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The original documents are located in Box K29, folder "Rockefeller, David (4)" of the
Arthur F. Burns Papers at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Arthur Burns donated to the
United States of America his copyrights in all of his unpublished writings in National Archives
collections. Works prepared by U.S. Government employees as part of their official duties are in
the public domain. The copyrights to materials written by other individuals or organizations are
presumed to remain with them. If you think any of the information displayed in the PDF is subject
to a valid copyright claim, please contact the Gerald R. Ford Presidential Library.
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
October 23, 1970
Dr. Arthur F. Burns, Chairman, Board of Governors
Federal Reserve System
20th Street and Constitution Avenue
Washington, D.C.
Dear Arthur:
Thank you so much for your letter of October 14 setting forth
the background leading to the Board's decision to exclude bank
trust department management from the System's retirement fund.
I naturally hope that this background will be understood by our
non bank competitors who might otherwise attempt to capitalize
on what could appear to be a lack of confidence in the abilities
of banks to perform the required services.
Perhaps the climate that caused your understandable concern will
change in the future. If so, we hope that the Board will give
further consideration to utilizing the trust facilities of banks
to serve the System.
Sincerely,
Dan't
FORD is LIBRARY GERALD
Mrs. Mallardi
October 14, 1970.
Mr. David Rockefeller, Chairman,
The Chase Manhattan Bank, National Association,
One Chase Manhattan Plaza,
New York, New York 10015.
Dear David:
In your letter of September 28, you requested more
information concerning the policy considerations which led to
the Board's decision to utilize the investment services of several
life insurance companies for the management of the System's retire-
ment fund.
As you surmised, the avoidance of conflicts of interest
between banks as fund managers and the supervisory role of the
System in regard to member banks was a basic factor in our
consideration of this matter. This has become an increasingly
difficult area to deal with, and it is more than ever necessary in
our position to avoid not only actual conflicts but also to avoid
any appearance of potential conflicts of interests.
The Federal Reserve's responsibilities include the making
of periodic examinations of trust departments of State member banks.
Our examiners do in fact counsel and advise with those banks to
whatever extent seems desirable and appropriate in connection with
their trust departments and their relationships with their customers.
Although the Federal Reserve does not have general
regulatory responsibilities for the trust departments of banks, some
of the Board's regulations may affect trust department operations.
Only a few days ago, for example, the Board acted on a minor regula-
tory amendment which, depending on how we had resolved the issues in
question, could have had some fractional effect on the return paid
to beneficiaries of bank-administered trusts. That particular
incident was trivial, but the point is clear: had the Federal Reserve
retirement fund been lodged with a bank trustee, conceivably it could
BERALD FORD VIBRARY
Mr. David Rockefeller
-2-
have benefited slightly by a Board decision on the issue in
question. You know and I know that no such influence would have
swayed the Board in its judgment, nor would I say that the possi-
bility of this or any other Board action would have influenced the
manner in which a bank's trust department might have handled our
retirement fund. But observers seeking to criticize the Federal
Reserve could magnify and distort such possibilities into a charge
of conflict of interest.
Our actions in implementing monetary policy, of course,
also have an influence on banking behavior. Because their impacts
on banks are often greater than on the rest of the financial system,
this relationship offers a possible additional target for charges
of conflict of interest if critics are so minded.
To me, preservation of the integrity of the Federal Reserve
System is so important that I believe we should lean over backwards
to guard against even remote possibilities for criticism. All of us
realize that this is a difficult problem to deal with and the results
may not be satisfactory to all concerned. We struggled for a
considerable time with various aspects of the handling of our Retire-
ment System investments, before coming in the end to the conclusion
that the responsibility for investment of the funds would best be
placed outside the banking system. This may seem to reflect an
extreme of caution, but we are convinced that it will help the System
to remain above suspicion in its administrative and organizational
activities.
I appreciate your having written as you did and I assure
you that we fully understand the interest that member banks may have
in our decision. I hope this letter will help you in understanding
the manner in which we reached our judgment in this particular case.
Sincerely yours,
(Signed) Arthur F. Burns
Arthur F. Burns.
RCH/MS/KAK:mcc
FORD i GERALD LIBRARY
OF
JO.BOARD
GOVERNORS
CHAIRMAN OF THE BOARD OF GOVERNORS
OF
THE
SYSTEM
FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551
RESERVE
October 14, 1970.
Mr. David Rockefeller, Chairman,
The Chase Manhattan Bank, National Association,
One Chase Manhattan Plaza,
New York, New York 10015.
Dear David:
In your letter of September 28, you requested more
information concerning the policy considerations which led to
the Board's decision to utilize the investment services of several
life insurance companies for the management of the System's retire-
ment fund.
As you surmised, the avoidance of conflicts of interest
between banks as fund managers and the supervisory role of the
System in regard to member banks was a basic factor in our
consideration of this matter. This has become an increasingly
difficult area to deal with, and it is more than ever necessary in
our position to avoid not only actual conflicts but also to avoid
any appearance of potential conflicts of interests.
The Federal Reserve's responsibilities include the making
of periodic examinations of trust departments of State member banks.
Our examiners do in fact counsel and advise with those banks to
whatever extent seems desirable and appropriate in connection with
their trust departments and their relationships with their customers.
Although the Federal Reserve does not have general
regulatory responsibilities for the trust departments of banks, some
of the Board's regulations may affect trust department operations.
Only a few days ago, for example, the Board acted on a minor regula-
tory amendment which, depending on how we had resolved the issues in
question, could have had some fractional effect on the return paid
to beneficiaries of bank-administered trusts. That particular
incident was trivial, but the point is clear: had the Federal Reserve
retirement fund been lodged with a bank trustee, conceivably it could
GERALD FORD LIBRARY
Mr. David Rockefeller
-2-
have benefited slightly by a Board decision on the issue in
question. You know and I know that no such influence would have
swayed the Board in its judgment, nor would I say that the possi-
bility of this or any other Board action would have influenced the
manner in which a bank's trust department might have handled our
retirement fund. But observers seeking to criticize the Federal
Reserve could magnify and distort such possibilities into a charge
of conflict of interest.
Our actions in implementing monetary policy, of course,
also have an influence on banking behavior. Because their impacts
on banks are often greater than on the rest of the financial system,
this relationship offers a possible additional target for charges
of conflict of interest if critics are so minded.
To me, preservation of the integrity of the Federal Reserve
System is so important that I believe we should lean over backwards
to guard against even remote possibilities for criticism. All of us
realize that this is a difficult problem to deal with and the results
may not be satisfactory to all concerned. We struggled for a
considerable time with various aspects of the handling of our Retire-
ment System investments, before coming in the end to the conclusion
that the responsibility for investment of the funds would best be
placed outside the banking system. This may seem to reflect an
extreme of caution, but we are convinced that it will help the System
to remain above suspicion in its administrative and organizational
activities.
