall be independent of one another, and as to any such dispute must be made by the entire division as here- the said divisions as well as the number of their members shall be as inafter provided. follows: "(1) Upon failure of any division to agree upon an award because "First division: To have jurisdiction over disputes involving train- of a deadlock or inability to secure a majority vote of the division and yard-service employees of carriers; that is, engineers, firemen, members, as provided in paragraph (n) of this section, then such hostlers, and outside hostler helpers, conductors, trainmen, and yard- division shall forthwith agree upon and select a neutral person. to service employees. This division shall consist of ten members, five be known as 'referee', to sit with the division as a member thereof of whom shall be selected and designated by the carriers and five of and make an award. Should the division fail to agree upon and whom shall be selected and designated by the national labor organi- select a referee within ten days of the date of the deadlock or zations of the employees. inability to secure a majority vote, then the division, or any member thereof, or the parties or either party to the dispute may certify that 9 8 fact to the Mediation Board, which Board shall, within ten days in session so long as there is pending before the division any matter within its jurisdiction which has been submitted for its consideration from the date of receiving such certificate, select and name the referee to sit with the division as a member thereof and make an award. and which has not been disposed of. The Mediation Board shall be bound by the same provisions in the (s) Whenever practicable, the several divisions or subdivisions appointment of these neutral referees as are provided elsewhere in of the Adjustment Board shall be supplied with suitable quarters this Act for the appointment of arbitrators and shall fix and pay the in any Federal building located at its place of meeting. compensation of such referees. '(t) The Adjustment Board may, subject to the approval of the "(m) The awards of the several divisions of the Adjustment Board Mediation Board, employ and fix the compensations of such assist- shall be stated in writing. A copy of the awards shall be furnished ants as it deems necessary in carrying on its proceedings. The com- to the respective parties to the controversy, and the awards shall pensation of such employees shall be paid by the Mediation Board. be final and binding upon both parties to the dispute, except insofar " (u) The Adjustment Board shall meet within forty days after as they shall contain a money award. In case a dispute arises in- the approval of this Act and adopt such rules as it deems necessary volving an interpretation of the award the division of the Board to control proceedings before the respective divisions and not in upon request of either party shall interpret the award in the light conflict with the provisions of this section. Immediately following of the dispute. the meeting of the entire Board and the adoption of such rules, the '(n) A majority vote of all members of the division of the Adjust- respective divisions shall meet and organize by the selection of a ment Board shall be competent to make an award with respect to any chairman, a vice chairman, and a secretary. Thereafter each divi- dispute submitted to it. sion shall annually designate one of its members to act as chairman (o) In case of an award by any division of the Adjustment and one of its members to act as vice chairman: Provided, however, Board in favor of petitioner, the division of the Board shall make That the chairmanship and vice chairmanship of any division shall an order, directed to the carrier, to make the award effective and, alternate as between the groups, so that both the chairmanship and if the award includes a requirement for the payment of money, vice chairmanship shall be held alternately by a representative of the to pay to the employee the sum to which he is entitled under the carriers and a representative of the employees. In case of a vacancy, award on or before a day named. such vacancy shall be filled for the unexpired term by the selection "(p) If a carrier does not comply with an order of a division of a successor from the same group. of the Adjustment Board within the time limit in such order, the "(v) Each division of the Adjustment Board shall annually petitioner, or any person for whose benefit such order was made, prepare and submit a report of its activities to the Mediation Board, may file in the District Court of the United States for the district and the substance of such report shall be included in the annual in which he resides or in which is located the principal operating report of the Mediation Board to the Congress of the United States. office of the carrier, or through which the carrier operates, a petition The reports of each division of the Adjustment Board and the setting forth briefly the causes for which he claims relief, and the annual report of the Mediation Board shall state in detail all cases order of the division of the Adjustment Board in the premises. heard. all actions taken, the names, salaries, and duties of all Such suit in the District Court of the United States shall proceed agencies, employees, and officers receiving compensation from the in all respects as other civil suits, except that on the trial of such United States under the authority of this Act, and an account of suit the findings and order of the division of the Adjustment Board all moneys appropriated by Congress pursuant to the authority con- shall be prima facie evidence of the facts therein stated, and except ferred by this Act and disbursed by such agencies, employees, and officers. that the petitioner shall not be liable for costs in the district court nor for costs at any subsequent stage of the proceedings, unless they "(w) Any division of the Adjustment Board shall have authority, accrue upon his appeal, and such costs shall be paid out of the in its discretion, to establish regional adjustment boards to act in appropriation for the expenses of the courts of the United States. its place and stead for such limited period as such division may If the petitioner shall finally prevail he shall be allowed a reasonable determine to be necessary. Carrier members of such regional boards attorney's fee, to be taxed and collected as a part of the costs of the shall be designated in keeping with rules devised for this purpose suit. The district courts are empowered, under the rules of the by the carrier members of the Adjustment Board and the labor court governing actions at law, to make such order and enter such members shall be designated in keeping with rules devised for this judgment, by writ of mandamus or otherwise, as may be appropriate purpose by the labor members of the Adjustment Board. Any such to enforce or set aside the order of the division of the Adjustment regional board shall, during the time for which it is appointed, have Board. the same authority to conduct hearings, make findings upon disputes, (q) All actions at law based upon the provisions of this section and adopt the same procedure as the division of the Adjustment shall be begun within two years from the time the cause of action Board appointing it. and its decisions shall be enforceable to the accrues under the award of the division of the Adjustment Board, same extent and under the same processes. A neutral person. as and not after. referee. shall be appointed for service in connection with any such "(r) The several divisions of the Adjustment Board shall main- regional adjustment board in the same eircumstances and manner as tain headquarters in Chicago, Illinois, meet regularly, and continue 116869-37-2 10 11 provided in paragraph (1) hereof, with respect to a division of the "A member of the Board may be removed by the President for Adjustment Board. inefficiency, neglect of duty, malfeasance in office, or ineligibility, but "Second. Nothing in this section shall be construed to prevent any for no other cause. individual carrier, system, or group of carriers and any class or "Second. The Mediation Board shall annually designate a member classes of its or their employees, all acting through their representa- to act as chairman. The Board shall maintain its principal office in tives, selected in accordance with the provisions of this Act, from the District of Columbia, but it may meet at any other place whenever mutually agreeing to the establishment of system, group, or regional it deems it necessary so to do. The Board may designate one or more boards of adjustment for the purpose of adjusting and deciding dis- of its members to exercise the functions of the Board in mediation putes of the character specified in this section. In the event that proceedings. Each member of the Board shall have power to admin- either party to such a system, group, or regional board of adjustment ister oaths and affirmations. The Board shall have a seal which shall is dissatisfied with such arrangement, it may upon ninety days' notice be judicially noticed. The Board shall make an annual report to to the other party elect to come under the jurisdiction of the Adjust- Congress. ment Board.' "Third. The Mediation Board may (1) appoint such experts and Section 4 of the Railway Labor Act is amended to read as follows: assistants to act in a confidential capacity and, subject to the pro- "NATIONAL MEDIATION BOARD visions of the civil-service laws, such other officers and employees as are essential to the effective transaction of the work of the Board; (2) in accordance with the Classification Act of 1923, fix the salaries "Sec. 4. First. The Board of Mediation is hereby abolished, effec- of such experts, assistants, officers, and employees; and (3) make tive thirty days from the approval of this Act and the members, such expenditures (including expenditures for rent and personal secretary, officers, assistants, employees, and agents thereof, in office services at the seat of government and elsewhere, for law books, upon the date of the approval of this Act, shall continue to function periodicals, and books of reference, and for printing and binding, and receive their salaries for a period of thirty days from such date in the same manner as though this Act had not been passed. There and including expenditures for salaries and compensation, necessary is hereby established, as an independent agency in the executive traveling expenses and expenses actually incurred for subsistence. and other necessary expenses of the Mediation Board, Adjustment branch of the Government, a board to be known as the 'National Board, Regional Adjustment Boards established under paragraph Mediation Board', to be composed of three members appointed by the President, by and with the advice and consent of the Senate, not (w) of section 3, and boards of arbitration, in accordance with the more than two of whom shall be of the same political party. The provisions of this section and sections 3 and 7, respectively), as may terms of office of the members first appointed shall begin as soon as be necessary for the execution of the functions vested in the Board, in the Adjustment Board and in the boards of arbitration, and as the members shall qualify, but not before thirty days after the approval of this Act, and expire, as designated by the President at may be provided for by the Congress from time to time. All expen- ditures of the Board shall be allowed and paid on the presentation the time of nomination, one on February 1, 1935, one on February 1, of itemized vouchers therefor approved by the chairman. 1936, and one on February 1, 1937. The terms of office of all suc- "Fourth. The Mediation Board is hereby authorized by its order cessors shall expire three years after the expiration of the terms for which their predecessors were appointed; but any member appointed to assign, or refer, any portion of its work, business, or functions to fill a vacancy occurring prior to the expiration of the term of arising under this or any other Act of Congress, or referred to it by which his predecessor was appointed shall be appointed only for the Congress or either branch thereof, to an individual member of the Board or to an employee or employees of the Board to be designated unexpired term of his predecessor. Vacancies in the Board shall not impair the powers nor affect the duties of the Board nor of the by such order for action thereon, and by its order at any time to remaining members of the Board. Two of the members in office shall amend, modify, supplement, or rescind any such assignment or reference. All such orders shall take effect forthwith and remain in constitute a quorum for the transaction of the business of the Board. effect until otherwise ordered by the Board. In conformity with Each member of the Board shall receive a salary at the rate of $10,000 per annum, together with necessary traveling and subsistence and subject to the order or orders of the Mediation Board in the expenses, or per diem allowance in lieu thereof, subject to the provi- premises, and such individual member of the Board or employee sions of law applicable thereto, while away from the principal office designated shall have power and authority to act as to any of said of the Board on business required by this Act. No person in work, business, or functions so assigned or referred to him for action the employment of or who is pecuniarily or otherwise interested in by the Board. "Fifth. All officers and employees of the Board of Mediation (ex- any organization of employees or any carrier shall enter upon the duties of or continue to be a member of the Board. cept the members thereof whose offices are hereby abolished) whose "All cases referred to the Board of Mediation and unsettled on the services in the judgment of the Mediation Board are necessary to the date of the approval of this Act shall be handled to