Historical Survey of Labor Arbitration [Reprint 2016 ed.] 9781512819403

Citation preview

HISTORICAL SURVEY of

LABOR A R B I T R A T I O N

E D W I N E. W I T T E

Published for the

LABOR

RELATIONS

COUNCIL

of the

WHARTON SCHOOL OF FINANCE AND COMMERCE by the

U N I V E R S I T Y OF P E N N S Y L V A N I A Philadelphia

1952

PRESS

Copyright 1952 UNIVERSITY OF PENNSYLVANIA PRESS Manufactured in the United States of America

Edwin E. Witte, Professor of Economics and Chairman of the Department of Economics, University of Wisconsin, has long worked in the related fields of industrial relations and social security. He has written extensively and has held many public positions in both fields. He was a special agent of the (U.S.) Industrial Relations Commission, 1914-15; Secretary of the Industrial Commission of Wisconsin, 1916-22; Executive Director of President Roosevelt's Committee on Economic Security (which sponsored the Social Security Act of the United States), 1934-35; member of the Wisconsin Labor Relations Board, 1937-39; member of the National Railroad Labor Panel, 1942-45; Chairman of the Detroit Regional War Labor Board, 1943-44; public member of the National War Labor Board, 1944-45. He is the author of more than a hundred articles on the aspects of industrial relations and social security published in academic, legal, and popular journals and convention proceedings; of Government in Labor Disputes, Five Lectures on Social Security, and of chapters contributed to many books and symposiums. He has been a member of the faculty of the University of Wisconsin since 1920. He was the first President of the Industrial Relations Research Association, and is a charter member of the National Academy of Arbitrators.

CONTENTS CHAPTER

PAGE

Preface

V

Introduction

1

Nineteenth-Century Beginnings

3

Early Twentieth-Century Progress

16

World War I and the Twenties

29

The Last Two Decades

43

[iii]

PREFACE Edwin E. Witte's Historical Survey of Labor Arbitration— presented with the deep understanding and keen perception which are the hallmarks of his work—most adequately fills an important void which has too long existed in the literature of industrial relations. One who reads this monograph can scarcely fail to be impressed by the recurrent pattern of public concern with the cost of strikes which generates an immediate interest in compulsory arbitration but only until the social costs of compulsion are once again perceived. While the relatively few attempts to establish compulsory arbitration were ill advised and abortive, voluntary arbitration has gradually been developed as a useful adjunct to collective bargaining. It is highly significant in this connection that the now virtually standard use of arbitration, in one of several forms, to resolve persistent grievance disputes has come about within the past twenty years. To be sure, pioneering experiments in the use of grievance arbitration were undertaken in earlier years. But even in the 1930's the work stoppage was the most common arbitrament, under the relatively few labor agreements, for day-by-day disputes over discipline, promotions, division of work, e' ". Snch a way of industrial life proved to be detrimental io -lie interests of all concerned. Employees came to work without assurance that they would be able to work, and employers were not assured of meeting production schedules. The problem was met by collective bargaining. The rights of strike and of lockout were restricted by voluntary agreement of those directly affected, and alternate means of settling such disputes were devised. No one intimately familiar with grievance arbitration would claim that it was a perfect solution to the problem. On the contrary, it seems clear that many improvements in [v]

grievance arbitration techniques are still to be made. It can safely be said, however, that great strides forward have been achieved by unions and by management in a very short period of time in the use of grievance arbitration as a substitute for work stoppages. Much less progress has typified the use of voluntary arbitration to resolve differences over the terms of labor agreements. This situation is a matter of great concern as respects such disputes in industries where a work stoppage threatens to create an emergency for the public. It is apparent from Professor Witte's study, moreover, that very little has been added over the years to an understanding of how to deal with this problem. In the development of voluntary arbitration in this area there lies what is perhaps the greatest challenge to the ideal of collective bargaining. This highly important study by Edwin E. Witte gives a much-needed perspective to those interested in these various problems. Less significant, perhaps, but still of great interest, is the attention given to the problem of nomenclature. Most of us had forgotten—or never knew—that in the very early days the term "arbitration" connoted collective bargaining and agreement-making. Later it was synonymous with "mediation" and "conciliation." The association of the term with the bringing in of an outsider with power to decide is relatively recent. A difficulty with terminology seems to have persisted throughout the entire development of arbitration. Maybe some day the terms "arbitration," " umpire," and "chairman" will have commonly accepted meanings that are different and precise. While all those interested in industrial relations will find very much of value in Edwin E. Witte's recording of the history of labor arbitration, those who have come recently into contact with the field are provided by this work with a means of securing that orientation without which full understanding is impossible. GEORGE W . TAYLOR

