The New York Times of November 6 and 8. reported the proceedings of the convention of the Congress of Industrial Organizations. The November 6 account carried the following:

Although the steel union will not draft its specific demands until next week, union officials doubt it will be possible without governmental intervention to avert a strike of 1 million steelworkers on New Year's Day.

The November 8 report declared that Mr. Philip Murraycharged that the regulations of the Wage Stabilization Board had killed free collective bargaining, and he served notice that his own union would ignore the limits fixed by the Board in seeking pay increases for 1 million steel workers later this month.

The steelworkers' demands, presented to United States Steel on November 27, would, so far as those costs could be assessed, have increased employment costs by more than 60 cents an hour.

The demands involved practically all sections of the agreement then in effect. The present dispute arose out of these demands.

Had the union wished, it could have requested, because of the magnitude of the task involved, that United States Steel and other companies commence collective bargaining November 1, or earlier as it had in 1950.

But it did not and the companies were in effect foreclosed from such a suggestion. This was because the officials of the union who attended the CIO convention in early November elected not to call a meeting of the wage policy committee of the steelworkers' union to formulate its demands, until November 15, I believe, in Atlantic City.

In fact, a release from that meeting announced that conferences with United States Steel would commence in Pittsburgh, Tuesday, November 27.

When I met personally with Mr. Murray on November 19 in Pittsburgh, I referred to that release, and readily agreed to meet on the day selected by the union, having earlier suggested that the sooner we could confront the major task ahead of us, the greater chances of some degree of success.

Was there any bargaining? I direct you first to the transcript of the hearings before the special panel of the Board.

On January 10, 1952, Mr. Murray again declared:

The steel companies, acting obviously in concert, refused to engage in any collective bargaining with the union.

A day or so later, the following from Mr. Murray appears in the transcript:

On noneconomic matters, the United States Steel Corp. did submit counterproposals.

The subsequent transcripts disclose that United States Steel offered counterproposals running to 11 of the 18 sections of the agreement. And, in fact, some six issues were by agreement of the parties reserved from presentation to the panel, on the ground that the union proposals and the counterproposals from United States Steel were sufficiently close as to warrant the belief that they could be adjusted satisfactorily when other matters before the Board had been concluded. In the first bargaining conference on November 27, I advised that certain provisions of the then expiring agreement required clarifica

tion and recasting. These sections dealt with management's direction of the business in an efficient manner and with wage incentives.

Misunderstandings as to the meaning of such provisions had caused very serious strikes. Further, we sincerely believed that certain provisions called local working conditions were being abused by the union in the grievance and arbitration procedures.

They were musts from our angle so far as clarification in the new agreement under negotiation. I so declared to the union delegation.

The union, however, would bargain on its own terms only. It made clear that except as the companies agreed in ways satisfactory to it on the wage and other cost demands, the union would not address itself seriously to a composition of the sections which the company, on the basis of experience, regarded as requiring modification.

The result was a stalemate. United States Steel was confronted, in its opinion, with the substance of the New York Times report of November 8, that the union would ignore stabilization regulations. Faced with such substantial cost demands, United States Steel made no counter offer on wages, shift differentials, holidays, overtime, vacations, reporting allowance and other demands.

It acted as it did for three reasons: First, it would not join with the union in any program to breach stabilization regulations, as it understood them; second, in a period of controls and in the light of the accumulating experience in the operation of the business, United States Steel could not, in the absence of knowledge of what could be done pricewise, hope to reach agreement at that time and without material union concessions on these extraordinary demands because of their unbearable effect on its employment costs; and finally, our experience in collective bargaining has led us to the conclusion, inevitable and true, in our opinion, that when judgment indicates that negotiations cannot be concluded by such offers as might be made, it is unwise and unfortunate to make offers which provide a foundation for those who will ultimately deal with the dispute, on which to build.

So much for the collective-bargaining phase.

Now, with respect to the Wage Stabilization Board-its composition, rules, and functioning-in August, 1950, responding to a letter request from Senator James E. Murray, that I give my views on certain wartime labor disputes procedures, I wrote, among other things, that any wartime labor disputes board should be composed, so far as policy making, administration and awards were concerned, of outstanding public members dedicated exclusively to the public interest.