conclusion by the efficient operation of the Board are hereby transferred to the Board. Mediation Board. without change in classification or compensation; except that the Board may provide for the adjustment of such classification or com- 12 13 pensation to conform to the duties to which such officers and em- appoint only those whom the Board shall deem wholly disinterested ployees may be assigned. in the controversy to be arbitrated and impartial and without bias "All unexpended appropriations for the operation of the Board of as between the parties to such arbitration. Should, however, the Mediation that are available at the time of the abolition of the Board Board name an arbitrator or arbitrators not so disinterested and of Mediation shall be transferred to the Mediation Board and shall impartial, then, upon proper investigation and presentation of the be available for its use for salaries and other authorized expendi- facts, the Board shall promptly remove such arbitrator. tures." "If an arbitrator named by the Mediation Board, in accordance SEC. 5. Section 5 of the Railway Labor Act is amended to read with the provisions of this Act, shall be removed by such Board as as follows: provided by this Act, or if such an arbitrator refuses or is unable "FUNCTIONS OF MEDIATION BOARD to serve, it shall be the duty of the Mediation Board, promptly to select another arbitrator in the same manner as provided in this "SEC. 5. First. The parties, or either party, to a dispute between Act for an original appointment by the Mediation Board. an employee or group of employees and a carrier may invoke, the "(b) Any member of the Mediation Board is authorized to take services of the Mediation Board in any of the following cases: the acknowledgment of an agreement to arbitrate under this Act. "(a) A dispute concerning changes in rates of pay, rules, or work- When so acknowledged, or when acknowledged by the parties before ing 22 conditions not adjusted by the parties in conference. a notary public or the clerk of a district court or a circuit court of (b) Any other dispute not referable to the National Railroad appeals of the United States, such agreement to arbitrate shall be Adjustment Board and not adjusted in conference between the parties delivered to a member of said Board or transmitted to said Board, or where conferences are refused. to be filed in its office. "The Mediation Board may proffer its services in case any labor (c) When an agreement to arbitrate has been filed with the emergency is found by it to exist at any time. Mediation Board, or with one of its members, as provided by this "In either event the said Board shall promptly put itself in com- section, and when the said Board has been furnished the names of munication with the parties to such controversy, and shall use its the arbitrators chosen by the parties to the controversy, it shall be best efforts, by mediation, to bring them to agreement. If such the duty of the Board to cause a notice in writing to be served upon efforts to bring about an amicable settlement through mediation shall said arbitrators, notifying them of their appointment, requesting be unsuccessful, the said Board shall at once endeavor as its final them to meet promptly to name the remaining arbitrator or arbitra- required action (except as provided in paragraph third of this sec- tors necessary to complete the Board of Arbitration, and advising tion and in section 10 of this Act) to induce the parties to submit them of the period within which, as provided by the agreement to their controversy to arbitration, in accordance with the provisions arbitrate, they are empowered to name such arbitrator or arbitrators. of this Act. "(d) Either party to an arbitration desiring the reconvening of a "If arbitration at the request of the Board shall be refused by board of arbitration to pass upon any controversy arising over the one or both parties, the Board shall at once notify both parties in meaning or application of an award may SO notify the Mediation writing that its mediatory efforts have failed and for thirty days Board in writing, stating in such notice the question or questions to thereafter, unless in the intervening period the parties agree to be submitted to such reconvened Board. The Mediation Board shall arbitration, or an emergency board shall be created under section thereupon promptly communicate with the members of the Board of 10 of this Act, no change shall be made in the rates of pay, rules, Arbitration, or a subcommittee of such Board appointed for such or working conditions or established practices in effect prior to the purpose pursuant to a provision in the agreement to arbitrate, and time the dispute arose. arrange for the reconvening of said Board of Arbitration or sub- "Second. In any case in which a controversy arises over the committee, and shall notify the respective parties to the controversy meaning or the application of any agreement reached through of the time and place at which the Board, or the subcommittee, will mediation under the provisions of this Act, either party to the said meet for hearings upon the matters in controversy to be submitted agreement, or both, may apply to the Mediation Board for an inter- to it. No evidence other than that contained in the record filed with pretation of the meaning or application of such agreement. The the original award shall be received or considered by such recon- said Board shall upon receipt of such request notify the parties to vened Board or subcommittee, except such evidence as may be neces- the controversy. and after a hearing of both sides give its interpreta- sary to illustrate the interpretations suggested by the parties. If any tion within thirty days. member of the original Board is unable or unwilling to serve on "Third. The Mediation Board shall have the following duties such reconvened Board or subcommittee thereof, another arbitrator with respect to the arbitration of disputes under section 7 of this shall be named in the same manner and with the same powers and Act duties as such original arbitrator. "(a) On failure of the arbitrators named by the parties to agree "(e) Within sixty days after the approval of this Act every carrier on the remaining arbitrator or arbitrators within the time set by shall file with the Mediation Board a copy of each contract with its section 7 of this Act, it shall be the duty of the Mediation Board employees in effect on the 1st day of April 1934, covering rates of to name such remaining abritrator or arbitrators. It shall be the duty of the Board in naming such arbitrator or arbitrators to pay, rules, and working conditions. If no contract with any craft 14 15 or class of its employees has been entered into, the carrier shall file Second. Such board of arbitration shall be chosen in the following with the Mediation Board a statement of that fact including also a manner: statement of the rates of pay, rules, and working conditions applicable (a) In the case of a board of three, the carrier or carriers and the in dealing with such craft or class. When any new contract is representatives of the employees, parties respectively to the agree- executed or change is made in an existing contract with any class ment to arbitrate, shall each name one abritrator; the two arbitrators or craft of its employees covering rates of pay, rules, or working thus chosen shall select a third arbitrator. If the arbitrator chosen conditions, or in those rates of pay, rules, and working conditions by the parties shall fail to name the third arbitrator within five of employees not covered by contract, the carrier shall file the same days after their first meeting, such third arbitrator shall be named with the Mediation Board within thirty days after such new contract by the Mediation Board. or change in existing contract has been executed or rates of pay. (b) In the case of a board of six, the carrier or carriers and the rules, and working conditions have been made effective. representatives of the employees, parties respectively to the agree- (f) The Mediation Board shall be the custodian of all papers ment to arbitrate, shall each name two arbitrators; the four arbi- and documents heretofore filed with or transferred to the Board of trators thus chosen shall, by a majority vote, select the remaining Mediation bearing upon the settlement, adjustment, or determination two arbitrators. If the arbitrators chosen by the parties shall fail to of disputes between carriers and their employees or upon mediation name the two arbitrators within fifteen days after their first meet- or arbitration proceedings held under or pursuant to the provisions ing, the said two arbitrators, or as many of them as have not been of any Act of Congress in respect thereto; and the President is named, shall be named by the Mediation Board. authorized to designate a custodian of the records and property of Third. (a) When the arbitrators selected by the respective parties the Board of Mediation until the transfer and delivery of such have agreed upon the remaining arbitrator or arbitrators, they shall records to the Mediation Board and to require the transfer and notify the Mediation Board, and, in the event of their failure to delivery to the Mediation Board of any and all such papers and agree upon any or upon all of the necessary arbitrators within the documents filed with it or in its possession." period fixed by this Act, they shall, at the expiration of such period, SEC. 6. Section 6 of the Railway Labor Act is amended to read notify the Mediation Board of the arbitrators selected, if any, or as follows: of their failure to make or to complete such selection. "SEC. 6. Carriers and representatives of the employees shall give (b) The board of arbitration shall organize and select its own at least thirty days' written notice of an intended change in agree- chairman and make all necessary rules for conducting its hearings; ments affecting rates of pay, rules, or working conditions, and the Provided, however, That the board of arbitration shall be bound to time and place for the beginning of conference between the repre- give the parties to the controversy a full and fair hearing, which sentatives of the parties interested in such intended changes shall shall include an opportunity to present evidence in support of their be agreed upon within ten days after the receipt of said notice, and claims, and an opportunity to present their case in person, by coun- said time shall be within the thirty days provided in the notice. In sel, or by other representative as they may respectively elect. every case where such notice of intended change has been given, or (c) Upon notice from the Mediation Board that the parties, or conferences are being held with reference thereto, or the services either party, to an arbitration desire the reconvening of the board of the Mediation Board have been requested by either party, or said of arbitration (or a subcommittee of such board of arbitration ap- Board has proffered its services, rates of pay, rules, or working pointed for such purpose pursuant to the agreement to arbitrate) conditions shall not be altered by the carrier until the controversy to pass upon any controversy over the meaning or application of has been finally acted upon as required by section 5 of this Act, by their award, the board, or its subcommittee, shall at once reconvene. the Mediation Board, unless a period of ten days has elapsed after No question other than, or in addition to, the questions relating to termination of conferences without request for or proffer of the the meaning or application of the award, submitted by the party services of the Mediation Board." or parties in writing, shall be considered by the reconvened board of arbitration or its subcommittee. ARBITRATION Such rulings shall be acknowledged by such board or subcommit- tee thereof in the same manner, and filed in the same district court SEC. 7. First. Whenever a controversy shall arise between a carrier clerk's office, as the original award and become a part thereof. or carriers and its or their employees which is not settled either in (d) No arbitrator, except those chosen by the Mediation Board, conference between representatives of the parties or by the appro- shall be incompetent to act as an arbitrator because of his interest priate adjustment board or through mediation, in the manner pro- in the controversy to be arbitrated, or because of his connection with vided in the preceding sections, such controversy may, by agreement or partiality to either of the parties to the arbitration. of the parties to such controversy, be submitted to the arbitration of (e) Each member of any board of arbitration created under the a board of three (or, if the parties to the controversy so stipulate, of provisions of this Act named by either party to the arbitration shall six) persons: Provided, however, That the failure or refusal of be compensated by the party naming him. Each arbitrator selected either party to submit a controversy to arbitration shall not be con- by the arbitrators or named by the Mediation Board shall receive strued as a violation of any legal obligation imposed upon such party from the Mediation Board such compensation as the Mediation Board by the terms of this Act or otherwise. 16 17 may fix, together with nis necessary traveling expenses and expenses actually incurred for subsistence, while serving as an arbitrator. SEC. 8.