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Mr. PUTNAM. He found some of my staff gathered with me, discussing the same thing.

Mr. ARNALL. So, Mr. Putnam did not go to the conference the next day, nor did Mr. Feinsinger, so the press conference was called off.

I then went over to see Mr. Wilson, and I said, "Charley, I cannot go along with any such proposal as that, because in my judgment, it is not right. We have got to maintain the standards."

And Charley said, "Well, the President has told me to do this, and I am going to do it."

And he said, "When the President gets back here, I want you to talk to him and I want Putnam to talk to him, and you will find that is what he wants. He does not want any strike or any trouble. He wants peace, and tranquillity. He says he has enough troubles and he does not want this trouble."

So, the next day, the President got back and Mr. Putnam called for an appointment. I was not going to call him.

Mr. PUTNAM. I called before that, in fact.

Mr. ARNALL. And Mr. Putnam invited me to go. We got over there early and I told Mr. Putnam, as I recall it, "Roger, we ought to have Mr. Wilson here, so that there won't be any misunderstanding and everybody will understand each other."

So I think Mr. Putnam suggested that the President call Mr. Wilson to come over. So Mr. Wilson came over.

Mr. PUTNAM. That arrangement was made before we saw the President. We did not have any private words with the President before Mr. Wilson was called.

Mr. ARNALL. And we had a conference.

Now, it developed from that conference that there had been a misunderstanding. As a result of that misunderstanding

Senator ROBERTSON. Was it a friendly conference or a mean, nasty conference?

Mr. ARNALL. Oh, it was a pleasant conference, Senator.
Senator CAPEHART. What was the misunderstanding?

Mr. ARNALL. Well, that the steel people were not going to get a commensurate price increase unless they could show they were entitled. to it.

Senator ROBERTSON. Who told Drew Pearson what happened?
Mr. PUTNAM. Whoever told him didn't tell the truth.

Senator ROBERTSON. He said it was a mean, nasty conference and that you cussed Charles Wilson out.

Mr. PUTNAM. Pearson wasn't there. That is all I can say.

Mr. ARNALL. Now Senator, I don't verify that report. I do verify it was a very congenial, pleasant conference. It developed there had been a misunderstanding and when we left there it was very obvious to me that Mr. Wilson was going to resign because he felt that there had been a misunderstanding.

Senator CAPEHART. Misunderstanding with whom?

Mr. ARNALL. Well, with everybody. Well, certainly the misunderstanding was as to whether or not he was going to grant a price increase to the steel people commensurate with the wage increase, without regard to whether they were entitled to it under the standards.

Senator CAPEHART. I thought you said Mr. Wilson visited the President at Key West and came back and said the President wanted him to settle the matter on the basis of wage increase and price increase.

Mr. ARNALL. No; he said that he was going to settle it and that the President didn't want any controversy. He was having enough trouble and he didn't want any commotion about the steel mills.

Of course, I realized he was having trouble and I didn't want to cause any commotion about it if I could avoid it. On the other hand, I could not agree and do not now agree to giving the steel people a price increase unless they are entitled to it under the law and under our standards.

In any event, Mr. Wilson then resigned. Mr. Putnam asked him not to, I asked him not to, Mr. Feinsinger asked him not to, but he resigned.

Now, I had to get that in about the price business because it was part of it.

Mr. FEINSINGER. I think the record should be corrected, Senator. You made a reference to a statement by Charlie Wilson about having the rug pulled out from under him. You used that in relation to wages. Charlie never made any such claim on wages. He was never surprised, at any time.

Senator FREAR. You say Charles Wilson was never surprised at the recommendation of the Wage Stabilization Board, on increased wages? Mr. FEINSINGER. That is right.

Senator FREAR. One more question, and this should be easy to answer, at least: Did both the industry and labor unions submit, or agree to the submission of the question of the union shop to the Wage Stabilization Board?

Mr. FEINSINGER. Yes, they submitted their evidence on it, just like every other issue. Nobody has ever challenged the jurisdiction of the Board. The industry never challenged the jurisdiction of the Board to recommend the union shop. Our industry members of the Board have never challenged the jurisdiction. They just disagree with the wisdom of doing it.