Philadelphia July 1952 [vi]

HISTORICAL SURVEY OF LABOR ARBITRATION INTRODUCTION

In its earliest usage the term "arbitration" applied to any settlement of labor disputes without strikes. Collective bargaining and mediation were covered by the term. As defined today, labor arbitration is the settlement of labor disputes by the decision of an impartial "outsider," by a board composed entirely of neutrals, or by a board consisting of neutral representation in addition to an equal number of representatives of the contending parties. Labor arbitration can be classified in several different ways. One meaningful classification is that of compulsory as distinguished from voluntary arbitration. Another classification is between governmental and private arbitration. A third classification is on the basis of the general nature of the issues presented, with the two most common types of labor arbitration specified as (1) determination of the terms to be included in labor-management agreements, and (2) settlement of disputes over the meaning and application of the provisions in the agreements entered into between the parties. Compulsory arbitration prevails when the parties are required by law to submit their disputes to some tribunal whose decisions are legally binding. This is always a statutory requirement. Compulsory arbitration tribunals are governmental in nature, although they may include partisan representatives. Generally, under compulsory arbitration, strikes are prohibited both before and after arbitration. Voluntary arbitration, in contrast, rests upon agreement and contract, not law. Statutes, however, in quite a few states nowadays provide legal means for enforcing agreements to arbitrate and also for insuring compliance with the awards. In actual practice, the distinction between compulsory

[1]

and voluntary arbitration is less sharp than in the theoretical definitions. Some elements of compulsion are frequently present even though completely compulsory arbitration does not prevail. For example, strikes may be prohibited prior to an investigation by a governmental tribunal, which may or may not have authority to make recommendations for settlement. After the necessary investigation has been completed, or a specified number of days thereafter, strikes may then become legal, even when the recommendations are flouted. Governmental and private arbitration, similarly, have not always been completely distinct. Governmental arbitration is, by definition, arbitration by a government agency or representative. Private arbitration is undertaken pursuant to a contract between private parties. In pure form, it does not involve the government at all. But private parties may agree to submit their dispute to a government tribunal for arbitration, or they may accept an arbitrator named by an agency of the government. Arbitration concerning the terms to be included in labormanagement agreements, and arbitration over the meaning of agreed-upon contract provisions, are quite different in character. As George Taylor has pointed out, however, interpretation of contract provisions in arbitration involves a great deal of law-making, just as does the interpretation of statutes by the courts. While these two types of arbitration account for the major kinds of labor arbitration when classification is by general nature, there are additional types that deserve to be mentioned. In its early use arbitration was sometimes employed to settle issues involved in strikes, without an incorporation of the awards in any agreements. Today there are also at least two other types of labor arbitration: Settlement of jurisdictional disputes between unions or union and contractors, and disputes involving rights and duties under collective-bargained pension, health, and welfare plans. All these forms of labor arbitration, with all the variations indicated, have been resorted to in this country over the past eighty years. While the beginnings of labor arbitration date [2]

back to shortly after the Civil War, there were few labor arbitration cases before the present century. It is only in the last fifteen years that their number has run into the thousands annually. The explanation for this relatively recent development lies in the fact that labor arbitration in nearly all its forms is directly related to collective bargaining. This is particularly true of voluntary and private arbitration. Ninety per cent and more of all present-day labor arbitration cases concern the interpretation and application of labor-management agreements. Clearly there can be no arbitration of this type until there have been union recognition and collective bargaining culminating in agreement between employers and unions. Arbitration in the settlement of strikes and over the terms to be included in agreements has sometimes antedated formal relationships, but most commonly has occurred in connection with the renewal and modification of contracts. Many influences have shaped the development of labor arbitration in the United States. Statesmen, both from neutral ranks and those of employers and unions, have had great influence. So have various organizations, and also legislation. Aroused public opinion, particularly in times of great strikes, has exerted pressures producing important results. But above everything else, the development of labor arbitration has been associated with the progress of unionism and collective bargaining. NINETEENTH-CENTURY BEGINNINGS E A R L Y INTEREST IN ARBITRATION

Tracing the beginnings1 of labor arbitration in the United States is difficult because the term "arbitration" was long used with a meaning different from its present connotation. 1 On the earliest beginnings of labor arbitration in this country the best sources of information are Carroll D. Wright, Industrial Conciliation and Arbitration, Massachusetts Bureau of Labor Statistics, 1881; the ten-volume Documentary History of American Industrial Society, and Volumes I and II of the History of Labor in the United States, both by John R. Commons and his associates, and published by Macmillan.