² The agreement to arbitrate- (f) The board of arbitration shall furnish a certified copy of its (a) Shall be in writing; award to the respective parties to the controversy, and shall transmit (b) Shall stipulate that the arbitration is had under the provi- the original, together with the papers and proceedings and a tran- sions of this Act; script of the evidence taken at the hearings, certified under the (c) Shall state whether the board of arbitration is to consist of hands of at least a majority of the arbitrators, to the clerk of the three or of six members; district court of the United States for the district wherein the (d) Shall be signed by the duly accredited representatives of the controversy arose or the arbitration is entered into, to be filed in said carrier or carriers and the employees, parties respectively to the clerk's office as hereinafter provided. The said board shall also agreement to arbitrate, and shall be acknowledged by said parties furnish a certified copy of its award, and the papers and proceed- before a notary public, the clerk of a district court or circuit court ings, including testimony relating thereto, to the Mediation Board, of appeals of the United States, or before a member of the Media- to be filed in its office; and in addition a certified copy of its award tion Board, and, when so acknowledged, shall be filed in the office shall be filed in the office of the Interstate Commerce Commission: of the Mediation Board; Provided, however, That such award shall not be construed to di- (e) Shall state specifically the questions to be submitted to the minish or extinguish any of the powers or duties of the Interstate said board for decision; and that, in its award or awards, the said Commerce Commission, under the Interstate Commerce Act, as board shall confine itself strictly to decisions as to the questions so amended. specifically submitted to it; (g) A board of arbitration may, subject to the approval of the (f) Shall provide that the questions, or any one or more of them, Mediation Board, employ and fix the compensation of such assistants submitted by the parties to the board of arbitration may be with- as it deems necessary in carrying on the arbitration proceedings. drawn from arbitration on notice to that effect signed by the duly The compensation of such employees, together with their necessary accredited representatives of all the parties and served on the board traveling expenses and expenses actually incurred for subsistence, of arbitration; while so employed, and the necessary expenses of boards of arbi- (g) Shall stipulate that the signatures of a majority of said tration, shall be paid by the Mediation Board. board of arbitration affixed to their award shall be competent to Whenever practicable, the board shall be supplied with suitable constitute a valid and binding award; quarters in any Federal building located at its place of meeting or (h) Shall fix a period from the date of the appointment of the at any place where the board may conduct its proceedings or arbitrator or arbitrators necessary to complete the board (as pro- deliberations. vided for in the agreement) within which the said board shall (h) All testimony before said board shall be given under oath or commence its hearings; affirmation, and any member of the board shall have the power to (i) Shall fix a period from the beginning of the hearings within administer oaths or affirmations. The board of arbitration, or any which the said board shall make and file its award: Provided, That member thereof, shall have the power to require the attendance of the parties may agree at any time upon an extension of this period; witnesses and the production of such books, papers, contracts, agree- (j) Shall provide for the date from which the award shall be- ments, and documents as may be deemed by the board of arbitra- come effective and shall fix the period during which the award shall tion material to a just determination of the matters submitted to continue in force; its arbitration, and may for that purpose request the clerk of the (k) Shall provide that the award of the board of arbitration and district court of the United States for the district wherein said arbi- the evidence of the proceedings before the board relating thereto, tration is being conducted to issue the necessary subponas, and when certified under the hands of at least a majority of the arbi- upon such request the said clerk or his duly authorized deputy shall trators, shall be filed in the clerk's office of the district court of the be, and he hereby is, authorized, and it shall be his duty, to issue United States for the district wherein the controversy arose or the such subpoenas. In the event of the failure of any person to com- arbitration was entered into, which district shall be designated in the ply with such subpœna, or in the event of the contumacy of any agreement; and, when so filed, such award and proceedings shall witness appearing before the board of arbitration, the board may constitute the full and complete record of the arbitration; invoke the aid of the United States courts to compel witnesses to (1) Shall provide that the award, when so filed, shall be final attend and testify and to produce such books, papers, contracts, and conclusive upon the parties as to the facts determined by said agreements, and documents to the same extent and under the same award and as to the merits of the controversy decided; conditions and penalties as provided for in the Act to regulate (m) Shall provide that any difference arising as to the meaning, commerce approved February 4, 1887. and the amendments thereto. or the application of the provisions, of an award made by a board Any witness appearing before a board of arbitration shall receive of arbitration shall be referred back for a ruling to the same board, the same fees and mileage as witnesses in courts of the United States, or, by agreement, to a subcommittee of such board; and that such to be paid by the party securing the subpœna. ruling, when acknowledged in the same manner, and filed in the same , Section 8 as contained in Railway Labor Act, approved May 20, 1926. 18 19 district court clerk's office, as the original award, shall be a part of ground of invalidity, but shall determine that a part of the award and shall have the same force and effect as such original award; and is valid, the court shall set aside the entire award: Provided, how- (n) Shall provide that the respective parties to the award will ever, That, if the parties shall agree thereto, and if such valid and each faithfully execute the same. invalid parts are separable, the court shall set aside the invalid part, The said agreement to arbitrate, when properly signed and and order judgment to stand as to the valid part. acknowledged as herein provided, shall not be revoked by a party to Fifth. At the expiration of ten days from the decision of the dis- such agreement: Provided, however, That such agreement to arbitrate trict court upon the petition filed as aforesaid, final judgment shall may at any time be revoked and canceled by the written agreement of be entered in accordance with said decision, unless during said ten both parties, signed by their duly accredited representatives, and (if days either party shall appeal therefrom to the circuit court of no board of arbitration has yet been constituted under the agree- appeals. In such case only such portion of the record shall be trans- ment) delivered to the Mediation Board or any member thereof; mitted to the appellate court as is necessary to the proper under- or, if the board of arbitration has been constituted as provided by standing and consideration of the questions of law presented by said this Act, delivered to such board of arbitration. petition and to be decided. SEC. 8.ª If any section, subsection, sentence, clause, or phrase of Sixth. The determination of said circuit court of appeals upon this Act is for any reason held to be unconstitutional, such decision said questions shall be final, and, being certified by the clerk thereof shall not affect the validity of the remaining portions of this Act. to said district court, judgment pursuant thereto shall thereupon be All Acts or parts of Acts inconsistent with the provisions of this entered by said district court. Act are hereby repealed. Seventh. If the petitioner's contentions are finally sustained, judg- SEC. 9. First. The award of a board of arbitration, having been ment shall be entered setting aside the award in whole or, if the acknowledged as herein provided, shall be filed in the clerk's office parties so agree, in part but in such case the parties may agree upon of the district court designated in the agreement to arbitrate. a judgment to be entered disposing of the subject matter of the con- Second. An award acknowledged and filed as herein provided shall troversy, which judgment when entered shall have the same force be conclusive on the parties as to the merits and facts of the contro- and effect as judgment entered upon an award. versy submitted to arbitration, and unless, within ten days after the Eighth. Nothing in this Act shall be construed to require an indi- filing of the award, a petition to impeach the award, on the grounds vidual employee to render labor or service without his consent, nor hereinafter set forth, shall be filed in the clerk's office of the court shall anything in this Act be construed to make the quitting of his in which the award has been filed, the court shall enter judgment on labor or service by an individual employee an illegal act; nor shall parties. the award, which judgment shall be final and conclusive on the any court issue any process to compel the performance by an indi, vidual employee of such labor or service, without his consent. Third. Such petition for the impeachment or contesting of any award SO filed shall be entertained by thescourt only on one or more EMERGENCY BOARD of the following grounds: (a) That the award plainly does not conform to the substantive SEC. 10. If a dispute between a carrier and its employees be not requirements laid down by this Act for such awards, or that the adjusted under the foregoing provisions of this Act and should, in proceedings were not substantially in conformity with this Act; the judgment of the Mediation Board, threaten substantially to (b) That the award does not conform, nor confine itself, to the interrupt interstate commerce to a degree such as to deprive any stipulations of the agreement to arbitrate; or section of the country of essential transportation service, the Media- (c) That a member of the board of arbitration rendering the tion Board shall notify the President, who may thereupon, in his award was guilty of fraud or corruption; or that a party to the discretion, create a board to investigate and report respecting such arbitration practiced fraud or corruption which fraud or corruption dispute. Such board shall be composed of such number of persons affected the result of the arbitration: Provided, however, That no as to the President may seem desirable: Provided, however, That no court shall entertain any such petition on the ground that an award member appointed shall be pecuniarily or otherwise interested in is invalid for uncertainty; in such case the proper remedy shall be any organization of employees or any carrier. The compensation a submission of such award to a reconvened board, or subcommittee of the members of any such board shall be fixed by the President. thereof, for interpretation, as provided by this Act: Provided fur- Such board shall be created separately in each instance and it shall ther, That an award contested as herein provided shall be construed investigate promptly the facts as to the dispute and make a report liberally by the court, with a view to favoring its validity, and that thereon to the President within thirty days from the date of its no award shall be set aside for trivial irregularity or clerical error, creation. going only to form and not to substance. There is hereby authorized to be appropriated such sums as may Fourth. If the court shall determine that a part of the award is be necessary for the expenses of such board, including the compensa- invalid on some ground or grounds designated in this section as a tion and the necessary traveling expenses and expenses actually incurred for subsistence, of the members of the board. All expendi- a Section 8 as contained in Public. No. 442, amendment to Railway Labor Act, tures of the board shall be allowed and paid on the presentation of approved June 21, 1934. itemized vouchers therefor approved by the chairman. 20 21 After the creation of such board and for thirty days after such TITLE II board has made its report to the President, no change, except by agreement, shall be made by the parties to the controversy in the SECTION 201. All of the provisions of title I of this Act, except conditions out of which the dispute arose. the provisions of section 3 thereof, are extended to and shall cover every common carrier by air engaged in interstate or foreign com- GENERAL PROVISIONS merce, and every carrier by air transporting mail for or under con- tract with the United States Government, and every air pilot or other SEC. 11. If any provision of this Act, or the application thereof person who performs any work as an employee or subordinate official to any person or circumstance, is held invalid, the remainder of the of such carrier or carriers, subject to its or their continuing authority Act, and the application of such provision to other persons or cir- to supervise and direct the manner of rendition of his service. cumstances, shall not be affected thereby. SEC. 202. The duties, requirements, penalties, benefits, and privi- Sec. 12. There is hereby authorized to be appropriated such sums leges prescribed and established by the provisions of title I of this as may be necessary for expenditure by the Mediation Board in Act, except section 3 thereof, shall apply to said carriers by air carrying out the provisions of this Act. and their employees in the same manner and to the same extent SEC. 13. (a) Paragraph "Second" of subdivision (b) of section as though such carriers and their employees were specifically included 128 of the Judicial Code, as amended, is amended to read as follows: within the definition of "carrier" and "employee", respectively, in "Second. To review decisions of the district courts, under section section 1 thereof. 