I appreciate your having written as you did and I assure
you that we fully understand the interest that member banks may have
in our decision. I hope this letter will help you in understanding
the manner in which we reached our judgment in this particular case.
Sincerely yours,
ase
Arthur F. Burns.
FORD i LIBRARY 076870
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
September 28, 1970
Dr. Arthur F. Burns, Chairman, Board of Governors
Federal Reserve System
20th Street and Constitution Avenue
Washington, D. C.
Dear Arthur:
My associates tell me that in rearranging the investment management
of the System's retirement fund a decision was made by the Board of
Governors to utilize the investment services of several life insurance
companies. This information came to us in a letter from Dr. Dan McGill,
dated September 10th.
I assume that among the considerations leading to this decision was
the avoidance of conflicts of interest between banks as fund managers
and the supervisory role of the System in regard to the trust activi-
ties of the member banks. If that were a concern, I believe banks'
trust departments such as ours have amply displayed a sense of inde-
pendence and fiduciary responsibility that would allay any such fears.
However, I am sympathetic to the nature of the problem that faced the
Board.
The banking industry competes actively with the life insurance industry
for private pension funds and, as you know, manages the majority of such
assets. It would seem to us that the Board's decision may foster conclu-
sions in uninformed circles which could be injurious to the competitive
positions of the banks.
If at all possible, we would naturally like to know more about the
policy considerations which led to the Board's decision. While we
are disappointed, we do take comfort in the statement in Dr. McGill's
letter that the decision was to "not use the service of banks at the
present time" and therefore we look forward to the time when the
banking industry may have the opportunity to further serve the System.
Sincerely,
Daniel
DERALD FORD LIBRARY
FOR FILES
Joan Hobbs
September 11, 1970.
Mr. David Rockefeller,
Chairman of the Board,
The Chase Manhattan Bank,
National Association,
1 Chase Manhattan Plass,
New York, New York, 10015.
Dear David:
I also welcomed the opportunity we had recently to meet
and appreciate the kind remarks in your letter to = of September 4.
In that letter you also expressed your disappointment at
the Board's decision that PEFCO could not become a so-called Agree-
ment Corporation and stated the hope that mutual efforts would lead
to a satisfactory solution to the present situation.
In our Board deliberations on the PENCO matter, I fully
appreciated, along with other members, the imagination and effort
that had gone into the formulation of the PEFCO venture, and I was
keenly sware, as were my colleagues, that the troublesome issue was
not the merit of the proposed operation but the formal requirements
of the law in question. Indeed, after the Board weighed all the
argumentation that had been developed since it pronounced itself
more than a year earlier about the doubtful permissibility of or-
ganizing FEFCO as an Agreement Corporation and after it concluded
that the legal obstacles to this form of organization could not be
surmounted, it did agree that PEFCO was a proper object for invest-
ment via a different and legally permissible vehicle.
As I believe you know, talks were promptly arranged be-
tween the PEFCO representatives and Board officials, including
Covernor Brimmer, to see what might be done through changes in the
formula for bank investment in PEFCO. We have also altered our
procedures to ensure rapid action on any requests for approving
investments involving Edge Act Corporations.
R:
FORD
GERALD
LIBRARY
Mr. David Rockefeller
-2-
Our staff remains available to help search for a setis-
factory solution, and I share your hope that the efforts will be
successful.
With best wishes,
Sincerely yours,
Arthur F. Burns
BN/RS:dch
9-11-70
LIBRARY GERALD x FORD
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
September 4, 1970
The Honorable Arthur F. Burns, Chairman
Board of Governors
Federal Reserve System
20th Street & Constitution Avenue
Washington, D.C.
Dear Arthur:
As always, it was a special pleasure to meet with you last week, and
I do want to thank you for being so gracious with your time.
There was one issue which didn't come up and which was called to my
attention upon returning to the Bank this week. As you may know, we
have struggled for a good many years to develop constructive supple-
ments in the private sector to the Export-Import Bank's export financin
programs. I have thus watched with considerable interest the develop-
ment of PEFCO, and have high hopes for the contribution it can make,
once it is in operation.
It was thus with considerable disappointment that I learned of the
Board's decision to deny PEFCO's request to become an "Agreement"
Corporation for this seemed to provide a simple solution to an invest-
ment problem for smaller banks anxious to participate in the equity
of the company. While the Board's action may not ultimately prove
critical, it does have the effect of limiting equity participation to
larger banks unless some way can be devised to modify the investment
restrictions impacting the smaller banks. It seems a great pity to
close out any legitimate investor in a project of this kind SO clearly
in the national interest.
I realize your staff is just as anxious as we are to find a solution,
and needless to say, I do hope our mutual efforts will prove success-
ful.
With kind regards and best wishes.
Sincerely,
GERALD FORD LIBRARY
Dain
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Office Correspondence
Date September 11, 1970
Mr. R. Holland
To
Subject:
PEFCO - Rockefeller letter
B. Norwood
From
to Chairman Burns
ON
Here is a letter which Chairman Burns might send to
David Rockefeller in response to the latter's note on the PEFCO
issue.
My memorandum to Bob Solomon adds some comment that you
might want to draw to the Chairman's attention.
I have discussed the matter with David Hexter and Fred Dahl.
They concur in the letter (Hexter after reviewing the text, Dahl
after I gave the substance to him by 'phone). Bob Solomon has gone
over both the memorandum and the proposed letter and approves. I
also have obtained Governor Brimmer's concurrence.
Attachment: Memorandum, together with proposed
letter to David Rockefeller.
LIBRARY GERALD ? FORD
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Office Correspondence
Date September 10, 1970
To
Mr. Robert Solomon
Subject: PEFCO -- Proposed Reply by
Chairman Burns to
From
Bernard Norwood
80
David Rockefeller
Rockefeller letter
In a letter of September 4, David Rockefeller expressed
to Chairman Burns disappointment at the Board's rejection of PEFCO's
application to become an "Agreement" Corporation. Rockefeller did
not directly appeal the decision, but he did express the hope that
the mutual efforts of the Board staff and of the PEFCO organizers
will be successful.
Proposed reply
Bob Holland spoke to me about the letter and about a
possible reply -- desirably for the Chairman's consideration on
Friday, September 11. For your review, I attach a draft reply
that you may wish to pass along to the Chairman.
Additional considerations
In addition to the points included in the letter, there
are some considerations that you might want to draw to the Chairman's
attention.
Board reaffirmed previously announced position. The Board's
decision that an Agreement Corporation was not permissible under the
law did not come as a surprise. The Board examined this question over
a year earlier, and Governor Brimmer, with the Board's authorization,
announced that position in an address at the May 1969 Convention of
the Bankers Association for Foreign Trade. In its recent delibera-
tions, the Board did have a specific application before it for the
first time and did have the benefit of extensive legal memoranda from
the PEFCO people and from the Board lawyers. Although additional
argumentation was developed and although full agreement was not
reached among our own lawyers, the Board was rather clear as to which
was the preponderant legal view.