Senator FREAR. Referring to your pamphlet here, at the bottom of that page, the industry members "are unanimous that whatever may be the merits of the union shop, with regard to labor-management relations, they could be realized only after the parties to the contract enter into them of their own free choice without the pressure of Government intervention."

I would say the Wage Stabilization Board was a part of Government intervention.

Mr. FEINSINGER. That is correct, Senator, but we left it to the parties to agree or disagree on it.

Senator FREAR. Now, the union, if I remember, felt exactly opposite that you should go ahead and talk about it.

Mr. FEINSINGER. They wanted us to recommend a full union shop right then and there.

Senator FREAR. Will you permit me one more question?

Mr. Arnall, do you know what happened at Key West between the President and Mr. Wilson?

Mr. ARNALL. No, sir.

The CHAIRMAN. Senator Douglas.

Senator DOUGLAS. I would like to straighten out these cost increases prior to July 26, 1951, which you said under the Capehart formula would give the industry an increase of something less than $3. Would that include the wage increases in the December 1950 agreement?

My question was about the increases in cost to the steel industry prior to July 26, 1951, which Governor Arnall said entitled the steel industry to an increase of approximately $3 a ton and I wanted to know if that included the wage increase the workers received in December 1950?

Mr. ARNALL. The answer to the question is that it does so include it. Senator DOUGLAS. The increases of costs and raw materials up to that date.

Mr. ARNALL. Up to July 26, 1951.

Senator DOUGLAS. In the statement of the steel industry that they are entitled to a $12 increase, do they include that $3 increase in the $12?

Mr. ARNALL. Yes, sir.

Senator DOUGLAS. So this $12 is made up of a claim of $3 under the Capehart formula and approximately $6 alleged claims if the recommendations of the Wage Stabilization Board go through? Mr. ARNALL. Yes.

In my talk with Mr. Fairless, I asked him if the steel corporations should or would absorb some of the cost increase. He said "Yes." So there was never any disposition on his part not to absorb part of the cost increase.

Where you run into trouble is not in his stating that he will absorb it or in agreeing on the principle, but the issue comes when you get into figures, you see, as to whether the figures show they are absorbing or not absorbing.

Mr. PUTNAM. Everybody admits the total package as of next January will cost about $6 a ton in added labor cost, but they also say there is a $6 material cost that they have to allow for. They haven't yet asked for the Capehart increase which will amount to close to $3. We say it is not historically true that a $6 material cost increase would follow. If it should it would not be in the immediate future. It wasn't true under price control during the last war. We say that when the $6 material cost develops, if it should, we will be glad to look at the figures at that time.

Senator CAPEHART. How much are you prepared to allow the steel. industry as an increase.

Mr. ARNALL. We are ready to give them the Capehart amendment and such other price increases as they are entitled to under our standards. But when we apply those standards to the steel companies, we find that they are not entitled to any additional price. increase.

The CHAIRMAN. Now, Senator Douglas says it is agreeable with him so we will recess until 2:30 and Senator Douglas will be first; Senator Moody, second; and Senator Benton, third. Then we will come back to Senator Capehart who has some questions. Would 3 o'clock suit you gentlemen?

Mr. PUTNAM. The President's Mobilization Advisory Board is meeting this afternoon to discuss steel, and they asked me to be there at 2 o'clock. I think most of your questions are directed primarily at Governor Arnall and Dr. Feinsinger, and I hope it will be all right if I go to that.

The CHAIRMAN. What is the wish of the committee?
Senator BENTON. How long will your meeting take?

96315-52-pt. 4- -4

Mr. PUTNAM. They are going to meet at 2 and the President is to join them at 3. I can't tell you exactly, Senator.

The CHAIRMAN. I don't think the committee would desire to keep you from the President's conference.

Mr. PUTNAM. I thought if we continued here until 1 p. m., I could be through.

The CHAIRMAN. There are a good many questions to be asked. Senator CAPEHART. Could I ask unanimous consent to ask him just one question.

Mr. PUTNAM. I don't want to duck questions, at all.

The CHAIRMAN. Without objection, any Senator here who desires to ask a specific question of Mr. Putnam may do so and then we will recess until 2:30 at which time we will take up the question of what we are going to do, including housing legislation. Senator Douglas will be first, Senator Benton will be second and Senator Moody, third, and then the others will come back again.

Senator ROBERTSON. Is it understood that until we can say that this record is in correct form and have it printed, nobody is going to discuss the testimony?

