Letter to the President of the Senate on Proposed Amendments to the Defense Production Act.

My dear Mr. President:

I understand that the Senate is beginning debate on S. 2594, amending and extending the Defense Production Act of 1950. I want to call to the attention of the Senate the serious implications of two of the proposed amendments in this bill--one dealing with the Wage Stabilization Board and the other with the Walsh-Healey Act.

The first of these amendments, Section of the bill, would abolish the existing tripartite Wage Stabilization Board-composed of representatives of management, labor and the public--and substitute a public board in which management and labor representatives are denied membership. The amendment would also strip the Board of its present responsibilities in handling labor disputes.

These changes would have a direct effect upon our ability to maintain essential production under our mobilization program. I cannot emphasize too strongly that the main burden of the defense program lies ahead of us. Because of the high rate of consumer savings and the increase in productive capacity, we have been able to relax some of our controls. But we are by no means at the point where we can afford to jeopardize the mobilization program by failing to provide an adequate system for maintaining a sound wage stabilization program and for handling labor disputes, affecting the defense program. And that is just what is involved in this amendment.

We should not lose sight of the fact that in determining the composition of the Wage Stabilization Board we are dealing with far more than a mechanical problem of administration. In giving labor and management an equal voice, we are encouraging them to share in the responsibility of making our wage stabilization program work. We are placing our faith in the capacity of responsible parties to help work out solutions to their problems in the national interest.

The effectiveness of the tripartite approach has been well demonstrated both in wage stabilization and in the handling of labor disputes. Through this approach we utilize the experience of labor and management and take advantage of the best advice and counsel available.

The fact is that the present tripartite set-up is working well. The representatives of industry and labor have been of great assistance in the development of the wage stabilization program and up to now have made a unique contribution in seeing to it that the wage stabilization rules have been complied with. The members of the Board have worked together to meet their responsibilities. The public interest has been adequately protected. The record shows that most of the general regulations and policies of the Board have been adopted by unanimous vote. The record also shows that in petitions for approval of wage increases submitted to the Board--which represent 99 per cent of the cases coming before the Board--the Board has been unanimous in over 90 per cent of its rulings. Of course, some disagreements are to be expected under a tripartite arrangement, but the record shows that the public members, in both wage stabilization and dispute cases, have done a conscientious job in resolving such differences, voting in accordance with their best judgment.

The Congress should bear in mind that the tripartite approach has proven its worth in two previous periods of national emergency--and it is proving its worth again. We should not arbitrarily abandon this approach in favor of a system which denies to the Government the experience, the wisdom, and the effective participation of labor and management in the stabilization program.

The proposed amendment not only would change the composition of the Board but would deprive it of its responsibilities for handling labor disputes. This presents a very serious problem.

There is a good reason why the Government must provide machinery for the settlement of labor disputes which threaten the defense program. Under normal circumstances, labor and management are free to bargain collectively to determine wages and working conditions and, when they cannot reach agreement, they are free to resort to strikes and lockouts. But in a defense economy, the free play of collective bargaining-including the freedom of strike action--must necessarily be restricted. There are some instances where the national security--and indeed the very lives of our troops in Korea-cannot be adequately protected if a defense plant closes down. In these circumstances, the Government must use its mediation and conciliation powers to the fullest in order to induce the parties to settle their disputes. And, if all else fails, we must, as a last resort in cases where vital defense production is involved, provide some practical alternative for the traditional test of economic strength.

That is why the Government is providing, through the disputes functions of the Wage Stabilization Board, a system which offers the parties every assistance in avoiding work stoppages. In establishing disputes responsibilities in the Board, we have deliberately sought to give as much play as possible to collective bargaining and to mediation and conciliation during this emergency period. For this reason, the Board may make final and binding decisions only in those cases where both parties agree in advance to be bound by the Board's findings. The Board only hears those disputes which the parties themselves submit for recommendation or decision, or which the President certifies to the Board for recommendation. Under this arrangement, we rely primarily on the good sense and patriotism of the parties to reach a settlement on their own after an impartial third party has recommended a fair settlement. We have not reached the point-and I hope we never reach it--of compulsory arbitration, where we substitute Government dictation of wages and working conditions for collective bargaining.

By and large, this system for handling labor disputes is working well. It is now evident that there was no basis for the fear that every labor dispute would be dumped on the Board. Furthermore, strikes have generally been averted. Of the twelve dispute cases certified to the Board by the President--disputes where at least one of the parties wanted to fight it out through resort to work stoppages--the Board has been generally successful, primarily because of its tripartite character, in avoiding a strike. Vital defense production has been maintained. In the thirty-three dispute cases submitted voluntarily by the parties, there has not been one instance of interrupted production.

