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Senator DIRKSEN. That is on the basis that you get a price increase, of course.
Mr. MOREELL, A commensurate price increase; a compensating price increase; yes, sir.
Now, I would like to qualify that answer, Senator. I would say that with the prospect that the problem will ultimately be put into the hands of Congress there would be a great incentive for both the companies and the union to settle this controversy under the mechanism of the Taft-Hartley Act.
Senator DIRKSEN. If they had agreed finally and put into effect a union shop as the Wage Stabilization Board recommends, is it your estimation that that gives the wage forces a recommendation not too acceptable in some lines of industry?
Mr. MOREELL. I do. I think the imposition of the union shop or the closed shop on industry by force of government is an iniquitous thing:
Senator Dirksen. Do you think the public members of the Board were biased.
Mr. MOREELL. I would have to refer to my conversations with Mr. Bane who was an industry member of the steel panel and who made a statement to me that in his opinion the public members of the Wage Stabilization Board were biased. That statement was later published in the papers.
Senator DIRKSEN. A statement that was inserted in the hearings when Mr. Wilson was before us, by Senator Capehart, coming from Hill & Knowlton in Washington, D. C., and attributing that to a conversation with Mr. Bane said:
No industry member of the Board or the panel had ever heard of this proposal Meaning the wage increase.
In spite of that, the wage recommendation, like all the others in the case. was approved at once, without discussion, by the votes of the public and labor members of the Board. The statement said that the industry members and 1 hour's notice of wage recommendations. Insofar as you know, is that a statement of fact?
Mr. MCREELL. That is a statement Mr. Bane made to me; yes, sir. Senator Dirksen. There has been various testimony on the cost of this package to the industry. What is your answer to it?
Mr. MOREELL. The ultimate cost, Senator, after the increase of January 1, 1953, and the 11/4 times for Sunday would be 30 cents an hour.
Senator DIRKSEN. Is there any reason why the research group, with the union, could not have figured the cost of this increase per hour!
Mr. MOREELL. There is no reason why it could not have been figured.
Senator DIRKSEN. We did not get any definite answer to it and I wondered if there was any particular reason why they, with their competence and background, could not figure it. There was no conclusive figure on the subject.
Mr. MOREELL. It could have been figured.
Senator DIRKSEN. Was there anywhere along the line in this discussion and controversy where the companies actually demanded $12 a ton?
Mr. MOREELL. No, sir; we never demanded $12 a ton. I am sure of that.
Senator DIRKSEN. What would be the losses of the industry if this continued, or what are its losses up to the present time in a general way?
What are the losses, ascertained losses and damage?
Mr. MOREELL. As I stated before, Senator, we lost approximatelyby “we” I mean the industry-approximately 900,000 tons of steel just in cooling off and heating up again or getting back into production.
Senator DIRKSEN. So it does constitute a loss to the industry?
Senator DIRKSEN. How do you expect to recapture that loss unless you are privileged to go into the Court of Claims?
Mr. NOREELL. Of course, that loss was started before we were seized. We began to cool off about 3 days before the seizure so that whether or not the loss can be attributed to the seizure is a matter that would have to be decided by the lawyers.
Senator DIRKSEN. Is there any reason why the industry and the union cannot sit down in good faith and bargain collectively and settle this matter, in your judgment !
Mr. MOREELL. I think if Government got out of it it would be fine and there would be no reason.
Senator DIRKSEN. What is the present supply of steel in the hands of fabricators, warehouses, and producers and is the supply so short that there is substance to this rather general allegation made that the defense program is being critically impaired and endangered?
Mr. MOREELL. Well, there has been a good deal of talk about that, Senator. We find that the supply of steel is not easy, but at the same time there has been no difficulty on the part of anyone who is doing defense work in getting all the steel that they need.
Senator DIRKSEN. That is all, Mr. Chairman.