[3]

In its earliest usage the term included what is now called "collective bargaining." The latter term was invented by the Webbs in England and did not come into use in this country until after 1900. Until then, and to some extent even later, "arbitration" was applied to all settlements of labor disputes by conference committees of the parties as well as through the decisions of outsiders. Both the term and the practice of arbitration as first developed in this country were greatly influenced by earlier developments in England. In the eighteenth century, when England prohibited combinations of workers, provision was made for the settlement of wage disputes by the justice courts. In 1824, when the Combination Acts were repealed, it was provided that disputes over wages not settled by the parties should be decided by referees, representing employers and employees, appointed by the justices. That legislation seems never to have been enforced. Beginning in 1860, however, employers' associations and unions in England organized permanent joint tribunals for the settlement of disputes arising between them. By law, in 1867, these privately organized tribunals were given legal status, although England to this day has never treated trade agreements as enforceable contracts. The joint tribunals, variously called "boards of arbitration," "boards of conciliation," "boards of conciliation and arbitration," or simply "trade boards," multiplied rapidly after they were legalized. In the next few decades they came into operation in many of England's most important industries. Sometimes the arbitration plans provided for reference to outsiders for binding determination of disputes which the joint boards could not settle, but as often they had no provision for that contingency. The first article written in this country about labor arbitration seems to have been the paper read by Eckley B. Coxe before the Social Science Association of Philadelphia on "Boards of Conciliation and Arbitration," published in the Penn Monthly of March 1871. This described the British arbitration boards. It was suggested that similar boards should be established in this country, particularly in the [4]

anthracite coal fields, in which there were very serious labor troubles at the time. Much more influential was a report which Joseph D. Weeks, later the Secretary of the Coal Operators of Western Pennsylvania, made as Special Commissioner of the State of Pennsylvania to Governor Hartranft in 1878. Weeks received this appointment after introduction in the state legislature of a bill making settlement of labor disputes by arbitration compulsory. This proposal had strong support because of popular concern over the serious riots which accompanied the great railroad strikes of 1877. Weeks visited England, and his report to Governor Hartranft described the English joint arbitration tribunals and also took note of some similar developments in this country. He opposed compulsory arbitration, but urged wider use of voluntary boards of arbitration. The report made by Weeks helped to defeat the compulsory arbitration bill in the Pennsylvania Legislature of 1878. Perhaps its greatest influence, however, was exerted through its incorporation in a report on Industrial Conciliation and Arbitration made by Carroll D. Wright as Commissioner of Labor of Massachusetts (he subsequently became the first Commissioner of Labor of the United States) pursuant to Chapter 43, Resolves of 1881, of the Massachusetts Legislature, which was published as a State Document and for public sale. Wright had given some attention to arbitration in the Eighth Annual Report of the Massachusetts Bureau of Labor Statistics in 1877. Now, in his much more extensive report of 1881, he reproduced the 1878 report of Joseph D. Weeks on the English system, plus information given by Weeks and some additional data on arbitration in this country. Even prior to the appearance of any of these published accounts, arbitration was advocated by American unions. The first mention of arbitration in labor matters in this country occurred in the Constitution of the Journeymen Cabinet-Makers of the City of Philadelphia in 1829. It was there provided that "any member appointed to an arbitra-

[5]

tion by a member of the society, in order to settle any difference between him and his employer" shall make a report on his success at the next meeting. Next, the National Labor Union, the great labor federation of the eighteen-sixties, resolved at its First (Baltimore) Congress that strikes should be used only as a measure of last resort, and suggested that each trades assembly should appoint "an Arbitration Committee, to whom should be referred all matters of dispute arising between employers and employees." The Industrial Congress of the National Trade Unions of 1874 similarly advocated arbitration for the settlement of all disputes between employers and employees, but declared that it would be "impudent" to seek legislation to compel employers to arbitrate. The Knights of Labor, the great labor organization of the next decade, enunciated in its Declaration of Principles that one of its major objectives was: "to persuade all employers to agree to arbitrate all differences which may arise between them and their employees, in order that bonds of sympathy between them may be strengthened, and that strikes may be rendered unnecessary." Similar endorsements of arbitration are to be found in constitutions or convention resolutions of many other early labor organizations. It is quite clear, however, that the "arbitration" advocated was merely union recognition by employers to the extent of negotiations and agreements on conditions of employment. STATE BOARDS OF ARBITRATION

