Now we had the same problem in World War II. In that labormanagement conference, industry wanted to maintain the status quo. If you had a closed shop you kept it and if you had an open shop you kept it. Labor wanted a closed shop.

When the Board was set up it was told to see what it could do. It had limitation on its jurisdiction. They worked out this "maintenance of membership" thing which industry bitterly resented at the time and which they have since voluntarily renewed in their contracts and when you asked them "How does it work?", they say it works fine.

Now here we are in exactly the same position. The labor boys want the full union shop in every case, industry taking this position, "Leave it to collective bargaining."

What we did was this: We tried to get our industry friends on our Board to go along with us to send the thing back to collective bargaining. They were willing to do it provided that if they could not settle it, we would wash our hands of it. We felt we could not do that, under our oath of office, under Executive Order 10233. We felt we should send it back but if they could not settle it, bring it back to the Board and we would see what we could work out, just as the Board in World War II worked out this maintenance of membership.

We could not get labor or industry to support us on the thing. So we had to answer this question to ourselves: Are we going to say now that we will never recommend the kind of a union shop that Congress itself has endorsed; that Senator Taft has described as a just and reasonable sort of thing. The kind of a union shop that 60 percent of the contracts negotiated in 1951 include. General Motors has negotiated one. Allis-Chalmers has negotiated one. Half of our industry members have negotiated it in their own shops. What would you have done in our position? I have simply tried to point out to you (a) we did not circumvent the Constitution, (b) we did not circumvent the statute, (c) we did our job under the Executive order which we were appointed as we saw it.

Now you may disagree with me. Lots of people do.

Senator ROBERTSON. My disagreement is just as honest as your agreement, but I will ask you this. You have brought it up to this point. What is the answer now?

Mr. FEINSINGER. The answer now I think is in your laps, gentlemen, and in the lap of the President. He is operating within the sphere of authority delegated by you.

I want to point out what is going to happen, what problems you face if you just wipe out this Board or wipe out its dispute jurisdiction. The CHAIRMAN. Senator Schoeppel.

Senator SCHOEPPEL. I will only ask three questions: If dispute hearings by the WSB are the means by which wage regulations are exceeded and I firmly feel that they will be-and a national emergency strike threat is a requisite to the Presidential referral to WSB, are you not encouraging a multitude of national emergency strike threats? I would like to hear your opinion on that.

Mr. FEINSINGER. I will be glad to answer that question if I can, sir. Sometimes it is one side that wants its case to go to the umpire. Sometimes it is the other side.

The real question is, What are you going to do when you have a strike affecting the defense effort and bargaining has failed and conciliation has failed, and you cannot get an injunction?

In most of our cases you could not get a Taft-Hartley injunction because they only involve a single plant. Whereas to get a TaftHartley injunction the dispute must involve an entire industry or a substantial part thereof.

I can give you a list of my cases to illustrate my point.
(The lists referred to will be found in the appendix, p. 2344.

Mr. FEINSINGER. What are you going to do in those cases? Are you going to let them strike? You have no other machinery, sir, that Congress or anybody else has provided to take care of those disputes. In peacetime we let them run their course.

If you want to let them run their course now, fine. That is up to you. I think it would be a mistake. But if you do not, you have to provide machinery to handle them. You do not have any now. The National Labor Relations Board cannot handle them under Taft-Hartley because all they can handle are disputes over unfair labor practices and representation cases. They do not deal with disputes on what goes into the contract. That is the kind of dispute we have. In most of the cases you cannot get a Taft-Hartley injunction. What are you going to do with them?

You have told the President what you thought he ought to do in title V. You said:

Mr. President, you go ahead and call a labor-management public conference and when that is over, you set up an agency, any agency you choose, to settle labor disputes.

You did not say, "But not including union-shop disputes."

You were on the right track, I believe. And if you want that, I am sure you can persuade the President to do it, but that would give either this Board or some other board much wider jurisdiction than our little Board has. We have a puny jurisdiction. We cannot act until Conciliation has certified that they have failed and until the Defense Department certifies that the country cannot afford that strike. All we can do is to make recommendations.