9 of the Railway Labor Act." SEC. 203. The parties or either party to a dispute between an (b) Section 2 of the Act entitled "An Act to amend the Judicial employee or a group of employees and a carrier or carriers by air Code, and to further define the jurisdiction of the circuit court of may invoke the services of the National Mediation Board and appeals and of the Supreme Court, and for other purposes", ap- the jurisdiction of said Mediation Board is extended to any of the proved February 13, 1925, is amended to read as follows: following cases: "SEC. 2. That cases in a circuit court of appeals under section 9 (a) A dispute concerning changes in rates of pay, rules, or of the Railway Labor Act; under section 5 of 'An Act to create a working conditions not adjusted by the parties in conference. Federal Trade Commission, to define its powers and duties, and for (b) Any other dispute not referable to an adjustment board, as other purposes', approved September 26, 1914; and under section 11 hereinafter provided, and not adjusted in conference between the of 'An Act to supplement existing laws against unlawful restraints parties, or where conferences are refused. and monopolies, and for other purposes', approved October 15, 1914, The National Mediation Board may proffer its services in case are included among the cases to which sections 239 and 240 of the any labor emergency is found by it to exist at any time. Judicial Code shall apply. The services of the Mediation Board may be invoked in a case SEC. 14. Title III of the Transportation Act, 1920, and the Act under this title in the same manner and to the same extent as are approved July 15, 1913, providing for mediation, conciliation, and the disputes covered by section 5 of title I of this Act. arbitration, and all acts and parts of Acts in conflict with the pro- SEC. 204. The disputes between an employee or group of elfi- visions' of this Act are hereby repealed, except that the members, ployees and a carrier or carriers by air growing out of grievances, secretary, officers, employees, and agents of the Railroad Labor or out of the interpretation or application of agreements concerning Board, in office upon the date of the passage of this Act, shall receive rates of pay, rules, or working conditions, including cases pending their salaries for a period of 30 days from such date, in the same and unadjusted on the date of approval of this Act before the manner as though this Act had not been passed. National Labor Relations Board, shall be handled in the usual manner up to and including the chief operating officer of the carrier designated to handle such disputes; but, failing to reach an adjust- ment in this manner, the disputes may be referred by petition of the parties or by either party to an appropriate adjustment board, as hereinafter provided, with a full statement of the facts and supporting data bearing upon the disputes. It shall be the duty of every carrier and of its employees, acting through their representatives, selected in accordance with the pro- visions of this title, to establish a board of adjustment of jurisdiction not exceeding the jurisdiction which may be lawfully exercised by system, group. or regional boards of adjustment, under the authority of section 3, Title I, of this Act. Such boards of adjustment may be established by agreement between employees and carriers either on any individual carrier, or system, or group of carriers by air and any class or classes of its or their employees; or pending the establishment of a permanent 22 23 National Board of Adjustment as hereinafter provided. Nothing to either party thereto, the said party, upon ninety days' notice to in this Act shall prevent said carriers by air, or any class or classes the other party, may elect to come under the jurisdiction of the of their employees, both acting through their representatives selected National Air Transport Adjustment Board. in accordance with provisions of this title, from mutually agreeing SEC. 206. All cases referred to the National Labor Relations to the establishment of a National Board of Adjustment of tempo- Board, or over which the National Labor Relations Board shall rary duration and of similarly limited jurisdiction. have taken jurisdiction, involving any dispute arising from any SEC. 205. When, in the judgment of the National Mediation cause between any common carrier by air engaged in interstate or Board, it shall be necessary to have a permanent national board of foreign commerce or any carrier by air transporting mail for or adjustment in order to provide for the prompt and orderly settle- under contract with the United States Government, and employees ment of disputes between said carriers by air, or any of them, and of such carrier or carriers, and unsettled on the date of approval of its or their employees, growing out of grievances or out of the inter- this Act, shall be handled to conclusion by the Mediation Board. pretation or application of agreements between said carriers by air The books, records, and papers of the National Labor Relations or any of them, and any class or classes of its or their employees, Board and of the National Labor Board pertinent to such case or covering rates of pay, rules, or working conditions, the National cases, whether settled or unsettled, shall be transferred to the custody Mediation Board is hereby empowered and directed, by its order of the National Mediation Board. duly made, published, and served, to direct the said carriers by air SEC. 207. If any provision of this title or application thereof to and such labor organizations of their employees, national in scope, any person or circumstance is held invalid, the remainder of the Act as have been or may be recognized in accordance with the provisions and the application of such provision to other persons or circum- of this Act, to select and designate four representatives who shall stances shall not be affected thereby. constitute a board which shall be known as the National Air Trans- SEC. 208. There is hereby authorized to be appropriated such port Adjustment Board. Two members of said National Air sums as may be necessary for expenditure by the Mediation Board Transport Adjustment Board shall be selected by said carriers by air in carrying out the provisions of this Act. and two members by the said labor organizations of the employees, Approved, April 10, 1936. within thirty days after the date of the order of the National Media- tion Board, in the manner and by the procedure prescribed by title I of this Act for the selection and designation of members of the National Railroad Adjustment Board. The National Air Trans- port Adjustment Board shall meet within forty days after the date of the order of the National Mediation Board directing the selection and designation of its members and shall organize and adopt ruies for conducting its proceedings, in the manner prescribed in section 3 of title I of this Act. Vacancies in membership or office shall be filled, members shall be appointed in case of failure of the carriers or of labor organizations of the employees to select and designate representatives, members of the National Air Transport Adjustment Board shall be compensated, hearings shall be held, findings and awards made, stated, served, and enforced, and the number and com- pensation of any necessary assistants shall be determined and the compensation of such employees shall be paid, all in the same man- ner and to the same extent as provided with reference to the National Railroad Adjustment Board by section 3 of title I of this Act. The powers and duties prescribed and established by the provisions of section 3 of title I of this Act with reference to the National Rail- road Adjustment Board and the several divisions thereof are hereby conferred upon and shall be exercised and performed in like manner and to the same extent by the said National Air Transport Adjust- ment Board, not exceeding, however, the jurisdiction conferred upon said National Air Transport Adjustment Board by the provisions of this title. From and after the organization of the National Air Transport Adjustment Board, if any system, group, or regional board of adjustment established by any carrier or carriers by air GOVERNMENT PRINTING OFFICE and any class or classes of its or their employees is not satisfactory For sale by the Superintendent of Documents, Washington, D.O. Price 5 cents EMERGENCY BOARD THE PRESIDENT R REPORT REPORT TO THE PRESIDENT BY THE EMERGENCY BOARD APPOINTED SEPTEMBER 10, 1941 UNDER SECTION 10 OF THE RAILWAY LABOR ACT TO INVESTIGATE THE FACTS AS TO THE DISPUTES BETWEEN CERTAIN COMMON CARRIERS BY RAIL AND CERTAIN OF THEIR EMPLOYEES RESPECT- ING VACATIONS WITH PAY, RULES OF SERVICE, AND WAGE INCREASES, AND TO REPORT THEREON. November 5, 1941 83 THE FRED J. RINGLEY CO., CHICAGO HD 53 R2 LETTER OF TRANSMITTAL 19. SETTING FORTH RECOMMENDATIONS A5 Washington, D. C., November 5, 1941 THE PRESIDENT The White House MR. PRESIDENT: The Emergency Board appointed by you on September 10, 1941, in accordance with the provisions of the Railway Labor Act, has the honor to submit herewith its findings and recommendations based upon the record made by the parties at the Board's hearings on the pending nation-wide railway labor disputes. The Report of the Board sets forth in some detail the pertinent surrounding facts and circumstances involved in the disputes, the contentions of the parties, and the Board's findings and recommenda- tions on each of the issues of the case. Subject to certain modifica- tions and qualifications as stated in the Report, the major recom- mendations of the Emergency Board are as follows: (1) The Board believes that the many uncertainties besetting any analysis of the economy of this country for the duration of the existing national emergency make it unwise to recommend changes in basic wage rates at this time except for minimum rates hereinafter suggested for the railroads. Therefore, all wage increases recom- mended by the Board are proposed as temporary additions to wages, effective as of September 1, 1941, and to terminate automatically on December 31, 1942, unless the parties extend the arrangement by agreement. This Board recommends that on or about December 31, 1942, the wage structure in the railroad industry should be examined in light of the existing economic conditions of the railroad industry and of the country. (2) The employees in the Five Operating Brotherhoods should receive a wage increase of seven and one-half percent over their present wage rates. (3) The employees in the Fourteen Cooperating Railroad Labor Organizations should receive an addition of 9 cents per hour-equiv- alent to an average increase of thirteen and one-half percent. (4) A week's vacation of six consecutive working days, effective January 1, 1942, should be granted during the year of 1942 and each year thereafter to those employees of the Fourteen Cooperating Rail- road Labor Organizations who were regularly attached to the railroad industry during the year preceding their vacation. It shall be understood that wherever more favorable arrangements exist with regard to vacations either by agreement or custom, these arrangements shall be continued. (5) The rules dispute between the carriers and the employees in the Fourteen Cooperating Railroad Labor Organizations should be re-submitted for further consideration and determination under the procedures of the Railway Labor Act. This Board assumes that whatever changes may be made in the application of present rules, iii the basic guarantees to railroad labor as to seniority and craft and class lines will be preserved. It is the Board's opinion that the rules dispute is one which lends itself to settlement by negotiation, mediation, arbitration, or hearings before a Special Emergency Board. It is not one which should be settled by a test of economic force. If a Special Emergency Board is appointed to hear the dispute, it should have among its members persons thoroughly versed in the practical problems of railroad labor and of railroad operations. TABLE OF CONTENTS (6) The employees of the Railway Express Agency should receive a wage increase of seven and one-half cents per hour. PAGE (7) It is to be understood that the wage increases recommended I. Letter of Transmittal to the President III by the Board for the period to December 31, 1942, shall be added to II. Introduction 1 present wage rates. However, the Board further recommends that a permanent basic minimum wage of forty cents per hour shall be estab- III. Background of the Present Controversy 4 lished for the employees of the so-called Short Lines, and a permanent IV. The Issues Presented to the Board 7 basic minimum wage of forty-five cents per hour shall be established for V. Wage Controversies in the Railroad Industry Since 1920 10 all other employees in the railroad industry, including the Railway Express Agency, and that no one shall be paid below these basic wage VI. Major Contentions of the Parties 12 figures for his class of employment. Except for the employees of the VII. Appraisal of Railroad Wages 21 Short Lines, these recommendations involve no further monetary addi- VIII. Ability of the Railroads to Pay 48 tion since the wage increases as recommended will bring railroad workers in their respective elasses up to or above the suggested basic IX. Vacation Case 56 minimum wage rates. X. Rules Case 61 (8) The Emergency Board is unable to recommend a specific XI. Special Case of the Short Lines 64 wage increase for the employees of the so-called Short Lines beyond the proposed forty cent minimum, because the record of the case does XII. Railway Express Agency Case 67 not contain sufficient data on which to base an intelligent wage recom- XIII. Parties Subject to Jurisdiction of the Board 71 mendation applicable to them. Most of the Short Lines are in a XIV. Conclusions and Recommendations 74 precarious financial condition and are characterized by other dis- tinguishing factors justifying further consideration of their wage problem through the procedures of the Railway Labor Act. APPENDICES Ilence, it is the opinion of the Board that some wage increase for the employees of the Short Lines should be agreed upon among the parties through the processes of negotiation, mediation, arbitration, A. Stipulated Time Extension Agreement of September 16, 1941. 