Mass production is the only answer. But this act, giving each trade union the power to battle with other unions, using the power of secondary boycott to enforce or extend their various jurisdictions, would be an insuperable barrier to mass production in housing.

In our mass production industries served by industrial unions we pay the highest wages in the world. Yet in spite of that we have the cheapest labor. The coal miners are the highest paid miners in the world and have the greatest fringe benefits. This is the result of two things: first, John L. Lewis' relentless demands over the year to obtain wage scales which coal operators used to consider fantastic; second, to the fact that along with his wage demands Lewis encouraged mechanization and automation. When asked if this would not cut down the size of his union, he replied that he would be very happy indeed if fewer men were compelled to work under ground.

What has been the effect on the price of coal? In spite of high wages, labor in our coal mines is the cheapest in the world. German coal wages are low, scarcely above subsistence. They are all the industry can afford. American coal industry can afford what seems to Europeans fantastic wages. This is because the American coal miner producers 10 tons a day as opposed to 3 tons a day for the German. It is for that reason that American coal can be shipped across the ocean and laid down in Germany cheaper than it can be produced at low wages in a German mine. Suppose there had been six unions in the coal industry, each in a monopoly on some special service. If that had been true, American efficiency in coal mining would not now exist.

Today the United Mine Workers are attempting to introduce into the building field an industrial union known as District 50. If District 50 succeeds, it may mean the dawn of mass production in low-cost housing. But if this bill is passed, it means that the present obsolete type of service in the building industry will be perpetuated indefinitely.

I am not arguing that trade unions do not have and will not continue to have an important place in building. The expensive house will never be made by mass production methods. Mass production destroys individuality in the product. Unions bound together by the common interest of their members in certain specialized skills will make a better contribution to an expensive house than industrial unions would. Trade unions will have no difficulty in finding an important competitive place in the construction industry. But if trade unions are not compelled to seek that place competitively by demonstrating their actual value in the field where they are most useful, if minorities may use their control of a specialized service to enforce secondary boycott, the housing industry will remain the conspicuous example of stagnation which it is today.

The trade unions in the building trades have a vested interest in the perpetuation of a type of industrial organization which has become obsolete in the area of building where mass production is the only solution. In other areas in the building trades, particularly in the individually built house, they can probably make a better contribution than the industrial unions. This bill would give them the power to maintain their position in a field where they are not needed, where indeed they are a positive handicap. It is unthinkable that this committee would reverse the policy of Congress when it passed the Taft-Hartley Act outlawing secondary boycott and the further policy in the recent labor reform bill which restored to the States the right to enjoin secondary boycott in order to perpetuate a form of industrial organization which has lost its utility in the area of mass production in housing.

Chairman BARDEN. Mr. Arnold, I realize the hour is late
Mr. ARNOLD. I have plenty of time.

Chairman BARDEN. Would you please discuss the restraint-of-trade aspect.

Mr. ARNOLD. I have already pointed out that so far as restraint of trade is concerned the secondary boycott is a tremendously effective weapon where you have specialized skills and all of them. necessary, and for one union to control that skill. The Teamsters is the fastest growing union in the world because they have, as you know from the McClellan investigation, utilized the secondary boycott, and they can take up everything. So the secondary boycott on the part of the Teamers is a tremendous weapon.

I do not believe that the Automobile Workers would use it even if you gave it to them. It would be very ineffective. So you are taking the most sensitive part of the whole structure, the part where a secondary boycott can do the most damage, and letting those people use it.

If I were letting them use it, I would let everybody use it, because it wouldn't be used much. The Steelworkers can't do much with it. If you look at the statistics given by Mr. Mahin, you will see that more than two-thirds of all the complaints before the Labor Board are building trades and teamsters' complaints on secondary boycott.

You know there are literally thousands and thousands of cases where secondary boycotts are carried on and nobody can do anything about it. You further know that after the Taft-Hartley Act was passed outlawing secondary boycotts the case of Guess v. Utah was headed for the Supreme Court of the United States. There the Labor Board said, "We don't have time; there is not enough interstate commerce involved. So we are not going to take the case up." The Supreme Court held: "All right; that is primary jurisdiction and the State is excluded from the field."

Now, that has been remedied by the last Labor Reform Act, but now you are putting it all back. The thing that you made illegal in the Taft-Hartley Act, the loophole which you plugged in the Labor Reform Act-all is being swept away. I have had a little experience with this. I am partly responsible for secondary boycotts in the labor movement because I am the fool that lost the Hutcheson case. If they had had a good lawyer there, they would not have had all this trouble.