A similar concept of arbitration underlay the organization of the first local and state boards of arbitration.2 Legislation 2 Far more information is available about the state arbitration laws and the functioning of the state boards of arbitration than about any other aspect of the nineteenth-century history of labor arbitration. The Massachusetts, New York, and some other state boards published biennial reports. The most important among many secondary accounts are Edward Cummings, "Industrial Arbitration in the United States," Quarterly Journal of Economics, Vol. 9, 353-71 ( 1 8 9 5 ) ; Nicholas P. Gilman, Methods of Industrial Peace, Boston, Houghton Mifflin, 1904, 329-45; Leonard W. Hatch, Government Industrial Arbitration, published as Bulletin No. 60 by the United States Bureau of Labor Statistics in 1905; George C. Groat, "Industrial Arbitration in New York State," Yale Review, Vol. 15, 412-31 ( 1 9 0 7 ) ; George E. Barnett and David A. McCabe, Mediation, Investigation, and

[6]

to create such boards was vigorously advocated by the labor organizations of the eighteen-eighties, and always had strong popular support after the occurrence of serious strikes. The first such law was enacted in Maryland in 1878. This was followed by similar laws in New Jersey in 1880 and 1886, Pennsylvania in 1883, Ohio in 1885, and Kansas and Iowa in 1886. All these laws provided for local boards of arbitration to be appointed, generally by district courts, on the joint application of employers and employees. An arbitration tribunal for the coal trade was organized in the Fifth Judicial District of Pennsylvania in 1883, and it functioned for two years. This is the only known instance in which the early state arbitration laws providing for local boards of arbitration were ever utilized. In 1886 Massachusetts and New York provided for permanent, full-time state boards of arbitration, but also included provisions in their laws for ad hoc local boards, if preferred by the parties in any particular dispute. Besides introducing the feature of a permanent state board, these laws also pioneered in making provision for what we would now call mediation and investigation in labor disputes. In the last years of the eighteen-eighties and in the nineties, laws for state boards of arbitration or conciliation and arbitration were enacted in fifteen more states, and in another in 1901. California repealed its first arbitration law in 1894, however, after a threeyear trial. These laws differed from the original models in that the state boards were constituted of members serving on a per diem basis only. Of all state boards, the Massachusetts board was the most Arbitration in Industrial Disputes, New York, Appleton, 1916; Carl H. Mote, Industrial Arbitration, New York, Bobbs-Merrill, 1916, 191-288; and Howard S. Kaltenborn, Governmental Adjustment of Labor Disputes, Chicago, Foundation Press, 1943. The last-mentioned book is an excellent account of all developments in federal, state, and local governmental adjustment machinery and its functioning up to the time of its publication, but is not primarily historical. The figures used in this study on the activities of the state boards of arbitration up to 1900 are taken from Bulletin No. 60 of the United States Bureau of Labor by Leonard W . Hatch. Statistics from other sources differ slightly, but leave no doubt as to the correctness of the appraisal of the effectiveness of the state and local boards of arbitration here presented.

[7]

active. The New York board was of some significance, but few of the other boards amounted to much of anything. The New York board reported that it acted in 409 disputes between 1886 and 1900. The Massachusetts board was active in 419 disputes from 1886 to 1904, with a much higher percentage of settlements than in New York. The Ohio board handled 160 cases from 1893 to 1903; Illinois, 36 cases from 1895 to 1900. No other state board, apparently, handled as many as ten cases. Everywhere the majority of the cases handled by the state boards were mediation proceedings, and the reported percentage of settlements was low. Only in Massachusetts were there many arbitration cases in the present meaning of that term. Only in Massachusetts, also, were any cases handled by statutory local boards of arbitration, and in that state there were only three such cases, all of them in the eighteen-eighties. RAILWAY LABOR DISPUTES