Board aware of effect of negative decision. The implica-
tions of the ultimate Board decision were brought out in the delibera-
tions. For example, the Board was informed that a negative decision
on the application would be a serious threat to PEFCO's emergence.
Some banks, especially the smaller ones, might decide not to partici-
pate and PEFCO might thereupon falter because Justice might consider
it too restrictive or because minimum capital might not be forthcoming.
FORD & LIBRARY GERALD
To: Mr. Robert Solomon
- 2 -
September 10, 1970
New Ex-Im specter. The situation of PEFCO is now even
more dismal than those observations suggested. A new factor is
the prospect that the Export-Import Bank will be "taken out of
the budget" (a bill having recently been introduced, with apparent
Administration concurrence, to do this). Some key PEFCO organizers
fear two adverse effects of this prospective change in Ex-Im's
position. First, Ex-Im will be competing in the market against
PEFCO and all others for funds. Second, Ex-Im, once in command
of new funds, will be more likely than otherwise to want to lend
directly than to defer to PEFCO and other private interests. The
prospect of this new Ex-Im threat is certain to cause some PEFCO
backers, perhaps large as well as small, to falter in their efforts
to bring that organization into operation.
Two million dollar Edge capitalization. One difficulty
posed by the need for banks to invest indirectly through Edge Corpo-
rations rather than directly in an Agreement Corporation might be
looked at as a problem of arithmetic. The small banks which now
have no Edge Act Corporations through which they might invest and
which would have to form such Corporations account for PEFCO capi-
tal subscriptions on the order of $400,000. Yet the minimum capi-
talization - required by law not merely by Board regulation -- of
a new Edge Corporation is $2 million. Even if all these banks or-
ganized collectively a single Edge Corporation, what would persuade
them to put up their share of $2 million when the sole objective
of forming an Edge Corporation is to get them to provide their
share of the $400,000 PEFCO investment?
Board-PEFCO mutual efforts. The Board staff has met
with the PEFCO representatives to explore alternative possibilities.
There seemed no profit in going over the Agreement issue again, and
thoughts were turned to techniques for direct investment by banks,
for indirect investment through Edge Act Corporations, and to pro-
viding a record the PEFCO organizers could use to show Justice they
had been sincere and assiduous in trying to avoid a situation that
might run afoul of U.S. antitrust laws and policies. One new thought
thrown out for exploration was that of the larger banks providing
funds to PEFCO additional to their presently envisaged subscriptions,
which additional funds might be lent by PEFCO to Edge Corporations
to aid them in meeting the Edge Act subscription requirements.
Another was that a small bank could put up $2 million to capitalize
an Edge Corporation (or a fraction of that amount if the Edge Corpo-
ration were formed by a group of banks) and that the Corporation
would then deposit a good part of that in an account at the share-
holder bank. There are uncertainties or drawbacks to these gimmicks.
FORD i 9ERALD LIBRARY
To: Mr. Robert Solomon
- 3 -
September 10, 1970
Further steps. We do not know whether a solution can be
found. We continue to be willing to do more brainstorming on our
own or "on a mutual basis." I am getting in touch again with several
staff members to ensure that we are making a full effort. However,
the PEFCO people, armed with the formal Board letter that had been
drafted after the Board decision and after discussion with them,
wanted to see what they could do with Justice. We will try to clarify
their plans, in the light of Rockefeller's indications of a desire
for possible further Board staff work, to see what might be desired
on their part and what might be feasible on ours.
Attachments: 1. Draft reply from Chairman Burns to David Rockefeller.
2. Letter from Rockefeller to Chairman Burns.
cc: Messrs. Holland
O'Connell
Hexter
F. Solomon
Dahl
FORD is LIBRARY 078470
552-2222
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
August 7, 1970
DAVID ROCKEFELLER Chairman of the Board
$500 is
Call
Dr. Arthur F. Burns, Chairman
Board of Governors
Federal Reserve System
20th Street & Constitution Avenue
Washington, D. C.
shur Aug.27
Dear Arthur:
I am delighted that it is possible for you to join with
some of my associates and myself on Monday, August 24.
I suggest that we meet at 6:30 p.m. at the International
Club. The Williamsburg Room has been reserved.
We would be very happy to have you by yourself. On the
other hand, should you wish to bring anyone else with you,
called
please do not hesitate to do so. In the latter event, would
you be kind enough to ask your secretary to advise my office
so that the proper number of places can be put at the table.
$12/70 cm
We are all looking forward with much pleasure to seeing you
on the 24th.
Sincerely,
(207)
FORD is LIBRARY
BR-5492
Dan It
Calley.
NW
to
196 135
May 6, 1970
Dear David:
Thank you for sending me a copy of "Labor and the American
Community." I am glad that the book is out. It was a pleasure
for me to be associated in the early stages of this enterprise,
and I look forward to the opportunity of reading -- or at least
perusing -- the book in the near future.
With warm regards,
Sincerely yours,
Arthur F. Burns
Mr. David Rockefeller
30 Rockefeller Plaza
New York, New York
AFB:ccm
FORD is GERALD LIBRARY
April 28, 1970
Dear Mr. Rockefeller:
Your letter of April 21st and the copy of "Labor
and the American Community" have been received
in Dr. Burns' absence from the office. He will
return on May 4th and I shall bring them to his
attention at that time.
Sincerely yours,
Catherine C. Mallardi
Secretary to the Chairman
Mr. David Rockefeller
30 Rockefeller Plaza
New York, New York
ccm
GERALD R. FORD LIBRABA
30 Rockefeller Plaza
New York, N.Y. 10020
Room 5600
April 21, 1970
Dear Arthur:
I am delighted to be able to send you enclosed an advance
copy of Labor and the American Community. The formal publication
date is April twenty-third, at which time the book will be available
for sale throughout the country.
It has occurred to me that since you will undoubtedly be seeing
a number of reviews discussing one or another aspect of the book, you
might be interested in having a copy of the enclosed summary prepared
by the staff of Special Studies. Although it is impossible to predict
which sections of the book will receive the greatest attention from
critics and other writers, I would call your attention to Chapters 11
and 12, "Collective Bargaining in the Public Sector" and "Frontiers
of Substantive Bargaining," pages 22-26 in the summary; and also to
the Conclusion, pages 30-34 in the summary. The conclusion not only
reflects the tenor of the preceding text, but also contains the principal
recommendations of the study.
Again, let me say how much I appreciate your participation in
the discussions held with the authors over the past three years.
With best wishes,
Sincerely,
P.