In answer to another question, I expressed my belief that were the principles by which such an agency would be governed determined in advance, such fact might minimize the work load of such an agency.

My reasons for these views are, first, bargaining is an inherent characteristic of tripartite boards. And, in the affairs of men, selfinterest or what is regarded as such rarely can be put completely out of mind-in the broader good.

My suggestion to Senator Murray contained the thought that labor and management advisers could be appointed to advise the kind of board suggested-but that such advisers should not be permitted to play other than an advisory role in policy making or awards.

A second reason is that, in my opinion, any board dealing with matters of this character should proceed in a judicial manner, gov. erned by fair and generally applicable rules and base its awards on a careful appraisal of the evidence presented in the case in relation to the established rules.

In my opinion, bargaining, which in my judgment, also played a big part in the Wage Stabilization Board's recommendations, is not the way to interpret and apply rules considered necessary in the interest of all people in a period of emergency.

Bargaining with respect to rules which should apply fairly to all, can mean only, as pointed out, I believe, by Mr. John C. Bane, industry panel member, in his recent testimony before the Senate Committee on Labor and Public Welfare, that the Board's rules will mean one thing in a case involving a weak, relatively nonmilitant union, and something else when the union is aggressive, powerful, and particularly, perhaps politically influential.

Had settlement been possible, it could have been reached in bargaining directly between the parties involved.

It was not. My view is that a matter of the importance of the steel dispute required, as was promised, fair and equitable recommendations based on regard for fact-adherence to, and not evasion of, defined rules. It should not have been a matter for Board bargaining.

Now, as to the Board's rules. My first comment, perhaps, is better classified under Board powers rather than rules. It is that I believe that a board appointed to develop sound stabilization policies should not have given a disputes function.

You all know, of course, how this came about, by Executive order, following a recommendation, opposed by the industry members of the Advisory Board on Mobilization Policy, about a year ago.

The recommendations and order followed, as you will recall, labor's walk-out from the Board because of disagreement with a regulation adopted by a public and industry majority. One price of labor's return was dispute powers for an enlarged board. The price was paid, and it was my view a year ago that such a grant would mean the end of effective wage stabilization.

It is my conviction today. I hope I am wrong, but one fact of life developed so far in my attempt to understand how to get along with unions is that, with a court of higher appeal available, settlement at the bargaining level is not possible unless at the level management concedes what the union considers its minimum and what it may hope to get from such higher authority.

Take the union-shop issue, for instance. The major steel companies have been and are opposed to the idea that they shall interfere with the free exercise of an employee's own will with respect to membership in a union as a condition of employment.

Can it be that, as a part of its interest in the Board having jurisdietion over disputes, the steelworkers had in mind that that which had happened on this issue would come to pass?

In my opinion, development and administration of equitable wagestabilization policy is not possible when the Board which engages in such efforts is also engaged in handling threatened strikes in vital industries in an emergency period.

At least, it is not possible if the Board conceives its role as that of a participant in the bargaining process in which it must face the economic strength of the union which can easily overpower the Board's stabilization rules.

Now, as to what more properly qualifies under the caption "Rules" or "Board policy."

In my testimony on April 22 before Senator Murray's Labor Committee, I quoted freely from an August 31, 1951, report by the former Chairman of the Wage Stabilization Board, Dr. George W. Taylor.

I shall not repeat those quotations here. My purpose then was to trace in Dr. Taylor's language the origin and development of Board policy in order to better understand the use or misuse of that policy in the steel case.

Dr. Taylor characterized 1949 as a year during which wage rates were relatively stable, and the cost of living declined slightly.

Nineteen-fifty was characterized as a year in which an unstabilizing of wage relationships occurred. During that year wage increases were sought and obtained, ranging from, as Dr. Taylor said, 5 cents at the beginning of the year to 16 cents at the end in steel and, in January 1951, 20 cents in coal.