Senator FULBRIGHT. Mr. Elliott, I wanted to make it clear about the request a moment ago regarding the basis for estimating these costs, this material to be put in. We would particularly like to know how you estimated the cost of paid holidays and the Sunday and Saturday requests, and we would like it for a representative period.
The reason I am saying this is that Mr. Brubaker the other day said that they had no figures by which they could figure what this would cost. That was only within the knowledge of the companies. It is a point in controversy and we want the basis by which you figure it.
Mr. ELLIOTT. We can definitely give it to you for our companies.
Senator FULBRIGHT. We would like it for a representative period for purposes of comparison. If you could say 1947 and 1948 and maybe 1950. What we are trying to get at are some basic facts here on these points upon which differences of opinion have arisen.
For example, they questioned the estimate of the cost of their original total demands. They said they were grossly overstated by the companies, so we would like to bring to issue, if we can, those differences. We would also like your estimates on the cost and the allocation of the cost of this recommendation of the Wage Stabilization Board, for your company. We expect, of course, to ask the same of Mr. Stephens, but we would like in the record that information for purposes of study and comparison so if possible we can get at what the real difference of opinion was. Not only for the industry but at least for some representative companies.
Mr. MOREELL. Very well, sir.
Mr. STEPHENS. I understand, Mr. Chairman, you want us to file this for our company.
Senator FULBRIGHT. That is right.
If you have it, we would like some other companies—not all of them, but some representative companies, if you have them, or perhaps Mr. Stephens, if this is in his particular line, he can file it.
Mr. ELLIOTT. We do not have them.
Senator FULBRIGHT. You never made an offer to the union at any particular time.
Mr. ELLIOTT. We made two offers. In New York we made an offer of 9 cents an hour plus certain fringes.
Senator FULBRIGHT. When was that?
Mr. ELLIOTT. That was April 3 when six companies were bargaining together.
Senator FULBRIGHT. Nine cents an hour?
Mr. ELLIOTT. I believe Mr. Stephens will probably bring that out in detail, that we made two offers.
Senator FULBRIGHT. What was the other offer?
Mr. ELLIOTT. It was the same offer with a wage rate increase from 9 cents an hour to 1212 cents an hour.
Senator FULBRIGHT. What was the date of that?
Senator FULBRIGHT. Why did you not make any offer prior to that first offer? What was the reason why you could not get even to the point of making an offer?
Mr. ELLIOTT. We did not get any response to our demands or our requests to get some of the points we considered very important considered by the union.
Senator FULBRIGHT. Such as what? Mr. Elliott. Management rights and so forth, and Mr. Stephens will go into that in detail.
Senator FULBRIGHT. Senator Capehart.
Senator CAPELART. I am not trying to tell you how to get this information but it is very simple. All you need do is take the amount you paid on Saturdays in 1950 and on Sundays. The Saturday payroll would be half as much as it was, Sunday would be double. For example, if you paid out in Sunday wages in 1950, $100 million, under this agreement you will be paying out $200 million and only getting the same amount of production.
Mr. MOREELL. We will get that information, Senator. We will have no difficulty with that. (See p. 2212.)
Senator FULBRIGHT. Senator Sparkman, do you have anything further?
Senator SPARKMAN. Admiral, going back to this statement Mr. Arnall made about $300 increase in the cost of living per family, and your statement that it would be 24 dollars a year, as a matter of fact, I do not care about arguing it, but when Mr. Arnall made that statement that it would be $300, somebody on the committee challenged
him. I have been looking through this excerpt that was in the United States News, looking for the statement where he elaborated on that. I do not know whether you read the whole transcript or not but he explained it in this way: He said that if this whole thing goes into effect, that naturally others are coming in and will ask for increased wages, and others will ask for higher prices. He estimated that when we went the whole spiral, that cost would be $300. Of course, he was not attributing the cost wholly to steel and iron. It seems to me that in your statement you do, and I believe that in all fairness we ought to have something stated on that, that it was an estimate.