David Rockefeller
Dr. Arthur F. Burns
Chairman
Federal Reserve Board
Federal Reserve Building
Constitution Avenue and 20th Street, N.W.
Washington, D.C. 20551
LIBRATA GERALD ? FORD
J. G. Dustan
March, 1970
Summary
Labor and the American Community
by
Derek C. Bok and John T. Dunlop
The accelerating change that characterizes all sectors of
our society makes it increasingly apparent to many Americans that
the institutions that served the country well in the past are not fully
meeting the needs of the present. Many institutions must adapt to
a changing environment and perform functions that as recently as
twenty years ago were virtually unknown.
The union movement, like government, business, universities,
and other institutions, has in recent years attracted much criticism.
Those who point to grievous failures of unionism are not confined to
businessmen beset with what they regard as unreasonable demands by
union leaders. Indeed, much of the criticism comes from academicians,
civil rights leaders, and spokesmen for urban and youth groups, all of
whom see in the labor establishment many of the same defects they
find in other American institutions.
In a continuation of its policy of encouraging a knowledgeable
examination of various institutions that generate the basic policies of
our society, the Special Studies Project of the Rockefeller Brothers
FORD is LIBRARY 07V839
- 2 -
Fund asked two scholars -- John T. Dunlop, professor of economics
at Harvard University, and Derek C. Bok, dean of the Harvard Law
School -- to analyze trade unions and the collective bargaining
system in the United States. The result of their two-year examination
is Labor and the American Community.
In the belief that collective bargaining cannot be thoroughly
understood unless one also recognizes its relationship to the internal
structure of unions and the community at large, the authors divide the
volume into three sections: (1) the internal operations of unions,
(2) their bargaining relations with employers, and (3) their relations
with the local and national communities of which they are a part.
Based on the premise that unionism is an enduring institution in Western
industrial society, the authors explore and explain the tensions and
conflicts that have arisen in organized labor's multiple relationships.
Through understanding the cross-currents in which the union movement
operates, the authors believe that all those concerned with improving
the quality of unionism - -- labor leaders as well as representatives of
other institutions and the general public -- will be better equipped to
deal intelligently with the challenge facing organized labor now and
in the future.
FORD is 07V839 LIBRARY
- 3 -
Trade Unions and Public Opinion
The authors begin by examining opinions expressed over the
past thirty years about the unions and their leaders. In fact, the
perceptions, and in many cases, the misperceptions and stereotypes,
concerning unionism, are central to the entire volume. For the authors
find that to a greater extent than is generally acknowledged, labor
organizations are molded, guided, and frequently limited by the
views of the public, employers, intellectuals, and, of course, the
members themselves.
Although probably no institution in America attracts more
contradictory opinions than the union movement, four groups queried --
the general public, the business community, workers, and intellectuals --
tend to share three attitudes: namely, that unions have a legitimate
place in our society and that workers have a right to join unions and
through them, to bargain collectively to improve their wages and
working conditions. And all the above-mentioned groups, specifically
including members of unions, also agree that there should be legally
imposed limitations on unions' power, particularly in those cases in
which it causes hardship to others.
Beyond these agreements, however, sharp differences emerge
that foreshadow the dilemmas faced by unions today. The appropriate
GERALD FORD LIBRARY
- 4 -
social and political role of unions, for example, arouses sharply
differing opinions. On the one hand, businessmen feel that unions
have already amassed excessive economic power that has given them
a disproportionately strong voice in politics, and that therefore, they
should be required to reduce their activities in the political sphere.
The intellectual community, on the other hand, is critical of unions
for their lack of dedication to social reform, for paying too much
attention to negotiations at the bargaining table and too little to
matters of broader political and social concern to the whole community --
in short, for not being active enough in politics. For their part, union
members favor some political activity, but their support of political
action has declined over the past fifteen years. In any case, they
would prefer to have their leaders continue to spend most of their time
securing higher wages and bigger benefits for the membership.
For disparate reasons, the public, businessmen, and intellectuals
often are in agreement that the union member is used to further goals of
the union leader that do not necessarily harmonize with the member's
own interests. The businessman frequently assumes that the member,
if unfettered from the influence of the leader, would side with business
in labor-management conflicts. Conversely, the intellectual often feels
that the member is inherently more interested in liberal social and political
causes than the leader, whom he sees as a slave of repetitious bread-and-
butter unionism.
GERALD FORD LIBRARY
- 5 -
A Profile of the Labor Movement
Examining the quantitative dimensions of unionism, the
authors ask such questions as: How big is it? What kind of people
are union members? Where do they work ? What do they earn? To
cite only a few answers, unions today comprise 28 percent of the
nonagricultural workforce, making unionism relatively smaller in
the United States than it is in other industrial countries. One in
three male nonagricultural workers is a union member; for women, the
rate falls to one in seven. Typically, a union member earns between
$5,000 and $10,000 a year and has a high school education (but no
more). The densest clusters of union members are found in the
Northeast, on the West Coast, and in the North Central parts of the
country.
Democracy, Union Government, and the Interests of Members
Over the years, one of the most frequently voiced criticisms
of unions has reflected concern about the corrupt practices of union
leaders. Despite the reported evidence of corruption appearing in
the press, the authors find the incidence low in relation to the total
number of unions and, in fact, the incidence of corruption in unions
no higher than it is in other institutions. The authors' conclusion,
FORD & LIBRARY
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and one that is central to the book, is that union members have
undoubtedly suffered more from inefficient and unimaginative adminis-
tration than they have lost through corruption and undemocratic
procedures.
Scores of studies have focused on the subject of democracy
in unions, and many writers have taken unions to task for the paucity
of formal procedures through which members can communicate their
interests to their leaders. A review of the various formal procedures
(elections, conventions, referenda) and informal means (collective
bargaining, the grievance mechanism, political activity) through
which members can make their wishes known to their leaders indicates
that there is more opportunity for membership involvement in the
decisions of the union than is generally acknowledged by those who
look only at the formal methods of union government. It is the authors'
contention that the most important issue is the amount and nature of
democracy that is practical in order to represent the members' interests
and at the same time to give due regard to the interests of the community
at large.
The Protection of Minority Interests
Unions must be concerned with a number of minorities --
Negroes, skilled and other occupational groups, older workers,
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white-collar workers, and any other special interest group within
the union. In the case of the Negro minority, the problem for the
unions is no longer merely the elimination of discrimination, but
now one of developing policies and programs that will enable Negro
workers to overcome the effects of generations of discrimination.