85 and if necessary, the findings of another Emergency Board. B. Stipulated Time Extension Agreement of October 22, 1941 86 (9) The above recommendations, except insofar as they are quali- C. Appearances and Jurisdiction Exhibits 87 fied in this Report, shall be applied to the employees of all parties D. Some Railroad Wage Data 132 listed in the Proclamation of September 10, 1941. The Board is pleased to report to you, Mr. President, that the E. Tables and Memoranda on Railroad Traffic and Finances 136 conduct of the parties throughout this case has exemplified a most desirable way to be followed by American employees and employers in settling their differences over labor relations. The hearings have demonstrated the value of the judicial process in which reason reigns as contrasted with the procedures of economie force in which might seldom makes right. The members of the Board await your further pleasure. Respectfully submitted, WAYNE L. MORSE, Chairman THOMAS REED POWELL JOSEPH H. WILLITS JAMES C. BONBRIGHT HUSTON THOMPSON iv REPORT TO THE PRESIDENT BY THE EMERGENCY BOARD APPOINTED SEPTEMBER 10, 1941 UNDER SECTION 10 OF THE RAILWAY LABOR ACT To investigate the facts as to the disputes between certain common carriers by rail and certain of their employees respecting vacations with pay, rules of service, and wage increases, and to report thereon. II. INTRODUCTION The jurisdiction, powers and duties of this Emergency Board were created and established by the terms of a proclamation issued on Sep- tember 10, 1941, by President Franklin D. Roosevelt. The proclamation reads: "WHEREAS the President, having been duly notified by the National Mediation Board that a dispute between the carriers listed on the attached exhibit "A" and certain of their employees as they are represented by the following labor organizations: Brotherhood of Locomotive Engineers Brotherhood of Locomotive Firemen and Enginemen Order of Railway Conductors of America Brotherhood of Railroad Trainmen Switchmen's Union of North America "WHEREAS the President, having been duly notified by the Na- tional Mediation Board that certain disputes between the carriers listed on the attached exhibit "B" and certain of their employees as they are represented by the following labor organizations: International Association of Machinists International Brotherhood of Boilermakers, Iron Ship Builders and Helpers of America International Brotherhood of Blacksmiths, Drop Forgers and Helpers Sheet Metal Workers' International Association International Brotherhood of Electrical Workers Brotherhood Railway Carmen of America International Brotherhood of Firemen, Oilers, Helpers, Round- house and Railway Shop Laborers The Order of Railroad Telegraphers Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employes Brotherhood of Maintenance of Way Employes See Appendix C-1. 1 2 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 3 Brotherhood of Railroad Signalmen of America On September 11, 1941, the President appointed the following per- National Organization Masters, Mates and Pilots of America sons as members of the Emergency Board: Wayne L. Morse of Oregon, National Marine Engineers' Beneficial Association Chairman; Thomas Reed Powell of Massachusetts, James C. Bonbright International Longshoremen's Association of New York, Joseph H. Willits of New York, and Huston Thompson of the District of Columbia. The letter of appointment received by "WHEREAS the President, having been duly notified by the Na- the members of the Board from the President stated in part: tional Mediation Board that certain disputes beween the carrier listed on the attached exhibit "C" and certain of its employees as they are "The Board will organize and investigate promptly the represented by the following labor organizations: facts as to such dispute, and on the basis of facts developed, make every effort to adjust the dispute and make a report Brotherhood of Railway and Steamship Clerks, Freight Handlers, thereon to me within thirty days from September 10, 1941." Express and Station Employes International Association of Machinists The time for completing the Board report was extended to November International Brotherhood of Blacksmiths, Drop Forgers and 1, 1941, by written stipulation of the parties approved by the President Ilelpers on September 16, 1941, and further extended by written stipulation until November 5, 1941, approved by the President October 22, 1941. which disputes have not heretofore been adjusted under the provisions The Board, with all members in attendance, met in Chicago, Illinois, of the Railway Labor Act, as amended, now threaten substantially to on September 15, 1941, held a prehearing conference with the repre- interrupt interstate commerce to a degree such as to deprive the coun- sentatives of the parties, agreed upon rules of procedure which should try of essential transportation service; "NOW, THEREFORE, I, FRANKLIN D. ROOSEVELT, Presi- govern its hearings, appointed an official reporter, and informed coun- sel for the parties that the first public hearing on the dispute would dent of the United States of America, by virtue of the power vested in be convened at 10 A.M. September 16, 1941, in the auditorium of Kim- me by the Constitution and laws of the United States, and by virtue of ball Hall, Chicago, Illinois. Thereafter public hearings presided over and under the authority in me vested by section 10 of the Railway Labor Act, as amended, do hereby create a board to be composed of by the Board continued for thirty-one hearing days, being concluded at 5:30 P.M. Wednesday, October 22, 1941. Witnesses were heard, five persons not pecuniarily or otherwise interested in any organiza- tion of railway employees or any carrier, to investigate the aforemen- exhibits introduced, and arguments made. The resulting transcript totaling 7,130 pages plus 436 exhibits comprises the massive record this date. tioned disputes and report its findings to me within 30 days from which was submitted by the parties to the Board for analysis and "The members of this board shall be compensated for and on account evaluation. This report is based upon that record. of such duties in the sum of seventy-five dollars ($75) for every day The employees were represented by the Conference Committee of actually employed with or upon account of travel and duties incident the Transportation Organizations and by the Conference Committee of the Fourteen Cooperating Railroad Labor Organizations. Appear- to such board. The members will be reimbursed for and they are ances for the Conference Committee of Transportation Organizations hereby authorized to make expenditures for expenses for themselves and of the Board. including traveling expenses and in conformity were entered by Charles M. Пау and Carroll J. Donohue, its attorneys, with Public, No. 212, 72d Congress, approved June 30, 1932, 11 :30 a.m., and by officers* of each of the several organizations involved. Appear- ances for the Conference Committee of Fourteen Cooperating Railroad subsistence. not to exceed five dollars ($5.00) per diem for expenses incurred for Labor Organizations were entered by Frank L. Mulholland and Wil- "All expenditures of the Board shall be allowed and paid for out of lard H. McEwen, its attorneys, and by B. M. Jewell, its Chairman. the appropriation National Mediation Board Appropriation Act, and officers* of each of the several organizations involved. 1942' on the presentation of itemized vouchers properly approved by The railroad carriers generally were represented by the Carriers' the chairman of the Board hereby created. Conference Committee and by the Carriers' Vacation Conference "IN TESTIMONY WHEREOF. I have hereunto set my hand and Committee. Appearances for the Carriers' Conference Committee caused the seal of the United States to be affixed. were entered by J. Carter Fort, Allan P. Matthew, Daniel P. Loomis, "DONE at the City of Washington this 10th day of September in William H. Swiggart, Edwin A. Lucas, William T. Joyner, William T. of the the year of our Lord one thousand nine hundred and forty-one, and Faricy, Elmer A. Smith, Bruce Dwinnell, Burton Mason, and Burnham Independence of the United States of America the one hundred Enersen, its attorneys. and sixty-sixth." Appearances for the Carriers' Vacation Conference Committee were . See Appendix C-1, Exhibit "C," referring only to Rallway Express Agency, Inc. See Appendix B. See Appendix C-2 and C-3. 4 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 5 entered by Joseph F. Johnston, R. J. Hagman, and E. R. Brumley, its on some or all of the rail carriers in each of the Eastern, Southeastern, attorneys. and Western regions. Thus the vacation dispute is one between sub- The Railway Express Agency appeared in its own behalf, and ap- stantially all non-operating employees and substantially all carriers, pearances were entered for it by Albert M. Hartung, L. P. Bergman, except the Railway Express Agency. C. J. Leary, W. J. MacGreevy, and J. E. Skaggs, its attorneys and Five days after the vacation proposal, on May 25, 1940. most of the officers. The Agency employees, consisting of members of the Clerks, Western carriers served a counter proposal for a reduction in pay Blacksmiths, and Machinists Organizations, were represented by the to offset any increase in costs in case vacations with pay should become Conference Committee of the Fourteen Cooperating Organizations. effective. None of the Eastern and Southeastern carriers joined in The short line railroads were represented by the American Short this counter proposal. Lines Railroad Association, appearances being entered by C. Д. Miller, Conferences on the vacation issue were held on the individual prop- its attorney, and by J. M. Hood, its president. erties, but no agreements were reached. It was not until some eight W. R. MeMunn appeared specially in behalf of Merchants' Despatch months later, on February 15, 1041, that the fourteen non-operating Transportation Corporation to protest its inclusion in the present in- organizations submitted a strike ballot to their members. On March vestigation and report, upon the ground that the company operates a 14, 1941, the National Mediation Board proffered its services, and private refrigerator car line only. mediation proceedings were conducted in Washington, D. C., between The Toledo, Peoria & Western Railroad appeared by Robert G. March 14 and May 31, 1941. On this latter date the Mediation Board Sprague, its attorney. The jurisdiction of the Board was conceded. advised the conference committees of the employee organizations and However, Mr. Sprague asked that the Board's recommendation as to of the carriers that no further mediation was possible. It then prof- this carrier be limited to rates of pay for power house and railway fered arbitration, which on June 16, 1941, was declined by the organi- shop employees, contending that only these wage rates were in dispute, zations representing the employees. as shown by the records of the National Mediation Board. In the meantime, issues as to rules of service and as to wages had The Hudson & Manhattan Railroad Company appeared by John E. arisen. On May 26, 1941, all of the Eastern and Western major trunk Buck, its general counsel. Mr. Buck conceded the inclusion of his line carriers notified the five transportation organizations, represent- carrier in the President's proclamation. Nevertheless, he protested its ing the operating employees, of proposed changes in rules of service. inclusion in any action of the Board because of the successful con- The Southeastern carriers made similar proposals to the operating clusion of wage, rules, and vacation agreements with its brotherhood organizations on June 2. Seven days later those Western carriers and organization employees through the National Mediation Board which had proposed changes in the operating rules presented to the before the date of the proclamation. fourteen non-operating organizations proposals to change the non- All other appearances representing parties protesting the jurisdic- operating rules. In this they were joined by all but two of the South- tion of the Board and all requests for special appearances before the eastern carriers. The Eastern carriers joined in the proposals to Board or for special consideration from the Board were made in change the operating rules but not in those which affected the non- writing and not in person. The record of such written appearances operating rules. and requests and the elaims which they urged are set forth in an Conferences between the carriers and the two groups of employees Appendix to the transcript of record of the Board's hearings. involved in the rules issue were held in Chicago from July 24 to July 31, 1941. The rules proposals were rejected by the operating brother- III. BACKGROUND OF THE PRESENT CONTROVERSY hoods on July 30 and by the non-operating organizations on July 31, and on these two days the disputes were submitted by the carriers to The controversies which led to the President's proclamation orig- the National Mediation Board. inated at various times and between various parties. The carriers are Meanwhile the wage issue had been initiated on June 10, 1941, by divided into three main groups, the Eastern, Western, and South- notices sent by some or all of the five operating brotherhoods to the eastern. The employees are divided into two groups. The operating carriers listed in Exhibit "A" of the President's proclamation. and men, represented by the Conference Committee of Transportation by notices sent by some or all of the fourteen non-operating