After the Hutcheson case, chaos ensued, and that was the result that built up the pressures which passed the Taft-Hartley Act. In the Taft-Hartley Act it was recognized that this secondary boycott should be abolished for this reason. When I started to prosecute labor I had no patience with these people who wanted to make little unions out of big unions. All they talked about was the monopoly power of labor. They did think if you gave monopoly power then you should restrict it to its legitimate objectives. Once you give a man monopoly power, the objective should be spelled out.

I tried to spell legitimate objectives out as precisely as I could. I said the strike of one union against another, the attack upon an employer that is not an attack on some other employer, the fixing of prices, the restriction of production, and I went down with a pretty precise list, and I didn't have other working conditions; I thought my language was pretty precise.

The Supreme Court rejected that and said, We don't care what the purpose of labor is, they are exempt from the Antitrust Act. Then in the House bill which was passed at the time of the Taft-Hartley, they adopted the test I tried to persuade the Supreme Court to adopt, that labor could strike all they pleased but it had to be a legitimate objective and they spelled out the objectives pretty precisely, which would cover the objectives here.

It reached the Senate and the Senate said, "That is all very well, labor should pursue"-I am interpreting and paraphrasing “it should pursue it as a legitimate objective but we will get the same result if we outlaw the secondary boycott. Once that is outlawed that

will cure the situation." So the secondary boycott provision of the Taft-Hartley Act was put in to prevent the restraints of trade which were going on because labor was not pursuing what was considered its legitimate objectives.

Well, it was not an answer at all, because the Labor Board was the only one person that could prosecute, enjoin. The employer could only sue for damages, and of course his business would be gone if he sued one of these powerful unions for damages. The net result is you got practically no enforcement.

The net result of that was a type of labor leadership, the most aggressive people in labor were given this weapon, and the most aggressive ones took advantage of it and I lay a great deal of the labor difficulties to the use of this secondary boycott by which my north groups got control of majority groups, in the trade unions and in the Teamsters.

The Congress has reiterated that same principle again in the Landrum-Griffin Act. The bill provides that if the Labor Board has not time to take the case, then the State may proceed. So I think that is twice Congress has considered this problem of restraint of trade and twice that they have affirmed the position of the opponents of this bill.

This sweeps away all that pretension, it gives them unions which have the key services a perfectly tremendous leverage over everybody else and whether it is a business organization, a Government organization, or any kind of organization, if they are given the power they will exercise it. That is about what I have to say on the restraint of trade.

Chairman BARDEN. Thank you, sir.

Mr. PERKINS. Any further questions?

Mr. GRIFFIN. Mr. Arnold, I would like to make a comment. Even in the last session of Congress when we were considering the labor reform bill there was a great deal of public pressure from many sources, from people who didn't understand what antitrust legislation means, urging that we put unions under the antitrust laws.

Mr. ARNOLD. Yes; I could comment on that.

Mr. GRIFFIN. I am inclined to follow your reasoning that the antitrust laws per se are not necessarily the right way to approach the problem of monoply power as far as labor organizations are concerned; that we are more concerned with their objectives and so forth. I just wonder, and I would think that the rest of the labor movement might well contemplate, what the effect of passing this bill might be on the temper of the people and of Congress in the future in terms of whether or not unions will be subjected to antitrust laws and the kind of antitrust legislation that they might be subjected to. This is just something that I think is entitled to some consideration.

Mr. ARNOLD. I think that is an interesting point you raised. When I started to prosecute labor I was hailed for my courage from the business group. It did not take courage to prosecute labor in those days any more than it takes courage to prosecute communism but I became the fellow that they invited to make the principal address to NAM. Everybody was enthusiastic and we were marching shoulder to shoulder and they went in to get legislation.

I found that the business group was not particularly interested in abolishing these restraints of trade. They wanted a bill which would attack what they called labor monopoly. I got no support either from labor or business for this legitimate objective test which I think is the only sensible test.

I testified before Mr. Robertson's committee in the Senate about 3 or 4 years ago and always the business drive is to break up the unions and break up union power. I am utterly opposed to that. But if you get a couple of drinks with some of these union people in the automobile trade and all that, you will find that they are just scared to death of giving this power to unions like the Teamsters because they can use it and the automobile workers cannot. It is a loaded weapon in the hands of minority groups who have monopoly control over some specialized service.

I think we have to get the same kind of industrial union structure in at least half of our housing industry. I don't think we should pass a law requiring industrial unions, only industrial unions in prefabricated houses, but I do say that the industrial union should have a chance to compete for a place in this building structure. The vice of the bill is that it takes away that chance.

Mr. GRIFFIN. Thank you, Mr. Arnold.

Mr. PERKINS. Thank you very much, Mr. Arnold.

Mr. ARNOLD. Thank you, Mr. Chairman.