Here, the AFL-CIO can play an important role by providing technical
assistance to national and local unions, by helping them recruit
minority groups and revise seniority and other promotion systems
that keep Negroes from higher-wage jobs, and by aiding in the
establishment of training programs run by unions alone or by unions
and employers together. At the level of contract negotiations, both
unions and employers will continue to have many problems to solve
in order to improve the lot of the Negro worker, and accommodations
will vary widely among different industries and even among different
companies. Unless unions make a real effort to prepare Negroes
for high-wage jobs and to promote them to positions within the union
hierarchy, new unions of low-wage Negroes will develop, and the
same kind of separatism will be created in the union movement that
threatens other areas of our life.
The Administration of Unions
FORD is LIBRARY GERALD
At a time when organizations of many types are analyzing
their procedures, it is appropriate for unions to examine their day-to-day
- 8 -
operations on the basis of accepted criteria of good administration.
The authors explore such seemingly humdrum matters as the organization
structure of unions, the precision with which they define their long-
range goals and establish orderly short-range objectives to attain them,
the extent to which budgeting is used as a managerial tool, and the
kinds of personnel policies that make the best use of existing staff
and attract competent newcomers.
With the exception of those few unions that have initiated
organizational innovations, the authors find that unions in general
do not use their organization structures and personnel as effectively
as they might. In many instances craft unions are excessively decen-
tralized, and locals develop what amounts to autonomous operations.
Conversely, many industrial unions are so centralized that local
leaders have little administrative leeway, and the incentive for
local leadership to develop is lacking. Many union organizing
programs are unplanned, and the union's inability to service and
satisfy new members within its present or an altered organization
structure can spell dissatisfied members and internal strife.
The adaptation of accepted policies of personnel administration
would, the authors believe, be an important means of helping serve
their members more effectively. For example, the fact that union
officers at all levels are elected rather than appointed poses a
FORD & GERALD LIBRARY
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problem that is exacerbated by the shrinking pool of talented or
competent workers seeking union office. Could not new apportion-
ments of elected versus appointed officers be explored, the authors
ask. To counteract the many inherent obstacles to good personnel
administration, the authors urge unions to re-examine their whole
system of incentives and rewards, many of which currently emphasize
avoidance of harmful action rather than encouragement of improved
performance. Other union practices that deserve critical scrutiny
are financial incentive systems and retirement programs -- or the
absence of them.
In education and training for leadership, unions, by and
large, lag far behind businesses and other institutions in both the
quality and quantity of their programs. Today, unions find themselves
in an increasingly complex world with staffs unequipped through
training and education to deal with the problems at hand, much less
plan imaginatively for the future. Although it is unrealistic to
advocate the introduction of wholesale changes in all union training
and education programs, the authors do suggest that a few of the
larger and more affluent unions could begin to institute innovations that
other smaller unions could then imitate, adapting pilot programs to
their own needs.
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The AFL-CIO
Although in recent years, the growth of the AFL-CIO's
influence over constituent unions has paralleled its increase in staff,
there still is much it can do to strengthen the union movement and
help to deal creatively with emerging political and social problems.
Because the Federation is removed from the daily pressures existing
in individual unions, it is in a unique position to plan and innovate,
and even to speculate in a way in which few individual unions can.
Indeed, leadership from the Federation in matters of organizing,
budgeting, planning, and education and training could have a marked
influence on member unions. Similarly, the Federation should encourage
research on a wide spectrum of subjects, ranging from pragmatic questions
of organizing, to the attitudes of younger members, the effects of increased
affluence on members, the impact of the suburban exodus, and the
relationship of some of the quasi-unions of professional people to the
union movement as a whole. In the field of administration, the AFL-CIO
could hire consultants who are knowledgeable in management and at
the same time, familiar with the special conditions of unions, to guide
member unions in their efforts to improve their administrative procedures.
It could encourage further mergers among units that are too small to
operate effectively and could give real impetus to education and
FORD & LIBRARY 03RALD
- 11 -
training by establishing a training institute for members. (Indeed,
the Federation has indicated that such a step is planned.) The
training institute should, the authors feel, set an example to
individual unions, help them to raise their performances, and
strengthen the currently weak tie between unions and universities.
FORD in LIBRARY GERALD
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Collective Bargaining in the United States: an Overview
When most people think of unions, they think first of union
and management representatives negotiating with each other, but
the collective bargaining process actually has three distinct phases:
(1) the negotiation of the contract with the employer, (2) the administration
of the contract and the handling of day-to-day grievances, and (3) joint
consultation between the union and the employer during the life of the
agreement. One or more of these functions is involved in the five major
aspects of bargaining on which the authors focus -- dispute settlement,
productivity, inflation, unionization of the public sector, and new
frontiers of collective bargaining.
Alternatives to Economic Conflict in the Private Sector
Tracing the public's attitude toward the union movement over
the years, one finds periodic valleys, times when the public is especially
critical of unions in general, which in most cases can be correlated
with strikes that have received national attention. It is the authors'
conclusion that strikes bring the union movement and the institution
of collective bargaining more adverse criticism than any other activity.
They examine the broad question of whether there is a way of preventing
these conflicts, or at least reducing those that are having an increasing
impact on our national life.
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Public concern about strikes has many bases -- the harm that
strikes may cause the innocent bystander, evidence of disregard
of laws in public employment, and the high incidence of strikes in
America as compared to other industrial societies. The authors contend
that compulsory arbitration and labor courts, frequently advocated as a
cure for strikes, are not the answer to the complex disputes that have
beset the country in recent years. Use of these methods, they believe,
would bring greater rigidity to union-employer relations, destroy the
present effectiveness of collective bargaining, and make contracts more
difficult to enforce. Alternatively, they suggest improvements in our
present system of collective bargaining that the negotiating parties
and government, separately and together, could effect.
The negotiating parties themselves could institute some
improvements. Both groups should make careful preparations in
ascertaining the interests of those they represent. National bodies
in the labor movement and business could help iron out negotiating
problems arising locally. If leaders of both groups could make greater
efforts to discourage exaggerated expectations among their constituents,
bargaining could proceed more smoothly than it does today.
Other steps to improve collective bargaining could be taken by
the parties themselves with the initiative of government. For
government could play a constructive role in the system by stimulating
FORD & LIBRARY GERALD
- 14 -
research, focusing attention on areas of greatest controversy and
concern to improve the process in these areas, helping to put together
outside groups to work with the negotiators in problem sectors, and,
possibly, creating special agencies to assist unions and employers
in resolving difficulties in industries that have been the focus of a high
degree of public concern.
It is only after these measures have been tried that the authors
suggest that additional legislation might be used to help solve disputes,
and even in these times, legislation should be used sparingly. Ad hoc
legislation might occasionally help in particular industries or disputes;
also, Congress might order no-strike-or-lockout periods where labor-
management problems persist in a particular sector. Legislative initiative
might take the form of Congressional studies of specific situations or
problems. Indeed, Congress itself might require proposals for collective
bargaining reform from labor and management in certain sectors.