organi- Organizations, belong to what are commonly known as the Five zations to the carriers listed in Exhibits "B" and "C" of the President's Brotherhoods. The non-operating men were represented by the Con- zations ference Committee of Fourteen Cooperating Railroad Labor Organi- proclamation. The proposal of the operating brotherhoods was that, to which they respectively belong. effective July 10, 1941, all existing basic daily wage rates be increased by a notice served by some or all of the non-operating organizations The proposal for vacations with pay was initiated on May 20, 1940, 30 percent with a minimum money increase of $1.80 on the minimum day. That of the non-operating organizations was that, effective July 10, 1941, wages be increased by applying to all rates then in effect 6 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 7 an increase of 30 cents an hour, with a minimum hourly wage of 70 cents. for a fixed minimum wage. No proposal for vacations was made to Following the receipt by the carriers of the wage proposals, dif- the Express Agency. ferent sets of committees of the carriers and of the operating and On the same day on which the wage demands were served by the non-operating groups of employees conferred with respect to them employees, the Agency served separate formal notices on the three from July 30 to August 5, 1941. In each case the carriers rejected organizations for changes in the working rules to effect a restoration the proposed increases in wages, and neither dispute was at that time of the 48-hour week in lieu of the existing 44-hour week, and to limit submitted to the National Mediation Board. the existing vacation rule to employees who have worked not less than Upon this failure to come to an agreement, each of the employee 250 days or 2,000 hours during the preceding calendar year. Confer- groups on August 5 circulated strike ballots returnable September 5, ences were held, but no agreement was reached. On July 18, 1941, 1941. The five operating brotherhoods listed the carriers' proposal for the services of the National Mediation Board were invoked. The dis- changes in rules and the brotherhoods' proposal for wage increases. pute was handled by the National Mediation Board separately from The ballot of the fourteen non-operating organizations listed four the general wage dispute between the railroads and the non-operating issues: vacations with pay, the counter proposal for a 10 percent re- employees. However, the Railway Express Agency was included in duction in pay served by most of the Western carriers, wage increases, the general strike order of the non-operating employees called for and the rules changes proposed by certain carriers. The canvass of the September 11, 1941, but it was classified separately in the President's ballots showed an almost unanimous strike vote in each instance. proclamation of September 10, 1941. On August 11, 1941, the National Mediation Board served notice that the carriers had invoked its services, and mediation proceedings IV. THE ISSUES PRESENTED TO THE BOARD embracing all parties and all disputes started on that date. During 1. these mediation proceedings it was agreed between the carriers and the five operating brotherhoods that their rules dispute be held in Before presenting in detail the particular proposals on which the mediation until the final settlement of their wage dispute. No such Board is asked to make findings and recommendations, it may be well agreement was made between the carriers and the fourteen non-oper- to restate briefly what parties are involved in each dispute and to ating organizations. point out such changes as have taken place with respect to the issues The remaining mediation proceedings were terminated by the before the Board as compared with the proposals initially made by National Mediation Board on September 4, 1941, with an offer of the parties to each other. arbitration. This offer was accepted by the carriers but declined by The only proposals made by the employees are for an increase in each of the employee groups. Five days later, on September 9, 1941, wages and for the granting of vacations with pay. All of the em- the five operating brotherhoods notified the National Mediation Board ployees are parties to the wage dispute, but only the non-operating that a strike was to become effective on September 15, 16, and 17, 1941. employees presented the vacation proposal. Both proposals were made The strike of the fourteen non-operating organizations was called for to rail carriers in each of the Eastern, Southeastern, and Western September 11, 1941. The President's proclamation creating this Emer- regions. The wage proposal but not the vacation proposal was made gency Board was issued on September 10, 1941. to the Railway Express Agency. The history of the dispute between employees and the Railway The only wage-reduction proposal was the conditional one of the Express Agency calls for separate recital because of the separate Western carriers to offset the cost of complying with any vacation record made and because of other circumstances presently to be noted. proposal. On June 10, 1941, all of the Express Agency employees represented Only the Western and Southeastern carriers presented proposals by three organizations separately served notices on the Agency to the non-operating employees for changes in rules of service. The of demands for an increase of wages. These three organizations were rules proposals made by all carriers to the operating employees were the Brotherhood of Railway and Steamship Clerks, Freight Handlers, postponed for continued mediation pending the report of this Board Express and Station Employes; International Association of Machin- on the wage issue. Those made to the non-operating employees were ists; and International Brotherhood of Blacksmiths, Drop Forgers submitted to the Board, but counsel for the carriers in his opening and Helpers. The notices of two of the organizations conformed statement relieved the Board from the duty of making specific recom- substantially to the wage notices served by other non-operating em- mendations for the adoption of the particular changes proposed. ployees on carriers other than the Express Agency. The notice of The carriers initially filed with the Board no counter proposals to the Machinists differed, in that it fixed August 1, 1941, as the the general wage proposals of the employees. Toward the close of posed effective date of the increase and in that it made no demand pro- their case in chief, however, the carriers submitted an offer in the form of a so-called Emergency Payment Plan which would adjust 8 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 9 wages for a limited time by variations above but not below the ments at quarterly intervals, but no adjustment to be made present basic rates. unless the index has moved five points or more from the date A counter proposal initially made by the Railway Express Agency of the last adjustment. to its three non-operating organizations asked for changes in rules which would bring about a restoration of the 48-hour week and for Vacations with pay: The non-operating employees submitted to all a modification of the existing vacation rule, SO ns to equalize past of the carriers designated in the President's proclamation with the benefits and the cost of the proposed wage increase. Under date of exception of the Railway Agency the following proposal: October 16, 1941, the formal confirmation of withdrawal of this coun- "All employees, upon the completion of one year's service, ter proposal was filed with the Board, such withdrawal having been and who are regularly employed, shall effective with the year made orally nt the opening hearing of the Board. The Express Agency 1940 and thereafter be given annually two consecutive calen- made a separate record before the Board and asked for a separate dar weeks vacation with pay. recommendation "that as to the dispute between the Railway Express "All other employees, upon the completion of one year's Agency and its employees represented by the Clerks, Machinists, and service, shall, effective with the year 1940 and thereafter, be Blacksmiths Organizations, mediation should be resumed" for the rea- given an annual vacation of one working day with pay for son that the dispute "was still in mediation when the proclamation each month during which they earned compensation during was issued." the preceding calendar year. "During the vacation period, the basis of pay for hourly 2. rated employees shall be eight times the hourly rate for the service last performed prior to vacation, and for employees The various proposals and counter proposals are stated in greater paid on piece work, mileage, daily or monthly basis, at the detail as follows: regular daily rate for the service last performed prior to Wages: Proposal made by the operating employees: vacation. "The vacation period shall generally be between April 1 "That effective July 10, 1941, all existing basic daily wage and September 30 and employees in each seniority district rates be increased thirty (30) percent with a minimum shall be entitled to preferential vacation dates consistent with money increase of $1.80 on the minimum day. The same per- the requirements of the service and their standing on the centage of increase applied to the basic day will be applied to seniority roster; provided, however, that by agreement be- all arbitraries, miseellaneous rates or special allowances and tween the Committee representing the employees and the man- to daily and monthly guarantees." agement arrangements may be made for the granting of vaca- Proposal made by the non-operating employees: tions to individual employees at times outside the limits "That effective July 10, 1941, there be applied to all rates herein specified." now in effect an increase of thirty (30) cents an hour, pro- vided that no employee shall be paid less than seventy (70) The sole counter proposal by the carriers was submitted by the cents an hour." Western group as an offset to the vacation with pay proposal of the non-operating employees to compensate for the cost to the carriers of case before the Board is in summary as follows: The counter proposal of the carriers presented near the close of their the granting of such vacations. In his opening statement, counsel on behalf of the Western carriers stated that this was not an independent A sliding-seale "emergency compensation payment" to proposal for a wage reduction, but only a counter proposal. above from November 1, 1941, to December 31, 1942, effective only run IIe added also that the 10 percent fixed in the notice was inserted with the basic rates of pay and applicable only to them, before ascertainment of the cost by the carriers, "with the idea that receiving $30 or more per week. up to $30.00-that is, a maximum of $4.50 per week for wages men a ceiling of 15% increase calculated on weekly when the cost of applying the vacation demands as made was ascer- tained, the 10 per cent figure could be adjusted to such an amount as would be necessary to offset the cost." The percentage factor of variation to be determined from one-half composite index based on gross revenue and the cost of a Changes in Rules: The rules changes proposed by the Western and full the gross revenue increase being averaged with living, the Southeastern carriers in their demands on the non-operating employees change in the cost of living. are in the form of a long memorandum* not fully informative unless The the payment to be applied for a three-month period based read against the background of the rules themselves. Briefly the pro- on composite index for November 1, 1941, with adjust- See Appendix C-4. 10 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 11 posal, according to the carriers, was to revise some rules so that, while eral control of the railways was pending. President Wilson, while recognizing and confirming the existence of craft and class lines, essen- holding that the problems presented by labor should be dealt with after tial work may be accomplished without disproportionate sacrifice of the roads were returned to their owners, assured labor that there reasonable efficiency and economy, so that the rules may be clarified to would be provided a mechanism for the consideration of their claims. permit some flexibility in hours, assignments, and starting times, and The Transportation Act of 1920 set up such a mechanism by providing so that the revised rules would place on a uniform basis the limitation for the establishment of the Railrond Labor Board which was author- provisions for the presentation and handling of claims and grievances ized to deal with controversies relating to wages and working con- of employees. ditions. Counsel for the carriers, in outlining the rules proposal in his open- On July 20, 1920, after considering the claim of railway labor that ing statement, informed the Board that the carriers would ask, not for wages were inadequate, the Board granted wage increases ranging a recommendation in favor of the adoption of the proposed changes from 12.5 percent to 26.2 percent and averaging about 22 percent but merely for a condemnation of the existing rules as unduly restric- for all railroad employees. Due to the business recession of 1920-21, tive and for a recommendation that the issue be submitted to mediation which caused a substantial decline in net operating income, the car- and arbitration if adjustments were not otherwise agreed upon. riers pressed for a decrease in wages, and proceedings were instituted before the Board. On June 1, 1921, the Board granted wage redue- V. WAGE CONTROVERSIES IN THE RAILROAD INDUSTRY tions averaging 12.2 percent. Further reductions in wages covering varying groups of railway employees were granted in 1922. SINCE 1920 For a number of reasons both labor and management grew in- Labor disputes in the railway industry have been a matter of Federal creasingly disinelined to invoke