If you want the broader thing, if you want the President to go ahead under title V, under the existing statute, I am sure you will not have any difficulty persuading him to move.

Senator SCHOEPPEL. I would like to ask this question: As long as the unions expect favorable consideration by your Board; I personally feel that is the case you may disagree with me the feeling of everything to gain and nothing to lose from WSB, I would like to ask you now how can you expect good faith collective bargaining or anything else but national emergency strike threats?

Mr. FEINSINGER. All right, sir. In the first place we have had only 12 cases referred by the President. The latest illustration of the case where the parties settled in collective bargaining is the telephone settlement, and by the way, the Bell Telephone Co. settled with its workers for much more than we recommended for the steel workers. Now in the second place let me set the record straight: If you check to see in which cases the union wanted their case to come to the Board, you will be surprised.

In the Douglas Aircraft case it was the company. The union resisted very vigorously.

In the Borg-Warner case-Senator Moody, I think you may know the history of that-the union fought against having the case referred to the Board. They had an all-night session before they agreed to go along with the Board's handling of the case. In the executive committee the vote was only four to three, and so on down the line.

We have 15 cases or better in which the companies and the union have joined voluntarily in submitting the case to us for our recommendations or decisions. If they thought we were partial or biased, I doubt very much whether they would have done it. So there are two things I would like to point out. First, that the record shows that in many of the cases, the union has resisted. They wanted to strike. They did not want a Government agency to ask them to stay at work. Secondly, we have had more cases voluntarily submitted to us by the parties because they had confidence in the tripartite system-even the nasty public members of the Board-than the President has referred to us.

The CHAIRMAN. Senator Sparkman---

Senator SPARKMAN. Mr. Chairman, I am not going to ask any questions. It seems to me that regardless of the legality of this thing I realize that you have a very hard job; all of you have. But it seems to me that the one who is forgotten in this thing is the great public that is being caught in the squeeze.

It seems to me that something went wrong in the manner in which this matter was handled.

Mr. Putnam says there was coordination. Apparently there was not sufficient coordination. It may be a weakness in the law or in the set-up, I do not know what, but something, it seems to me, ought to be done so that the person who has to buy the articles that are manufactured is not going to be caught in the lurch.

It seems to me we have almost reached an impasse in that the recommendation has been made for the wage boost. Steel says they cannot give the wage boost without boosting the prices. We know if the prices are boosted appreciably, the line is broken and we are off on another spiral.

It seems to me that there could have been closer coordination that would have withheld those recommendations until some kind of a formula could have been worked out.

I will even go further than that. It seems to me that even before the case was handled there should have been a very definite formula established, as was done during World War II. In World War II you had a formula to work under.

Mr. FEINSINGER. We have a formula now. The cost of living. SENATOR SPARKMAN. Wait a minuite. Wait a minute. Where? On wages? But how about over here in price stabilization?

Mr. ARNALL. I have a wonderful formula and I want to tell you about it.

Senator SPARKMAN. That is what I am talking about, you have two formulas and they are not coordinated.

In World War II we had a formula that went across the board. Now, why hasn't somebody worked out a similar formula this time so that the two would work together.

Mr. ARNALL. Senator, when we get into that, I want to demonstrate to you that we have exactly what you are talking about. Senator SPARKMAN. Who has?

Mr. ARNALL. This whole set-up. All of us.

Senator SPARKMAN. Why didn't it work in this case?

Mr. ARNALL. It will work, if you will let us show you the facts. When you see it, it will work.

Mr. PUTNAM. May I just walk over here to thec hart (p. 1972) for one second?

These white extensions are the fringe benefits and the black the cash payments. They are wage increases given since January 1, 1950. You can see from January to June the period before Korea there was very little change. Then you had this upsurge.

I want to show in the first place how steel-that is steel, the black line here this is the recommendation for steel-how all these others are very much higher and here, for instance, is International Harvester, which I am bringing out as a particular example. There is where International Harvester will be in May.

All those companies have received only the price increases that come according to our rules.