ADJUSTMENT

Early federal legislation for the settlement of railroad labor disputes 3 was, if anything, even less effective. The first law on the subject was the Arbitration Act of 1888. This legislation was passed after long debate, following a special message of President Cleveland in April 1886. President Cleveland had recommended a permanent board for voluntary arbitration, but Congress provided only for neutral, ad hoc arbitration boards to decide disputes whenever both parties so agreed. It further provided that the President might appoint a board of investigation in any railroad labor dispute, to make a public report on the difficulty, with recommendations. The voluntary arbitration provisions of this act were not utilized even once during the ten years 3 On the various laws for the settlement of railroad labor disputes there are numerous Congressional investigations and hearings and reports of the several adjustment agencies. Convenient sources of information on the early legislation are Charles P. Neill, Mediation and Arbitration of Railway Labor Disputes in the United States, Bulletin No. 98, U . S. Bureau of Labor ( 1 9 1 2 ) , and United States Board of Mediation and Conciliation, Railroad Labor Arbitrations, Senate Document No. 493, 64th Congress, 1st Session. A good summary of the entire history of the adjustment of labor disputes on the railroads down to 1943 is given in Kaltenborn, Governmental Adjustment of Labor Disputes, 37-72.

[8]

that it was in effect. The investigation provisions were used only once when President Cleveland appointed a commission, headed by Carroll D. Wright, U. S. Commissioner of Labor, to investigate the Pullman Strike in 1894. This agency was not created until after the strike had ended, and hence served not to assist in settlement of the dispute but for consideration of further needed legislation. Even before this, there had been some support for the compulsory settlement of railway labor disputes by arbitration. This seems to have been first suggested by the New York Board of Mediation and Arbitration in its report in January 1891 on an investigation of a strike on the New York Central in August of the preceding year. Two years later, E. A. Moseley, Secretary of the Interstate Commerce Commission, came up with a plan for the licensing of all supervisory and skilled personnel of the railroads, which provided for the revocation of the licenses if the licensees engaged in any strike or lockout. The Commission to Investigate the Pullman Strike of 1894 considered this proposal, but reported that it had not reached any conclusion regarding its advisability. The Commission did recommend the establishment of a permanent U. S. Strike Commission, with powers in relation to railway labor disputes similar to those of the Interstate Commerce Commission, whose determinations at that time were advisory only. The Springer Bill, introduced in Congress by one of the Democratic leaders of the House, went further. It provided for awards by a permanent national board of arbitration enforceable through the courts. Congress did not act on the matter until 1898, when it passed the Erdman Act. In this act, which applied not to shop crafts but only to train service employees, permanent machinery for mediation and voluntary arbitration was created. It was made the duty of the U. S. Commissioner of Labor and the Chairman of the Interstate Commerce Commission, on the request of at least one of the parties, to attempt to settle through mediation any existing or threatened labor dispute. The act further provided for arbitration, on agreement of both parties, by an ad hoc board composed of

[9]

a representative of each side and a third person agreed upon by these representatives, or appointed, in the event of their failure to agree, by the two federal officials having primary responsibility for the administration of the Act. Soon after the passage of the Erdman Act, the Railroad Trainmen invoked the law in connection with a dispute involving switching service in the Pittsburgh area. The Commissioner of Labor and the Chairman of the Interstate Commerce Commision promptly offered their services as mediators. These services were declined by the railroads with a statement that wages were such a vital matter to them that they could not accept outside intervention. Thereafter no further attempt to use the Erdman Act was made until late in 1906. By 1900 labor was pretty well disillusioned about arbitration laws. A great weakness of the laws was that the employers generally refused arbitration. Some demand was expressed in labor circles for legislation to compel employers to arbitrate. This point of view was voiced in testimony of William H. Foster, the first Secretary of the Federation of Organized Trades and Labor Unions (out of which developed the American Federation of Labor) before the Senate Committee on Education and Labor in 1885; in resolutions adopted by the Workingmen's Assembly of New York in 1888; and by T. V. Powderly, Grand Master of the Knights of Labor, in a statement issued in 1892. But Samuel Gompers came out strongly against compulsory arbitration as early as 1894 in a speech at the Congress on Industrial Conciliation and Arbitration. His position was officially adopted by the American Federation of Labor at its 1900 Convention, after reference of the matter to a special committee. The Federation declared itself in favor of agreements with employers on conditions of employment and also of voluntary arbitration, but totally in opposition to compulsory arbitration—a position from which it has not deviated since. NINETEENTH-CENTURY ARBITRATION CASES