determinations by the Railroad Labor concern for over half a century. It is unnecessary to give the details of Board, and undertook to deal with wage problems by direct negotia- that history in the present report. However, the present controversy tion. In 1926 the Board went out of existence as a result of the enact- may perhaps be better understood if a brief resume of important labor ment of the Railway Labor Act of that year. disputes and settlements is presented here. The provisions of the Railway Labor Act of 1926 placed emphasis The developments of greatest interest date from the period of World upon the settlement of railway labor disputes through processes of War I. During this war period, unprecedented rises in prices negotiation, mediation, and arbitration. These procedures were used occurred and the cost of living seriously outran the wages received by to dissolve controversies concerning one or another group of employees. the railway employees. Demands for increases, were already pending Up to 1929, increases in wages on the basis of individual agreements when, on December 28, 1917, the Federal government took over the were secured by almost all groups of railway employees, though in railways. A commission, known as the Lane Commission, was ap- general, wage rates equivalent to those established in 1920 were not pointed by the Director-General of Railroads to investigate the de- re-established. mands of railway labor for wage increases. This Commission, on The onset of the depression in Inte 1929 ended further upward wage April 30, 1918, recommended substantial wage increases on a sliding adjustments. As the depression deepened and net railway operating scale percentage basis for the bulk of railway labor, primarily on the income declined, the carriers undertook to secure a general reduction ground that wages of railway labor had not kept pace with the rise in in wages. Such a reduction was effected on a national basis by an the cost of living. The recommendations, with slight modifications, agreement, reached on January 31, 1932, between the officials of the General Order No. 27. were made effective by the Director-General on May 25, 1918, by carriers and the representatives of the employee organizations. This agreement provided that, for a period of one year beginning February Dissatisfaction on the part of railway labor continued despite some 1, 1932, there should be a deduction of 10 percent from the pay check upward wage adjustments granted to particular groups by the Direc- of each employee covered by existing contracts. This agreement pro- tor-General on the recommendation of the Board of Railroad Wages and vided not for a reduction in the basic wage scales then existing, but Working Conditions, a board established in accordance with one of for a temporary deduction from basic wages. The agreement was later the recommendations of the Lane Commission. In the latter part of extended to October 31, 1933, and again to June 30, 1934. 1919 railway labor urged a general increase in wage rates in order to On April 26, 1934, an agreement was reached between the carriers adjust them them to the continued rise in the cost of living and to align and railway labor for the restoration of the 1932 deduction. It was done with the higher wages paid in other industries. Nothing was provided that 2½ percent be restored on July 1, 1934, an additional . about wages, however, due to the fact that termination of Fed- 21/2 percent be restored on January 1, 1935, and the final 5 percent on April 1, 1935. Emergency For fuller Board description to the President, of the pp. history 3-8, of railway labor controversies see the 1938 Report of the In 1937, with the improvement in business conditions, railway labor 12 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 13 moved to secure an increase in wages. After prolonged negotiation also independent representation, argument, and brief in support of and mediation, the National Mediation Board, on August 5, 1937, and the rules proposal advanced by the Western and Southeastern car- on October 3, 1937, succeeded in securing settlements which gave to riers. substantially all groups of railway labor wage increases amounting to With respect to rules, the carriers involved were the moving party, 5 cents an hour for non-operating service and 5½ cents an hour for and the issue is sufficiently separate from those in the wage and train and engine service. Hardly had these agreements been reached vacation controversies to make it advisable to state the opposing when business recession set in and substantial declines in railway net contentions in the section confined to the rules dispute. The em- operating income were suffered. This led to an effort on the part of the ployees advanced their wage and vacation contentions equally, and carriers to effect wage reductions to the amount of 15 percent. without differentiation, against all the carriers, except that the Rail- Negotiations were entered into early in 1938 by the carriers and the way Express Agency was included only in the wage dispute. Their labor organizations to handle the matter on a national basis. Efforts special case against the Express Agency was in the nature of rebuttal to settle the controversy by negotiation and subsequently by media- against the Agency's claims of independence, separability, and dif- tion were unsuccessful, and it appeared that a nation-wide strike ferentiation. These contentions will stand out more clearly when would be called if the wage reduction proposals of the carriers were summarized in the section confined to the Express Agency. not withdrawn. In view of the seriousness of the situation and the With these qualifications we proceed to outline the major contentions threat of the interruption of interstate commerce, the President cre- of the employees and the major contentions of the carriers. The con- ated an Emergency Board, under section 10 of the Railway Labor Act, tentions on both sides were supported by elaborate statistical data. to investigate and report respecting the dispute. After extended hear- Such proof will not be summarized here, but will be dealt with in the ings the Board reported to the President, on October 29, 1938, and pre- two succeeding sections on railroad wages and their adequacy and sented its conclusion "that no horizontal reduction upon a national on the financial situation of the carriers. The summary which fol- scale of the wages of railway labor should be pressed by the carriers lows is confined to an abstract of the principal arguments of the at this time." On November 4, 1938, the railroads advised the Presi- parties, with no implication of concurrence or dissent on our part. dent that the notices for a 15 percent wage reduction would be withdrawn. A. CONTENTIONS OF THE EMPLOYEES 1. The Fourteen Cooperating Railroad Labor Organizations. VI. MAJOR CONTENTIONS OF THE PARTIES The employees in the non-operating services based their wage case The case of all the employees against all the carriers on all the issues on two main contentions: (1) that the railroad industry is enjoying was presented on a consolidated record. The non-operating employees a high level of prosperity and can afford to grant wage increases; presented their case first, and the operating employees adopted as and (2) that both absolutely and relatively the railroad employees their own much of the testimony and many of the exhibits introduced are entitled to the wage increases which they have put in issue. on behalf of the non-operating organizations. This was especially true The present prosperity of the carriers is the result of the great with respect to the employees' case on the financial situation of expansion in the volume of traffic. The employees express their con- the carriers. There were, however, separate opening statements and fidence that still further expansion is inevitable. As volume increases, separate briefs presented on behalf of the non-operating and of the net income increases nt a still higher rate. The recent improvements operating groups. in operating efficiency and in plant and equipment have already For the carriers, the situation was somewhat different. The defense lowered the ratio of wage costs to total costs and will progressively of the Railway Express Agency was made on a separate record and reduce that ratio as traffic approaches nearer and nearer toward full was supported by an independent opening statement and an inde- utilization of the combined facilities of the earriers. Other costs than pendent brief. The special defense of the Short Lines, although made wages will also be less per unit of traffic as the same rails and equip- on the consolidated record, was confined to contentions predicated ment are more fully employed. A still greater enhancement of net on their special situation with respect to employees and to the physical earnings will accrue to those roads which because of past distress and financial peculiarities of their operations. have been reorganized with resulting decreases in their fixed charges. The other carriers were united in their contentions against the The present and prospective improvements in the condition of the wage proposals of both groups of employees, and the vacation pro- railroad industry as a whole will, it is argued, be reflected in corre- posal of the non-operating organizations. They were, however, repre- sponding amelioration of the financial status of most individual roads. sented by separate committees on the two issues, with separate coun- If there are still marginal lines which face reorganization. it should sel, separate opening statements and separate briefs. There were be recognized that some of them have long been in a hopeless condi- 14 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 15 tion and that some are controlled by more prosperous roads for which In advancing these claims for increased wages, the employees de- they are remunerative feeders. While the necessity for reorganization clared that they sought, not a favored position among industrial is to be regretted, the necessity is due to already existing conditions workers, but merely equality of treatment. The requirements of for which reorganization is the imperative cure. The losses to inves- service exacted by railroad employment are as severe as those imposed tors thus registered through reorganization are losses that have long by any industry upon its employees, and due recognition should be been accruing or accrued. The remedy of reorganization restores the given to the skill and to the responsibilities of the employees involved industry itself to a firmer financial position with new safeguards in performing their work. The railroad workers have for two decades against future deficits in net income. Whatever the unhappy pros- observed a steady improvement in the wages of the American worker, pects of a few roads, the employees assert that the Board in recom- an improvement in which they have not participated, and in which mending wage rates for the entire industry should not be influenced they believe they have a right to share. With reference to the financial condition of the carriers, the em- by the condition of these marginal lines. It would be essentially un- reasonable to penalize the workers of an entire industry because of ployees drew the conclusion that when the movement for a wage increase comes at a time described as one in which the railroads are the uneconomic position or the improvident operation of a small number of roads. receiving a bounteous portion of the mounting earnings of industry, it is essentially unfair that all of the increased profits be diverted to While the carriers in recent years have had to meet competition management and invested capital. The employees suffered in the from which they formerly were free, they have made definite progress season of depression even more than did the railroads, and now ask in meeting it, and further progress is to be anticipated, as the car- for themselves a just division of the fruits of prosperity. riers continue to improve their services and as competing forces of In support of their plan for a two weeks vacation with pay for the transportation become increasingly subject to governmental regula- non-operating groups the employees offered the following propo- tions and their employees become increasingly unionized. sitions: (1) Enlightened thinkers everywhere have considered vaca- The employees pointed to factors which would cushion any post- tions socially desirable because they provide necessary relief from war slump such as occurred after the first World War. Even this industrial fatigue and afford opportunity for leisure and change of recession was a temporary one, and for approximately a decade environment which will contribute to the development of faculties thereafter the railroad industry enjoyed great prosperity. The car- essential to good citizenship. (2) There is a strong and increasing riers, it was protested, advance a peeuliar and untenable argument trend toward the granting of vacations to industrial workers. (3) in respect to cycles of depression and of prosperity. Presumably they This movement may be extended to the railroad industry without would resist any attempt to raise wage levels in periods of low earn- ings, yet they similarly resist such efforts in periods of prosperity, encountering practical difficulties growing out of either the physical structure of the railroads or the present volume of their traffic. (4) on the theory that, while existing conditions may appear to justify an increase in wages, these conditions may not continue. At the The cost of granting vacations to railroad employees would be present time, railroad revenues are soaring, properties are being im- negligible in view of the financial condition and future prospects proved, competition is being mastered and financial burdens are being of the industry. These propositions were elaborated by citations from