The CHAIRMAN. I am not going to do it, that is the understanding. Senator MOODY. Providing the testimony is given out at the earliest possible moment.

The CHAIRMAN. Well, we will have it printed tonight. It will be here in the morning.

Could you send down these things to be put in the record by night? It has to go to the Printing Office by 12 o'clock.

By the way, the meeting this afternoon will be in room F-39 in the Capitol.

Senator CAPEHART. I hold in my hand a chart that says "Changes in average hourly earnings, Korea (June 1950), to December 1951. Source, United States Bureau of Labor Statistics."

That shows that the electrical machine workers have had a 20.3cents-an-hour increase; automobiles, 19.9; meat packing, 24.4; rubber products, 22; and steel, 20.9. You will note that they are all about even, with meat packing ahead and rubber products a little ahead, and auto 1 cent behind steel.

It also shows that if you give this proposed recommended increase, which it says here is $0.25 per hour, that it brings steel up to 45.9. That is since June 1950.

Now, my question is, Is that the truth?

Mr. PUTNAM. We want to make sure we are talking about figures that mean the same thing. Those are average hourly earnings which include overtime. If an industry is working on short time, it looks very low.

If it is overtime, it looks very high. They are quite different from wage rates. They are not the same thing as wage rates, at all. Senator CAPEHART. The source is United States Bureau of Labor Statistics. It shows the electrical machine workers have had a 20.4 increase; automobiles, 19.9; meat packing, 24.4; rubber products, 22; and steel, 20.9.

Now, my question is, if that is a true statement of the facts, then steel, rubber products, meat packing, automobiles and electrical machinery have had the same increase in hourly wages since June 1950.

Senator DOUGLAS. Mr. Putnam made the answer on that. The distinction that you have is between wage rates and earnings.

Mr. PUTNAM. They are quite different.

Senator DOUGLAS. If you have eight additional overtime hours at time and a half, that produces 8 bonus hours of pay so, on a 40-hour week, you get a 10-percent increase in hourly earnings although the hourly rates remain unchanged.

Senator MOODY. I would like to point out that Mr. Putnam has read Senator Douglas' book but Senator Capehart has not read Senator Douglas' book.

Senator CAPEHART. I don't know whether that is true; I don't know whether these facts are true.

Mr. PUTNAM. I do not doubt their accuracy, but they are not wage rates.

Senator CAPEHART. These are the facts in the steel controversy. Now, they show--and I shall not read it again-but they show that since June 1950, the hourly wage earnings have been about the same for all these industries and if you award the steelworkers this 20 cents an hour, you take them up to 45.9 cents, which will make them, on an average, 23 cents higher than the others. Now, what is wrong with that chart?

Mr. PUTNAM. What's wrong with that chart is that it doesn't show wage rates at all. It shows the average hourly earnings, which may mean that some industries have been working overtime and show higher earnings; some may have been working on a short workweek. It is not a reflection of actual wage rates.

I think my chart on wage rates is a much better one-the one which was up there and which you saw.

Senator CAPEHART. It certainly demonstrates take-home pay; does it not?

Mr. FEINSINGER. Surely it does, but if we did business on the basis of take-home pay you would be in trouble if you were trying to protect against inflation. If the steel industry should go down to a 40-hour week in a couple of weeks, we would have to give them a terrific wage increase.

Senator CAPEHART. How much hourly-wage increase have the auto workers had since June 1950?

Mr. PUTNAM. It is easier to see it on the chart. (See p. 1972.) Here is General Motors increase today, since 1950 [indicating]. This line is General Motors-the top there with an escalator clause. As of today, the amount of their increases since January 1950, including fringes, is almost 41 cents. Here is where General Motors will be in May when they get 4 cents more, and if the cost of living should go up they would be still higher.

Here is the maximum of the steel increase next January which is at about 42 or 43 cents, including everything since January 1950, the base date for our wage stabilization regulations.

Senator CAPEHART. The automobile companies had a 15- to 16-centan-hour increase since December 1950.

Mr. PUTNAM. It was the first of December 1950.

Senator CAPEHART. Well

Mr. FEINSINGER. It is a base period of January.

Since the base period of January 1950, General Motors had a total increase including the decrease that they took once because of a de

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