On January 25, 1951, the Government moved in and stopped all wage changes with a general freeze, after which the Board began the task of "restoring reasonable equity among the scrambled wage relationships" that had developed during the preceding year.

"Some firms," wrote Dr. Taylor, "had anticipated the freeze and gave generous pay boosts."

One provision of one regulation, said Dr. Taylor, was to take care of the kind of a situation in which wages paid by an industry or a company were abnormal or grossly out of line with their normal relationships in the base period of 1950.

Such a situation could not be found in steel. In September 1949 a Presidential board had found, with respect to the union's demand at that time for a wage increase, that steelworkers' wage relationship with the wages of employees in other industries and with the cost of living was equitable.

In addition, it must be remembered that the steelworkers received on December 1, 1950, a wage increase of 16 cents an hour, the highest for 1950, as referred to by Dr. Taylor.

Dr. Taylor recognized this fact, apparently, because with respect to out-of-line wage relationships he wrote that "relatively few industries were found in this situation," most of them seasonal industries.

Later in 1951, Dr. Taylor reported, another regulation was adopted, No. 8 specifically, which approved the operation of escalator clauses and thus related the wages of an important group of workers to the cost of living as of a base date which did not limit them to the maximum 10-percent increase from the base date, January 1950.

Were regulations 6 and 8 applied in a judicial atmosphere to steelworkers, the increase permissible, on the basis of the BLS Consumers' Price Index for February 1952, would be less than 7 cents per hour. The Board, however, recommended increases totaling 1712 cents per hour, more than twice as much as is permissible under the BLS revised index for either January or February 1952 and almost twice as much as was permissible had the old unrevised and less accurate index of the Bureau been employed.

Having ignored the guides provided by its own regulations, we find the Board seeking to justify its action by saying that regulations 6 and 8 have no application in a dispute case and that the Board is free to take whatever action it sees fit and deems to be fair, equitable, and not unstabilizing.

In its presentation of the case, the union declared that it could justify 34 cents an hour increase in wage rates alone because of the interpretations which it believed could be attached to various sections of these two regulations, 6 and 8.

Certainly, in my opinion, rules susceptible to such extreme flexibility are not designed in the interest of stabilization and go far toward converting in a time of emergency our traditional principle of rule by law to rule by the whim of a board, which the record, I believe, will show traded with labor on recommendations for which it would vote "aye."

Time will not permit further attention to this aspect. The committee can, however, learn more in this connection from the transcript of the April 15, 1952, hearing before Senator Murray's Committee on Labor and Public Welfare and testimony of Mr. Bane, industry member of the special panel, in the transcript of April 23, 1952.

Expressed briefly, the President of the United States and Mr. Feinsinger can assert that the steel recommendations conform to the Board's policy. But conformance to policy, which can be interpreted as broadly as it has been in the steel case, can be, and is, unstabilizing because the policy as interpreted is just that.

Just one more point. Another regulation-13, I believe-permits the application of certain so-called fringe benefits, provided they do not exceed prevailing industry or area practice.

The amount of money involved is not calculated against the permissible wage increases under regulations 6 and 8. In the steel dispute, for instance, a number of so-called fringe benefits were recommended-one, for instance, penalty overtime rates of pay for work on Sunday despite the fact that no prevailing pattern for such is to be found in continuous-process industries.

My next heading is "Extension of controls?" The immediate question before this committee, as I understand it, is what Congress should do about wage-price controls after June 30.

My own conclusion, based upon my experiences in the current steel dispute and my observation of the manner in which controls were operated in the closing months of World War II, is that they should not be extended.

In that respect, I am in agreement with Prof. Sumner H. Slichter, of Harvard University, who last week stated that "the steel case sharply illuminates the discriminatory differences between wage-stabilization policies and price-stabilization policies" and that "it would be better for the country to run the risk of some inflation than to impose controls as discriminatory and unjust as those embodied in present wage-price policies."

The fact is that it is not possible to control only a part of the economy, and the Board's recommendations in the steel case make it clear that there is no longer any control over wages.

Were the recommendations merely catch-up?