lightened. Hence it was concluded that, if ever there was a time when reports of employers stating the good effects which have resulted labor might justifiably press for a larger share in the fruits of the from the adoption of vacation plans for their employees, by records railroad industry, that time is now. of the rapid increase of agreements providing for vacations, and by Apart from the improved financial position of the railroads. the testimony as to the important function of vacations in the improve- employees presented a number of reasons as justifying wage increases ment of the social order. and which were summarized under five main heads: (1) wages in The vacation plan, it was pointed out, did not propose vacations the railroad industry have not improved for twenty years; (2) rail- for those who had not had one year of service. While an employee road employees possess a high degree of skill in comparison with who had not had substantially full employment during the preceding employees in other industries and for which they are not adequately year might be eligible for a vacation, it was noted that an employee rewarded: (3) railroad wages are lower than those in other and on furlough does not lose his connection with the industry. The rail- corresponding employment; (4) railroad employment is irregular; road service of a furloughed employee is not considered as having and (5) the cost of living is rapidly advancing. been interrupted by a temporary cessation in the performance of These contentions, like those dealing with the financial condition active duties. This continuity of the service relationship, though the of the railroad industry, were supported by extensive statistical employment may be intermittent, is recognized by both the Railway material. The various contentions and the data presented in their Labor Act and the Railroad Unemployment Insurance Act. support were applied also to the issue of the minimum wage. 16 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 17 2. The Five Operating Brotherhoods. the men in the service. Upon these men the carriers must rely for The only issue presented to the Board by the employees in the success in efficient handling of an expanding volume of traffic with operating services was that of an increase of wages. Inasmuch as the heavier loading and at swifter pace with superior records of on-time non-operating organizations had opened the case for the employees arrivals. Upon these mén, 'too, the carriers must rely for the best of and had dealt at length and in great detail with the financial situa- relations with all patrons of the service as an important factor in tion and prospects of the earriers, with the claims of the employees meeting the force of competition. that their wages were lower than those of employees in similar occu- The operating brotherhoods joined with the fourteen organizations pations in non-railway industries, and with the rising cost of living, the in expressing confidence that the current improvement in the volume contentions of the operating brotherhoods on these points were mainly of business is not a temporary one, but will continue after the present cumulative and therefore need not be stated in detail. emergency as it did for a long period after the first World War. They The basic contentions of the operating brotherhoods were thus added that the high volume of traffic at the moment, even if there set forth in the introduction to their brief: "The contention of the should be a recession later, makes increased demands for service upon operating employes that their wages do not fairly and adequately the men and that therefore they are entitled to an increase in pay compensate them for the services they render and their consequent whether the emergency ends tomorrow, next year, or ten years hence. proposal for a wage increase rest upon the following considerations: In connection with the wages of employees in other industries, the 1. The kind and character and characteristics of the work; operating brotherhoods recognized a difficulty in determining com- 2. The increase in the service performance and responsibility of parability, since the work in the railroad operating service is of a character seldom found outside the railroad industry. This unique the men since the fixation of wages at substantially the present character of their work was assigned as an additional reason for level; wage increases when accompanied by increased service performance 3. The increased service performance which is being demanded, on the part of the men and by increased net operating income en- and will be demanded of them in the emergency period, upon joyed by the carriers. which we have entered and which will undoubtedly continue Finally it was urged that deserved wage increases should not be for many months and probably for many years; denied for fear that such an increase might further the tendency 4. The wages paid and wage trends in other industries; toward inflation. While the employees joined with the carriers in a 5. The rise in the cost of living which has already ensued and sincere concern over the possibility of excessive inflation, they insisted the certainty of further marked rises." that it is not within the province of an Emergency Board, serving as In elaboration and support of these main positions, the operating an intermediary in the collective bargaining process, to attempt to group advanced a series of more detailed considerations. They laid control or influence such general tendencies by recommending that emphasis on the fact that the labor of the men in the operating groups an increase in wages, even if deserved, should be withheld, because of is skilled labor. Their work has also other special characteristics. It considerations of a public character that are for other public agencies is attended by more than ordinary physical hazard, by heavy responsi- to weigh and act upon. A somewhat similar point was made about bility for the safety of the lives and property of others, by irregular the possible effect of wage increases in furthering the necessity of day and night, week-day and Sunday calls to service, by many hours the financial reorganization of some of the carriers. If by reason of per month spent away from home, with consequent increase in living high fixed charges there are roads that cannot pay adequate wages expenses, and by peeuliarities and difficulties of their tasks which are and still meet the interest due to bondholders, then financial reor- without counterpart elsewhere. Over the past twenty years the ganization should be regarded as a necessary measure to put the service performance of these employees has doubled from the stand- enterprise on a solid footing. point of the volume of traffic moved, and has greatly increased in responsibility as measured by the value of the traffic units moved. The B. CONTENTIONS OF THE CARRIERS work of the operating men, though lightened somewhat in physical The contentions of the carriers are much more difficult to state exertion during the twenty-year period, now demands and receives in summary form, since to a large extent they necessarily consist in lance, It is and increased capacity for sound judgment in an emergency. a higher degree of mechanical knowledge, greater alertness and vigi- denying, qualifying, or minimizing the arguments of the employees. In general their position was that the proposals of the men are true that the carriers, as they point out, now face more com- petition will than formerly. Their success, however, in the competitive grossly excessive both from the standpoint of the situation of the employees and from that of the past, present, and prospective earn- race depend in large measure upon the quality and capacity of ings of the carriers. Here again, as in the case of the employees, 18 REPORT OF EMERGENCY BOARD REPORT OF EMERGENCY BOARD 19 extensive statistical data and testimony were offered to support the that present conditions are more than temporary and that wage positions advanced. increases should be granted on the assumption that business expansion The chief counsel for the carriers on the wage issue pointed out will long continue. It is to be anticipated that, when the defense in his closing argument that the question of the reasonableness of emergency is over, traffic volume will decline and the present gains wages does not lend itself to solution by any nice formula. A case will disappear. of this kind, he said, is largely a matter of measuring equities against The railroad workers, it is contended, have fared better, and now equities, of trying to weigh conflicting interests in order to reach an fare better, than the rank and file of the workers of this country. equilibrium. By way of illustration he noted that wage fixing might The average compensation of railway employees is not exceeded in be simple if viewed solely from the standpoint of the immediate more than a handful of industries for which over-all records are interest of the employees, without considering their long-run interest, available. As a group, therefore, they are in a relatively favored without considering the interest of the security holders, or of the position. The recent advances in wage rates in a few selected indus- shippers, or the national interest in a healthy, robust and thriving tries engaged in production of defense materials do not afford a fair railroad system. It would be equally simple if viewed solely from basis for comparison. Much of the new labor has to be brought from the standpoint of any other selected interest in entire disregard of a distance with consequent increased expense to the worker, and the all the rest. But all these interests must be put on the scales of conditions of work and of living are disadvantageous in contrast with judgment in order to reach a proper balance. the settled employment on the railroads. Many of the recent increases Counsel emphasized the importance of the railway industry in the in wages in outside industries are due to factors which raised railroad national economy, the difficulties with which the industry has been wages years ago, and are therefore not of significance as evidence of beset, the widespread distribution of railroad securities, and the great a general trend which should be applied to all wages. The claims of the employees that they have not been adequately volume of employment which the railways provide. The health of the rewarded for their increased productivity, and that the modernized industry and its continued power to provide ample and efficient service are, he said, of major importance to the well-being of the plant and equipment require the use of more skill and effort, are nation. without foundation. The increased productivity is due almost wholly The carriers presented statistical evidence of the long lean period to huge expenditures for the modernization of the plant and to of the thirties which brought about bankrupteies and receiverships improvement in management. Without the decrease in unit costs of railroads and caused losses to holders of railroad securities. The of traffic as a result of this modernization, the carriers would have been unable to maintain the scale of wages that has obtained. The return on capital invested in the industry has so long been inade- recent improvements in tools and all facilities have made the labor quate that the securing of new capital through long term bonds or of the worker easier rather than harder. The skills required have not new issues of stock has become almost impossible. The rail- roads, it was asserted, need a net operating income of at least a been shown to be greater than those in other industries. billion dollars a year in order to provide for the necessary improve- Railway employees shared the ill effects of the depression in less ments and additions to structure and equipment, and to pay adequate degree than employees generally. Regularity of employment is higher dividends to stockholders. The wage increase proposed by the em- on the railroads than in industries generally. Railroads must operate ployees would deprive the carriers of all chance of compensation continuously. Many of the outside industries that are now having a for past deficits and of securing adequate returns to maintain bor- mushroom growth will inevitably when the emergency is over either rowing power. It would, furthermore, throw many roads into receiv- close down or reduce the number of their employees much more than ership and cause additional depreciation in the value of railroad will the railroads. securities. This would result in suffering not only to private investors With respect to the demand for a minimum wage, the carriers but also to the millions who have a stake in the financial well-being claimed that there is no justification for establishing such a rate for of banks, insurance companies, and other institutional holders of common labor in excess of the rate fixed by the Federal Administra- such securities. tor. An increase in the minimum rate will necessarily have the effect Even the present prosperity of the railroads will not bring in 1941 of increasing unemployment. the net income which is essential to financial health in view of the With regard to the cost of living, it is contended that, neither at accumulated deficiencies of the depression years. The current increase the time the wage requests were made nor at the present time, has in the volume of traffic is due largely, if not wholly, to the defense there been any such increase in the cost of living as would support expenditures, and there is no assurance that such a volume of traffic or justify a disturbance in the basic rates of pay agreed to in 1937. will be maintained for any considerable period. Those who propose In recognition of the possibility of future increases in prices the a wage increase have the burden of proof, and they cannot establish carriers proposed an arrangement for temporary increases in pay on