Letter to the Administrator, Economic Stabilization Agency, on the New Wage Agreement in the Coal Industry.

[Dated December 3, 1952. Released December 4, 1952]

Dear Mr. Putnam:

As you know, I am doing all that I can to assure an orderly transition of the heavy responsibilities of Government to the new Administration in as calm and stable an atmosphere as possible. I am particularly anxious to avoid the development of any major economic disturbances which could not be resolved satisfactorily during my remaining tenure in office.

You have had before you in the bituminous coal wage case a matter which could lead to such a situation. The Bituminous Coal Operators' Association and the United Mine Workers of America signed an agreement on September 29, 1952, effective October 1, extending their 1950 contract for at least 12 months and amending it to provide an increase in wages of $1.90 per day. The Wage Stabilization Board, after extensive study and hearing, ruled that only $1.50 per day of the increase was approvable under stabilization policy. Both the operators and the union subsequently appealed to you to overrule the Board and permit the payment of the full amount of the negotiated increase. You have heard the case and discussed its ramifications with me.

From a stabilization standpoint, there are many reasons for upholding the decision of the Wage Stabilization Board and disallowing payment of the disputed 40 cents per day of the agreed-upon wage increase. These stabilization considerations are important.

The stabilization program is a vital part of our defense mobilization. The mobilization program, in turn, is vital to our security. We cannot carry through on our essential defense program without effective economic stabilization. It is therefore my firm intention to continue a strong stabilization program and turn it over to the new Administration as a functioning, effective entity. If the new Administration then wants to scrap price, wage, salary and rent controls, it will be free to do so on its own responsibility. But it should be in a position to decide this important issue on the basis of a calm appraisal of the situation in a calm atmosphere--and not be pushed into a hasty decision by the existence of an economic crisis.

The issues in the coal case certainly affect stabilization, but they go far beyond stabilization considerations. The decision in this case must not only recognize the importance of continuing stabilization as an effective program, but must also face up to problems completely apart from stabilization which are involved in the transition from this Administration to its successor.

In view of my concern on this point, and in view of the fact that the decision you had planned to make would not, in my opinion, have met the requirements of this unique situation, I feel it is necessary for me to exercise the final authority in the coal case. The ultimate responsibility is mine in any event.

As you know, I have made a careful review of all of the facts in the case and have had full discussions on it with you and other Government officials, including, in particular, the Director of the Federal Mediation and Conciliation Service.

The Director of the Federal Mediation and Conciliation Service has impressed me most solemnly with the probable consequences to coal production of upholding the Wage Board's decision, and has urged the approval of this contract.

The overriding consideration to my mind is not the danger that there would otherwise be a work stoppage, but rather that the situation it would cause would be one the Government is not equipped to meet and resolve promptly.

There are, at present, unusually large stocks of coal above ground. A work stoppage in the coal industry, while adversely affecting some parts of the economy, would not immediately cause a national emergency in which the Government would be authorized to act. The stoppage would have to continue for some time before any Government authority could be invoked.

Such an emergency would arise at just about the time my successor took office. I am not willing to take an action that will create such a crisis for my successor.

In making my decision, I realize I am rejecting the recommendations of the top officials of Government concerned with stabilization--the Wage Stabilization Board, the Administrator, Economic Stabilization Agency, and the Director of Defense Mobilization. Much as I regret the necessity for doing that, I believe considerations outside stabilization are of major importance in this matter. I am therefore directing your Agency to approve the bituminous coal wage agreement as negotiated.

I recognize the fact that approval of the additional 40 cents per day in the miner's wages could have an unfavorable effect upon stabilization, but I am convinced that it will not be a serious effect if the special circumstances under which it is approved are clearly understood.

On the price side, I understand from the testimony you received from the operators' representatives that since bituminous coal is now selling generally below ceilings the producers would find little practical benefit in seeking higher price ceilings as a result of this action because very few of them could collect those higher prices in the market place. So that while the cost of producing coal would rise by perhaps five or six cents a ton, the effect on ceilings would be slight.

As for its influence on other wage levels and on collective bargaining generally, I am also convinced the effect would be slight. Everyone is cognizant of the difficult conditions under which coal miners work and live. Everyone knows that the wage increases customarily given coal miners are, as a practical matter, discounted by other workers who have never envied the miner his hazardous, unpleasant and unhealthy work, his living conditions in isolated communities and his sporadic employment. The same reasons which keep other workers from wishing to become coal miners also keep them from expecting---or their employers from offering--wage increases to match every increase the miner receives. They know that for all of his greater-than-average hazards of loss of life, eyesight or limbs, the miner has less-than-average economic security and less-than-average benefits in some of the so-called fringes like vacation and holiday pay. They know that the miners are among the very few groups of workers in the country who have been unable to maintain progress in real spendable income in the last few years.

These were among reasons put forward by both the operators and the union for approval of their contract. Standing alone, these reasons do not, in my judgment, afford sufficient ground for overruling the Wage Board's decision from the point of view of stabilization. But they do reinforce my belief that my decision will not have serious inflationary effects upon wages and upon the economy generally.

Both you and Mr. Fowler have made a vigorous and convincing case in favor of the decision you had planned to make to uphold the Wage Board. But because of the exceptional situation involved here, I cannot accept your recommendation.

I know this will create some problems for the stabilization program and I deeply regret that. I am impressed by the outstanding job the stabilization agencies have done under severe handicaps during the past 23 months in containing the inflationary pressures in our economy.

This case presents a unique situation. My decision should not be interpreted as establishing any new pattern or policy. I expect you and the other officials administering the stabilization laws to continue to do as well as you can, within the limits set by Congress, to hold the stabilization line in the interest of the national defense and the well-being of our people.

Sincerely yours,

HARRY S. TRUMAN

[Honorable Roger L. Putnam, Administrator, Economic Stabilization Agency, Washington 25, D.C.]