The one notable exception in the Board's successful record in getting settlements has been the steel case. The failure to reach a settlement thus far in the steel case is not the fault of the Board, for its recommendations provide a sound and sensible basis for reaching agreement on the issues in dispute. And, in any event, the lack of a settlement in this case could not possibly justify abandoning the machinery that has been successful in so many other cases.

If there had been no forum to hear the disputes which have been before the Board, the defense program would have been damaged by crippling strikes. Further, the Congress should remember that in all the labor disputes now before the Board the parties are continuing production at the request of the Board while their case is being heard. If the Board is deprived of its authority to recommend a fair settlement of those disputes, the major inducement to the parties to refrain from resort to economic pressures and to use the peaceful alternative provided by the Government as a means of settling their differences will be removed.

If there is no peaceful alternative to strikes, then we will have strikes. I cannot believe that the Congress will close its eyes to this inescapable fact.

Many people seem to feel that the Taft-Hartley Act meets our needs for industrial peace during the mobilization period. That just is not so. The emergency provisions of that Act were not designed for a mobilization economy and by their very terms do not apply to labor disputes in single defense plants. In any event, the emergency provisions of the Taft-Hartley Act are inadequate. At best, the Taft-Hartley Act simply delays a strike for 80 days. It makes no positive contribution toward settlement of the dispute but simply gives the parties a respite from the pressures of collective bargaining. The Boards of Inquiry authorized under the Act are expressly forbidden to make any recommendations for settlement. Yet recommendations for settlement by some impartial tribunal are precisely what is needed if the parties are to be given assistance and if the force of public opinion is to be brought into play to encourage a settlement. Thus, it is obvious that the emergency provisions of the Taft-Hartley Act fall far short of meeting the needs of the defense emergency.

I want to make it absolutely clear to the Congress what is at stake here. We cannot meet our production goals and keep our economy stable if we fail to provide a sound and fair system of wage stabilization and disputes settlement. If the Congress prohibits the participation of labor and management in wage stabilization, it will, in effect, be declaring its lack of confidence in the integrity and public-spiritedness of both labor and management. If the Congress will not provide some forum where labor disputes may be heard and considered, it will, in effect, be encouraging strikes and lockouts.

I also want to call to the Senate's attention the serious effects of the amendment in Section 301 dealing with the Walsh-Healey Act. That Act provides for the determination of wage and working standards for workers employed on Government procurement contracts. It was passed in 1936 to advance the public interest in sound labor standards and to protect fair-minded businessmen by ruling out unscrupulous dealers and unprincipled manufacturers who were able to submit the lowest bids for Government contracts only because of their exploitation of workers. The Act was aimed at preventing the resort to "sweatshop" working conditions and child labor in carrying out Government contracts. As such, the Walsh-Healey Act has been a major force in encouraging sound labor standards in this country.

The amendment in Section 301 of this bill, however, would seriously retard the effectiveness of the Walsh-Healey Act. In the first place, it would drastically cut down the present coverage of the Act by excluding Government purchases of materials which are sold in the open market to purchasers generally. I am advised that by restricting the Act to contracts for those articles which are specially made for the Government, fully half of all contracts now covered might be exempt. The proportion of contracts excluded would increase in normal times when the Government does not purchase the great quantities of specially made items required for military purposes during a mobilization program. As a result, the purchasing power of the Federal Government would once again be instrumental in depressing labor standards to the detriment of businessmen who wish to adhere to advanced working standards in their plants and factories.

Second, the amendment would place very serious procedural obstacles in the way of effective administration of the Walsh-Healey Act. The net effect of these new procedural requirements is to distort the original intent of the Administrative Procedures Act. That Act already provides adequate protection to private parties affected by Walsh-Healey interpretations and rulings, and the Secretary of Labor not only has scrupulously abided by its spirit but has gone beyond its specific requirements in assuring full hearings to interested parties. In short, these procedural changes would pave the way for harassing litigation by those who want to make the Walsh-Healey Act ineffective.

It should be noted that this amendment is, in effect, a "rider." Although proposed in a bill dealing with temporary, emergency authority, it would incorporate revisions in permanent legislation. The Walsh-Healey Act has served as a landmark for sound labor standards in this country and has served us well in protecting these standards, particularly during World War II. I, therefore, urge the Senate not to take any action which would arbitrarily destroy an essential safeguard of the decent working conditions which we have carefully built up in this country over the past 16 years.

These two amendments deserve the most critical analysis of the Senate. They have serious and far-reaching consequences. This is no time to lose sight of the urgent requirements of our mobilization program or of the enduring need to protect sound labor standards in our country.

Sincerely yours,

HARRY S. TRUMAN