Senator ROBERTSON. Maybe that is true, but is it not a fact that if you put into effect this new Wage Stabilization Board recommendation for steel they will then be the highest paid industrial workers in the Nation?

Mr. PUTNAM. No, sir; not nearly. Look at the others that are much higher. It has not been nearly so. All of those have had no more increase than in our regular formulas. Take the top one of all, International Harvester.

Senator SPARKMAN. Mr. Putnam, I go along with you on that, and I think, perhaps, from the figures that I have seen that a case has been made out, but that relates only to the increase of wages. We saw in 1946 and we saw in 1948 and we saw in 1950, when wages were increased in coal and steel, prices went up and wages and everything else went up, and it seems to me that inevitably we are going to see the same thing again unless we balance off.

You have shown us the wage increase. Now, I wish Governor Arnall would show us how the price increase is balanced against that. It seems to me it is inevitable.

Mr. PUTNAM. Before I turn it over to him, may I say just one thing?

Senator SPARKMAN. All right.

Mr. PUTNAM. It is simply as I said earlier, I make the broad policies. He carries them out in the details, and Dr. Feinsinger and I work out the broad policies on wages.

Now, Governor Arnall carries out the price policies and he can go on from there and explain the price situation. We have fair standards on both sides. They are not the same standards because they deal with entirely different things.

The CHAIRMAN. Mr. Arnall.

Mr. ARNALL. Mr. Chairman and members of the committee, I want to talk just for a minute, if you will permit me to, so I can point out what we have been reaching for here.

I would like for you at the outset to forget about this wage business. Let's just forget completely about it and let me talk to you about some of my problems. Let's forget about Mr. Putnam, the stabilizer.

Now, we, over in our shop, operate under your law and we are going to continue to do it. Whenever you tell me what to do I am going to do it gladly.

Now, under the Defense Production Act, we have these positive provisions of the law with reference to price increases:

First, we have the Capehart amendment, so-called, and that has absolutely nothing in the world to do with this wage dispute. The steel companies are entitled to whatever they are entitled to under Capehart as a matter of law, with no reference to the wage dispute. Senator ROBERTSON. They have not asked for any increase. How are you going to give it after July 26?

Mr. ARNALL. We cannot give it until they ask for it.

Senator ROBERTSON. How can they ask for it after July 26?

Mr. ARNALL. That is when they would be eligible to ask for it, Senator. They would not be eligible until July 26 because it takes care of the increased costs from Korea until July 26, 1951.

Now, let me point this out to you: There are between 300,000 and 400,000 manufacturing companies in America, and only a very small percentage of them have asked for Capehart increases. But let us forget Capehart for a minute.

The second provision of the law that you gave me is that our ceiling prices shall be "generally fair and equitable.'

Now, acting under the clear-cut mandate of the Congress, we have provided standards. The standard under which we operate which is relevant to this case is called the Industry Earnings Standard. It was promulgated last April a year ago, by Mr. Eric Johnston, who was then Economic Stabilizer. Mr. Putnam has confirmed and approved that standard.

Mr. PUTNAM. After much searching for a better one.

Mr. ARNALL. My predecessor, Mike DiSalle, thought well of that standard and I feel so good about it that I bow down to it every morning when I come in because it is the only protection the public has.

The standard is modeled very much after the standard in the excess profits tax law. We take the 4 years, 1946, 1947, 1948, and 1949. We tell any industry, "You can take the best 3 of those 4 years and if, after your cost increase, your wage increase, or any other business cost you have, you fall below 85 percent of your average earnings for the best 3 of the 4 years in that base period, then we will give you a price increase to restore that level of earnings."

Senator ROBERTSON. "If you are losing money"?

Mr. ARNALL. No, no, no, no. Let me again say this.

We guarantee under our Earnings Standard that they will make at least 85 percent of what they made in the three best pre-Korean normal years.

Now, that is a standard that applies to all American business. It is modeled, again I tell you gentlemen, very closely upon your excess profits tax formula.

Now then, whenever an industry comes over to our shop, whether they have had a material cost increase, supply cost increase, labor cost increase whatever it is-we apply that yardstick to that