(The following biographical sketch of Judge Arnold was submitted by Congressman Griffin:)

Arnold, Thurman Wesley, lawyer; born Laramie, Wyo. June 2, 1891; son of Constantine Peter and Annie (Brockway) A.; A.B., Princeton, 1911; LL.B., Harvard, 1914; M.A., Yale, 1931; LL.D., University of Wyo., 1943; married Frances Longan, September 7, 1917; children-Thurman Wesley and George Longan. Admitted to Illinois bar, 1914, and began practice at Chicago; practiced at Laramie, Wyo., 1919-27; lecturer in law, University of Wyoming, 192126; dean College of Law, West Virginia University, 1927-30; visiting professor Yale, 1930-31, professor of law, 1931-38; Assistant Attorney General of United States in charge of antitrust, March 7, 1938 to March 16, 1943; associate justice of U.S. Court of Appeals for District of Columbia, March 1943 to July 1945; now member of law firm of Arnold, Fortas & Porter. Member Temporary National Economic Committee representing the Department of Justice, 1938-41. Special assistant to General Counsel of Agricultural Adjustment Administration in suits involving constitutionality of Agricultural Adjustment Act, 1933; legal adviser to Governor General of Philippines by Secretary of Agriculture in administration of sugar control under Jones Costigan Act, summer, 1934. Served as first lieutenant field artillery, U.S. Army, France, World War I; major and judge advocate general, Wyoming National Guard, 1924-27. Member Wyoming House of Representatives, 1921; mayor of Laramie, 1923-24. Member American, Wyoming State and West Virginia State Bar Associations; Phi Beta Kappa. Democrat. Episcopalian.

Author: "The Symbols of Government," 1935; "Cases on Trials, Judgments and Appeals," 1936; "The Folklore of Capitalism," 1937; "The Bottlenecks of Business," 1940; "Democracy and Free Enterprise," 1942; also articles in periodicals.

Home: 301 South St. Asaph Street, Alexandria, Va. Office: 1229 19th Street, NW., Washington, D.C.

Mr. PERKINS. Come around, Mr. Iserman. Do you have associates with you, Mr. Iserman?

Mr. ISERMAN. No.

Mr. PERKINS. All right, come around and proceed.

52420-60- -22

STATEMENT OF THEODORE R. ISERMAN, MEMBER OF THE INDUSTRIAL RELATIONS COMMITTEE, COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC.

Mr. ISERMAN. My name is Theodore R. Iserman. I am a member of the law firm of Kelley, Drye, Newhall & Maginnes, 70 Broadway, New York, N.Y., and of the Industrial Relations Committee of the Commerce & Industry Association of New York, Inc. I appear today on behalf of that association. We are grateful to you for the time you have allotted to us.

Commerce & Industry Association of New York has a membership of more than 4,000 business firms. Many are large, with nationwide operations. More are small. They engage in almost every type of business enterprise-manufacturing both hard and soft goods, wholesaling, retailing, uncounted service industries, construction, and all the myriad activities that provide work and wages for the world's biggest and greatest city and fill the needs of its citizens.

Our association has a keen interest in labor relations and in legislation in that most important area. The association's industrial relations committee includes experts in the field from local industry as well as many from firms that have their head offices in New York. A primary purpose of our organization is to foster good labor relations and to promote labor legislation that is sound and is fair to employers, to unions, to working men and women and to the public. I am here today to give you our association's views of proposed amendments to the Labor-Management Relations Act that would permit a single union, regardless of whether or not it represented any employees at a construction project, to picket the project and thus to bring all the work to a halt, even when there was no dispute between any of the employees and their employers.

We oppose these proposals. We oppose them not only on behalf of those of our members who engage in the building and construction industry, but on behalf of business and industry generally, and, we believe, in the interest of the public and of working people, themselves

I shall not recite in detail the history of section 8(b)(4) of the National Labor Relations Act, as amended, which deals not merely with secondary boycotts but with some primary strikes and boycotts, and which Congress, in section 303 of the Labor-Management Relations Act, 1947, described under the heading, "Boycotts and Other Unlawful Combinations." It is enough to say that in response to widespread and insistent public demand, Congress, in enacting the Labor-Management Reporting and Disclosure Act of 1959, known as the Landrum-Griffin Act, closed a number of loopholes that the National Labor Relations Board and the courts, in administering the Labor Relations Act, had professed to find in the antiboycott clauses. One loophole that labor unions, and particularly those in the building and construction trades, sought to establish but could not, involved so-called common situs picketing. In National Labor Relations Board v. Denver Building Trades Council, 341 U.S. 675 (1951), 21 LRRM 2108, a general contractor awarded a subcontract for electrical work on a commercial building to a nonunion electrical contractor. To force the general contractor to terminate its contract and thus