Although it is by no means true that use of one or more of these
measures would guarantee the end to strikes, careful analysis of individual
disputes and possible solutions to them can, in many cases, avoid
economic conflict. Here, the authors stress the importance of defining
the nature of the dispute. Does it concern the substance of the
agreement -- wages, crew size, working conditions, incentives, and
the like? Or does it revolve around the relations between the particular
labor and management organizations involved -- the number of previously
FORD & LIBRARY 9ERALD
- 15 -
negotiated contracts, leadership problems between the two groups, and
so forth ? Or does it concern the structure of bargaining - -- the design
of the negotiations themselves, the time of the expiration dates of the
contract, relations between two or more unions bargaining with the same
management, or controversies concerning the range of plants or employees
to be included in the scope of the negotiations.
In disputes involving the substance of the contract, questions
of wages and benefits usually are amenable to arbitration. If the
substantive issues involve more complex subjects such as crew size
or incentive systems, arbitration is likely only after a long strike.
Outside study, on the other hand, may help to resolve complicated
issues. In the case of disputes concerned with internal problems between
the negotiating groups, an experienced neutral with powers of fact-
finding and recommendation may be the best means of settlement. Where
the government plays a major role in the relationships of the two parties,
its participation may help solve the conflict. When members or constit-
uents refuse to ratify agreements made by their leaders, greater efforts
by the leaders to keep their constituents or members informed about the
progress of negotiations may be useful. Similarly, a review of ratification
procedures by a union may forestall an impasse between members and
their leaders when a proposed contract is put to a vote.
FORD i LIBRARY GERALD
- 16 - -
Disputes involving the structure of bargaining have attracted
most public attention and often proved the most difficult to settle.
Indeed, these disputes may persist over many years, with accommodations
in bargaining arrangements made bit by bit through negotiations often
characterized by prolonged stoppages. There is no easy solution to such
disputes. If inter-union rivalries are involved, mergers among the unions
may be the answer. Another solution may be an agreed-upon joint nego-
tiating committee. Here, as in other cases, no solution is fool-proof,
and not every dispute can be solved by the happy choice of the right
bargaining technique.
The Impact of Collective Bargaining on Productivity
Next to strikes, probably nothing causes so much public
disapproval of unions as "featherbedding," a word that appears
frequently in discussions of the need for greater productivity through
technological innovations. The authors pose the question of the extent
to which featherbedding has reduced our industrial output and prevented
needed technological advances. The answer is by no means clear.
Numerous instances can be cited of collective bargaining agreements
that have obstructed new technology, forced management to pay for what
it considers excess labor, and slowed the introduction of technological
FORD is LIBRARY GERALD
of
- 17 -
change. On the other hand, some agreements have fostered union-
management cooperation that has increased productivity and the quality
of management.
On balance, the authors find that agreements generating uneconomic
work practices are on the decline. There are several reasons for this
trend. The introduction of new capital equipment often has provided
the occasion to review and alter previous uneconomic rules. Some
industries are so highly automated that they present few manning problems,
and even more important, modern industrial managers are increasingly
alert to the necessity of meeting work-rules issues at their early
stages before they have solidified into featherbedding practices.
Given this generally positive conclusion, the relevant question
is: How can the participants in a collective bargaining agreement prevent
further uneconomic practices from being developed in the future? On
management's side, alertness to incipient featherbedding is called for,
plus a willingness to take the initiative in proposing changes in rules
or practices to obtain greater efficiency or managerial flexibility.
Once ineffecient practices are entrenched, they are infinitely harder to
eradicate than they are to prevent. A detailed objective study of the
situation may help management convince the workers that comfortable
though their present uneconomic practices may be, to continue them
would have a long-range negative effect on the industry, and therefore
FORD & LIBRARY GERALD
- 18 - -
on their jobs. In some cases, a long strike has proved to be the only
means of getting workers to compromise and thus reach an accord with
management.
Historically, legislation has not been an effective tool in pre-
venting or eliminating inefficient practices. The authors suggest,
however, that government administrative bodies might play a useful role
in combatting featherbedding in the future. These bodies might, for
example, initiate detailed factual reports on sectors with serious
problems. Often, the issues are complicated, and seldom are they clarified
in the heat of negotiations or a strike. A second means by which govern-
ment could help prevent the development and spread of uneconomic work
practices lies in maintaining full employment. Workers' opposition
to rules changes frequently is based on a fear of losing their jobs.
Coupled with full employment, government and management should provide
training programs, relocation allowances, and better information on the
job market so that skilled workers who lose their jobs would be able to
find others of equal pay.
Collective Bargaining and Inflation
A third aspect of collective bargaining is its relationship to
the nation's economic health. In recent years, most comment in this
regard has focused on inflation. Although there appear to be nearly as
GERALD R. FORD LIBRARY
- 19 - -
many explanations of the causes of inflation as there are economists,
a good deal of popular attention has centered on recent wage settlements,
which are seen as the culprits for inflation rates of 4 and 5 percent a
year. Although the authors, along with most other economic experts,
lay the major share of the blame on government fiscal and monetary
policies, they acknowledge that collective bargaining agreements and
unionism itself can have inflationary effects on the economy.
The authors identify a few of the obvious ways in which
collective bargaining can have an inflationary effect on the economy.
As a result of collective bargaining contracts, wage decreases in periods
of business declines are disappearing. In sectors where unionism is new,
sharp wage increases are common. It should be noted, however, that
long-term contracts can exert either an inflationary or a stabilizing
effect on wages, depending on the course of the economy and the
provisions of the agreement. On the whole, long-term agreements have
been a stabilizing force and have enabled both parties to work on common
problems affecting productivity.
Apart from the effect of the actual contract itself, unions
contribute to inflation in other ways. In situations in which many unions
bargain with a company that is not well organized to resist union
pressures, one union often tries to exceed the increases obtained by
another, with an inflationary result. The demand by skilled workers for
FORD & 938470 LIBRARY
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special increases over those obtained for all the members of a union also
has an inflationary effect. Less directly, the union movement's encourage-
ment of government spending on social and economic welfare and its espousal
of expansionist monetary and fiscal policies tend to add to inflationary
pressures.
What can be done by the negotiating parties themselves and
by government to curb these inflationary tendencies? Labor and
management could, the authors suggest, work to correct inter-union
rivalries or divisions within employer groups, as both these tensions have
an inflationary effect. The government could stimulate imports or bring
other corrective pressures to bear in situations in which unions in
industries insulated from outside competition obtain unduly high wage
gains. And government could encourage both labor and management to
exercise restraint over wages and prices to the mutual long-term advantage
of both groups. Although devising a government policy that encourages
such restraint is a delicate matter, the opportunity is at hand, the
authors believe, to formulate new policies and new machinery for the
future.