Mr. MOREELL. He said it would be compounded by virtue of the fact that the price increases will run through the whole economy.
Senator SPARKMAN. That is right. Not just through steel and iron.
Mr. MOREELL. I say it will be compounded by virtue of the fact that the wage increases will run through the whole economy. That is where the costs arise, Senator. They do not arise from the 80,000,000 tons of finished steel which we sold last year, or 79,000,000. They arise from the fact that once this wage pattern is established, as Mr. Stephens will show you in his presentation, it is bound to go through all of industry. It always has.
Senator SPARKMAN. I realize that steel has usually led the way, but according to most of the evidence that has been presented to us so far, Mr. Brubaker and those with him steel is not leading the way.
Mr. MOREELL. Mr. Stephens is going to demonstrate that it is leading the way, Senator, or it will be, if, as and when this increase is granted.
Senator SPARKMAN. That is all, Mr. Chairman.
Senator BRICKER. I will reserve any further questions in order to get Mr. Stephens' testimony in.
Senator FULBRIGHT. Senator Frear
Senator FREAR. You are aware of the fact that the unions know of the salaries paid by your company. Are your officers responsible to the Wage Stabilization Board for increases in salaries?
Mr. MOREELL. The Wage Stabilization Board, yes, sir. We have to clear with them.
Senator FREAR. Do the steel companies know the salary of Mr. Philip Murray?
Mr. MOREELL. No, sir; I do not know it, and I am not interested because I think it has nothing to do with this controversy.
Senator FREAR. Would you assume that they would have to go before the Wage Stabilization Board for increases in their salaries?
Mr. MOREELL. The Salary Stabilization Board, yes, Senator. I am sure that they do.
Well, I do not know. I am just guessing, because I have never had any interest in Mr. Murray's salary. I assume that he is probably underpaid.
Senator FREAR. I think some of them take an interest in the salaries of the management of steel.
Mr. MOREELL. I am sure they do because they have mentioned it very frequently
Senator FULBRIGHT. Are there any further questions?
Senator SCHOEPPEL. Senator Fulbright, I want to say this: I have no further questions but I am caught in a dilemma here. I happen to be a member of the calendar committee and we call the calendar starting in just a few minutes on the Senate floor. I do not know what the pleasure of the Chairman is with reference to Mr. Stephens.
Senator FULBRIGHT. We are very anxious to get his testimony in this record if we can.
Senator SCHOEPPEL. Do you mean beginning right now?
I am going to have to ask then that I be excused because I am compelled to be present for that calendar call. I would like to have permission to leave some questions for one of my colleagues to ask.
Senator CAPEHART. Mr. Chairman, could we have an understanding that we will go to 12:30 and come back at 2:30?
Senator FULBRIGHT. Why can't we go until 1 o'clock and come back at 2:30?
Senator MOODY. I would like to ask Admiral Moreell to furnish for the record how much per ton of steel is spent for raw materials and the price increases which you assumed occur in each of the major components in order to make the cost increase that you have calculated.
Mr. MOREELL. I will submit that for the record. (The information requested follows:)
In answer to the Senator's question, I would like to quote from my statement to the Steel Panel of the Wage Stabilization Board (Jones & Laughlin exhibit No. 1) iu New York on February 9, 1952.
We know that a wage increase in the steel industry is soon followed by an increase in the cost of materials, supplies, and services we buy which at least equals the direct cost of the wage increase. Union spokesmen have challenged the validity of this statement. To prove to you that this actually happens we have made a special study of labor and material costs at our three steel plants for the period following the wage increases of April 1947 and December 1950. This is what we found. In comparing March 1947 with April 1948, when no price controls were in effect, salaries and wages increases $0.8 million while the cost of purchased materials consumed increased $1.9 million. In comparing November 1950 with November 1951, when price controls were in effeci, salaries and wages increased $1.1 million and the cost of purchased materials consumed increased $1.2 million. (See table 2 attached.)