On the assumption that monetary and fiscal policy provides
an economic environment conducive to high employment and stability,
FORD & GERALD LIBRARY
- 21 -
the government must develop special machinery and policies to curb
inflation. The mechanisms suggested by the authors include:
-- The establishment of a continuing body to gather
facts, issue reports, and make recommendations regarding
trouble-spots in the economy that contribute to price and
wage increases at periods of high employment.
-- A reorganization of government policies and procedures
regarding procurement of goods and construction, the
use of stockpiles, the policies of regulatory agencies,
and the like, at all levels of government.
-- Inauguration of a policy to encourage discussion
of the general problems of inflation and economic
activity on a continuing basis and to develop general
guides for private and public decisionmakers on methods
of curbing inflation.
Direct government intervention in the collective bargaining
process should be reserved for the most unusual circumstances. The
government could, however, play a vital role in the control of inflation
by the development of manpower programs to alleviate shortages of
specialized skills through programs of training, education and upgrading;
better manpower projections; and the improvement of labor market
information.
FORD : LIBRARY 938470
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To date, unions, employers, and consumers have reacted to
inflation and high employment in ways that reflect an assumption that
prosperity and high employment will be of short duration. Unions insist
on increases while the getting is good. Management raises prices in
the belief that it will not be able to during a future economic decline.
Consumers vacillate between spending high earnings and saving them
for a rainy day. With a continuation of prosperity, however, changes
may take place in attitudes and expectations that will make it some-
what easier to achieve reasonable price stability. Indeed, the speed
with which these changes occur may largely determine the capacity of
the economy to sustain precariously high employment without substantial
inflation.
Collective Bargaining and the Public Sector
Strikes, productivity, and inflation all raise grave issues in
the private sector. In the public sector they cause increasingly heated
controversy. On this latest frontier of unionism, such questions as
the right of public employees to organize and bargain collectively, the
scope of their negotiations, the impact of unionization on efficiency,
and most especially, the right of employees in the public sector to strike,
are matters of serious debate throughout the country. Although state by
state, public employees are slowly winning formal recognition of their
FORD is LIBRARY 938870
- 23 -
unions, a significant number of work stoppages at state and local levels
still arise over union recognition. Therefore, the enactment of state
legislation or city ordinances to provide an agency to resolve these issues
is essential to the orderly development of employee unions and collective
negotiations.
Once a negotiating relationship has been established, concern
shifts to the resolution of disputes over the terms of employment. Here,
the authors suggest that it is probably wise to ask the parties themselves
to design their own negotiating procedures. The government, however,
must provide a general procedure in the event the parties' methods fail.
Should direct negotiations meet with no success in resolving a dispute,
there is wide agreement that provision should be made for mediation
between the employee organization and the government unit involved.
In the case of an extended impasse or strike, however,
proposed solutions differ widely. One view contends that government
employees should be allowed to strike, except when the health or
safety of the public is threatened. A second opinion insists that if the
impasse cannot otherwise be settled, no strike of public employees
is permissable, and binding compulsory arbitration should be used to
resolve the dispute. A third view suggests that recommendations be
made by a fact-finding body, with further mediation around these
recommendations Then, if these last-named methods fail, the
FORD & GERALD LIBRARY
- 24 -
appropriate legislative body should review the dispute and enact a statute
prescribing the terms and conditions of employment. This final procedure,
in the authors' view, provides a role for both expert opinion of neutrals
and legislative judgment on questions beyond the province of the labor-
management specialist, and is consonant with the separation of functions
existing within the American governmental system.
So far, most strikes in public employment have taken place
without benefit of settlement recommendations, and similarly, there
have been few strikes growing out of legislative enactments derived
from fact-finding recommendations. There are, however, no procedures
that offer a guarantee that a strike will not take place. The significant
issue, the authors believe, is not whether there will continue to be isolated
strikes in the public sector, but rather whether the system of industrial
relations emerging in this sector is to use the strike as a means to
settle disputed wages and working conditions, or whether it is to eschew
the strike as a basic tool of decisionmaking. Certainly, avoidance of
strikes is the clear choice of public policy. Therefore, it is incumbent
on both public agencies and public-sector unions to develop staffs skilled
in negotiations and sufficiently imaginative to find new ways of devising
orderly bargaining procedures.
FORD & GERALD LIBRARY
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Frontiers of Substantive Bargaining
Are there other areas, the authors ask, in addition to wages
and benefits, to which both labor and management might fruitfully devote
their attention? Since the end of World War II, a prime topic of collective
bargaining in Western Europe, and particularly in Germany, has been the
demand of unions that they be allowed to participate with management
in the administration of the company. To date, "co-determination" has
had, at best, mixed success from the point of view of both management
and labor. Because of this record and because of special obstacles in
this country, programs to share the responsibility for managing are
unlikely to be the subject of collective bargaining negotiations in the
near future. Far more promising is the possibility that unions and employers
might work together to improve the quality of workers' jobs.
There are three avenues through which such improvements might
be made. Training and education programs established through bargaining
contracts -- programs that range from upgrading skills, to basic education,
to college courses -- would enable workers to gain new skills and better
jobs. (Moreover, higher expenditures on training are required in a full-
employment economy.) Greater self-determination for the worker is a
second area of possible improvement. In most current agreements
specifying different benefits and levels of compensation for various groups
GERALD FORD VIBRARY
- 26 - -
of workers, there is little opportunity for the individual worker to change
the mix to suit his own needs. With the use of the computer, latitude
in individual choice that once would have been impractical may now permit
the individual worker to select the benefits he wishes from the total
negotiated package. A third and more radical area of change is the nature
of work itself. Recent studies have shown that the long-term satisfaction
derived from a job involves recognition, responsibility, achievement,
variety, and interest, rather than the more superficial factors such as
wages, working conditions, and methods of supervision. Historically,
most union bargaining efforts have concentrated on the latter group of
subjects. However, assuming recent studies are correct, if unions wish
to improve the long-term satisfaction of their members, then labor leaders
must begin to think about expanding the area of bargaining into ways
in which jobs are organized and controlled. As yet, few unions or
managements have grappled with the problems presented by routine
work. Both groups have tended to seek palliatives rather than examining
the root of the problem. It is the authors' contention, however, that
unions might reap enormous rewards if they made an effort to enrich the
work experiences of their members.
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Having explored unions' internal structure and operations in
the first section and their relations with employers in the second, the
authors turn in the third and final section to other groups with which
the unions come into contact. These are the non-working part of the
members' lives and the national and local communities in which the
unions live.
Beyond Better Wages and Working Conditions
No study of the union movement would be complete without
discussion of the increasing number of benefits and services that
unions provide their members. In addition to such expected items as
pensions, health insurance, and even some recreational facilities,
individual unions have included labor-operated banks, resort spas,
apartments, retirement homes, education programs, and today, an
ever-growing variety of medical services in the non-wage benefits
they offer their members. Although devising programs that the members
use and to which they and the employers are willing to contribute is
by no means easy, an expansion of such programs might, the authors
believe, enable unions to make a fresh appeal to the unorganized
and offer current members the chance for closer involvement in the
life of the union.
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- 28 -
Labor in State and National Politics
The authors leave the economic sphere and move on to
unions' political and social activities at the national and local levels.
Beginning in the thirties, when the labor movement forged a closer
identification with the Democratic party than had existed in its
early years, it has continued, despite widespread diversity within
its ranks, to strengthen its generally liberal political stance. Labor's
political influence at the national level varies from very little in the
case of the judiciary, to fairly extensive in the case of the executive
branch of government during Democratic administrations, to a great
deal in the case of a few Senators and Congressmen. In most
instances of legislative lobbying, however, opposing organizations
exert a countervailing pressure. Thus, union influence is unlikely
to be dominant.
Labor Unions and the City
At the local level, unions' activities in the community outside
the political sphere frequently have more impact than do their efforts
to campaign for particular candidates or get out the vote of their
members. Some 75,000 union representatives serve on the boards of
community health and welfare agencies, and there are a number of
FORD is 938470 LIBRARY
instances of union participation in government-sponsored training
- 29 -
programs for the poor. However, union efforts to organize the poor
into locals based on residence rather than jobs have met with more
frustrations than success, and so far, the traditional union structure
has not proved easily adaptable to this new field of community
endeavor. A major determinant of the success of community projects
is the quality of the local community leadership, and since it is
difficult for a union or any other organization to produce a charismatic
leader -- particularly from a community with which the union may
have few close ties - lack of leadership will continue to be a large
obstacle to effective union organization at the community level.
Can unions do more than they are at present to confront urban
problems? Such an effort clearly is needed both by the community and
by the unions themselves, whose long-run health depends to some
extent on deeper involvement in the community. A successful liaison
with community groups would help unions recruit low-income workers --
often from minority groups -- and would enhance unions' political
influence in urban areas. If the union movement continues to operate
outside these groups, it will increasingly isolate itself from forces of
growing change and power in the community.
To help solve some of the manifold problems besetting our
communities, the authors contend that the AFL-CIO must become a
source of new programs and ideas. The effort will call for greater
FORD & LIBRARY
- 30 -
resources devoted to community affairs on the part of the Federation,
and at the same time, greater influence over the community programs
of constituent unions. At the local level too, unions must try to
become centers of new ideas by developing capacities to identify
emerging community needs and to assist in creating new programs to
meet these needs. Perhaps labor's greatest contribution to community
efforts should be in getting jobs for the hard-core unemployed and
developing training programs for them. Also, unions could use their
staff officials to help organize groups of the disadvantaged with a
view to identifying and developing individuals with leadership ability.
In some cases, union pension funds might be used to help meet
community problems by, for example, investing in mortgages for
low-income or aged groups.
There are, the authors conclude, many obstacles to these
community actions, but unions at all levels must realize that involve-
ment in the community will, in the long run, considerably strengthen the
union movement.
Conclusion
In the face of the many criticisms, the authors believe it is
important to review the manifold accomplishments of unions. First,
their very existence has helped to gain general acceptance for rates
FORD i LIBRARY GERALD
- 31 -
of pay and working conditions that prevail, even in unorganized plants.
Second, unions have been instrumental in fashioning the form of compen-
sation in putting a major portion of their members' earnings into health
and welfare benefits, old-age pensions, and unemployment and severance
compensation. Perhaps the greatest contribution of unions has been
obtaining fairer treatment for their members at the workplace and virtually
eliminating error, malice, favoritism, and other human failings of super-
visors in the dismissal, discipline, promotion, and preferment of workers.
Fourth, unions are the strongest institution for representing politically
both their members and many unorganized workers. One has only to
compare the legislative accomplishments of well-organized groups such as
veterans and the unorganized draftee to realize the value of effective
organization to gain political, economic, and social goals. In fact, the
AFL-CIO has been the major political force seeking to extend laws to
cover currently unorganized and low-paid groups.
Despite these accomplishments, unions face many and growing
challenges. They are confronted with a continuing threat of controls to
curb inflationary wage increases and prevent disruptive strikes. They
must try to maintain and even increase their importance in the eyes of
their members, many of whom did not experience the Depression and the
early struggle of the union movement. They must come to terms with the
pervasive problem of race, exercising leadership in the workplace and
the community. Also, they need to develop greater respect for unions
in the society as a whole.
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Because the structure of the American union movement is
so decentralized and dispersed, the leaders of the AFL-CIO, the
heads of the international unions, government officials, and represent-
atives of universities and foundations must all work toward meeting
these challenges. The authors suggest that for unions, such
seemingly mundane steps as better staff training, a new emphasis
on research and improved administration, and more imaginative,
more carefully planned, community programs will be important steps.
For union leaders, even these efforts will demand greater flexibility
of mind, less sensitivity to constructive criticism, a willingness
to reach out to universities, and an attempt to overcome old dogmas
and old prejudices toward intellectuals.
Government's role in helping the union movement serve its
members and society more effectively might lie in the area of the
development of labor market policies -- the amalgam of programs
that seek to train the labor force for new jobs, facilitate the movement
of workers from one area to another, and give economic security to
those who are displaced from one job and searching for another. More
informally, government can encourage union leaders to meet with
public and employer representatives to consider long-range issues
of importance to all parties. A third area in which government assist-
ance would be of value would be that of subsidies. Much could be
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done, for example, to provide research that would help unions
overcome troublesome problems or develop new areas for constructive
action. Another might involve training programs for leaders and staff.
Universities and colleges too could play a role in helping unions
with education and training. Today, there is little communication
between the union movement and the academic community. To remedy
the situation, the authors recommend that organized labor take the
initiative in seeking methods of cooperation and points of contact
within higher education that can offer to unions the same kind of use-
ful interchange that has benefited business, government, and charitable
institutions in this country. In a similar vein, the authors urge
foundations to play a role in helping to finance union programs in the
community, new services for members, and better-conceived and
broader research.
The need for building bridges to other institutions underscores
the special isolation of the union movement in American society. It
is not an ideological separation, but rather a more tangible estrangement
from universities and foundations, from government (as evidenced by
the paucity of union officials in high government positions), and
even from business itself, with the exception of bargaining and
grievance confrontations. If unions fail to bridge the gap with other
elements of society, if they find themselves in the position of being
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taken more and more for granted by their members, they will become
largely ignored in the major developments of society and rather widely
disliked as a necessary evil.
Today, more than anything else, the union movement suffers
from isolation from the main streams of thought and social change,
an isolation that is dangerous for the institution of unionism and for
society as a whole. This study attempts to show some of the ways in
which this isolation can be overcome. Indeed, the study itself is a
first step in this direction.
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