Although the progress made in use of arbitration up to

[10]

the end of the nineteenth century was not spectacular, its beginnings date from that time. The first instance of arbitration in the United States is that of the Pittsburgh Boilers (Puddlers) case in 1865. From all available data, however, it would appear that this was not an arbitration case in the present-day meaning of the term. Involved was a collective agreement arrived at through negotiations between conference committees representing the parties, but without participation by any outsiders. In the early seventies there were other reported arbitrations in the Pittsburgh iron trade, the boot and shoe industry in Massachusetts, and in the anthracite coal fields. These involved the organization of short-lived boards of arbitration on the English model, which negotiated agreements fixing wage rates and sometimes other conditions of employment. As in England, some, but by no means all, of these boards of arbitration had provisions for the bringing in of an outsider to decide matters upon which the partisans could not agree. It was in connection with such a board of arbitration that the first labor arbitration (as we now use the term) took place. This was a decision by Judge William Elwell of Bloomsburg, Pennsylvania. He was selected by the Committee of the Anthracite Board of Trade and the Committee of the Workingmen's Benevolent Association to serve as an umpire to settle disputes between them over "questions on interference with the works, and discharging men for their connection with the Workingmen's Benevolent Association." His decision, rendered on April 19, 1871, has been preserved in full. It apparently satisfied the parties, since they thereafter agreed to let Judge Elwell decide the "bill of wages." He ruled on this matter in another award which was observed for a few months and then violated by the operators. The next definitely established arbitration case occurred in the coal fields of the Tuscarawas Valley in Ohio. In December 1874, the Tuscarawas Valley Coal Operators, the chairman of whose Conference Committee was Mark Hanna (later United States Senator and first President of the National Civic Federation) entered into an agreement with

[11]

the Miners' National Association for arbitration of a dispute over wage rates. Judge Edwards of Cleveland was named as the arbitrator. His decision was accepted by all of the operators except one company, which granted the miners higher wages on condition that they give up their demand for a check weighman, which Judge Edwards had granted. The upshot was a strike throughout the Valley, despite efforts of the National Miners Association to stop it. In the end, the operators all gave the higher wages, and the miners failed to get their check weighman. Joseph D. Weeks, upon whose report to Governor Hartranft the facts of the first two arbitration cases are based, was an important participant in another unsuccessful arbitration of the eighteen-seventies. Weeks was the moving spirit behind the Board of Conciliation and Arbitration for the Coal Mines of Western Pennsylvania, which was organized in October 1879. The first matter to come before this joint board involved specification of a new wage scale. Upon that the parties were unable to agree. As provided for in their plan, the parties then selected an umpire to settle the dispute. Judge Collier was selected, but he would not serve, and the parties were unable to agree upon another umpire. That ended the joint board since there was no provision in the agreement, or in any other similar joint-board system of this early period, for the selection of a neutral arbitrator when the parties failed to agree upon a selection. In the eighties and nineties there were other labor arbitrations, but even a guess as to the approximate number is very hazardous. Some of these were decisions of state or local boards of arbitration acting under state arbitration acts. Others were arbitrations by neutrals selected by joint boards of arbitration. In a few cases, decisions were made by arbitrators who had been selected to settle pending strikes. Despite their general record of ineffectiveness, the state boards of arbitration appear to have had the great majority of the arbitration cases. Outstanding in this respect was the Massachusetts board. It reported settlements by arbitration in 232 cases from 1886 to 1904. The majority of these were

[12]

in the years 1902 to 1904, but at least fifty-four occurred in the nineteenth century. The great majority of these cases in which the Massachusetts State Board of Arbitration served as the arbitrator were in the boot and shoe industry.4 As early as 1886, William O. Douglas, an important shoe manufacturer, author of the state arbitration law and later Governor of Massachusetts, made contracts with his employees providing that any unsatisfied grievances would be submitted to the state board of arbitration for binding settlement. These were at first individual contracts, except with one craft. When all employees were organized the procedure for settling grievances was incorporated in the collective agreements. Similar provisions were made in many other agreements, and by 1900 were a common feature in this industry. These arbitrations principally concerned piece rates, but sometimes covered general revisions of wage scales. In other states, arbitration cases were far less numerous. Hatch reports twenty-one arbitration cases by the New York state board of arbitration up to 1900, six in Illinois, seven in Missouri, three in Ohio, and scattered single cases in other states. Most of these occurred in the first years after the establishment of the state boards. By 1900 all state boards except Massachusetts were no longer important arbitration agencies, although a few of them participated in quite a few strikes as mediators. Apart from arbitrations by state boards, prior to 1900 there appear to have been but few instances of the settlement of labor disputes through decisions of outsiders. In quite a few industries, boards of arbitration were established by agreement of employers' associations and unions. Some of these provided for the calling in of neutral arbitrators when the representatives of the parties could not agree. However, there 4 The settlement of labor disputes in this industry in Massachusetts is dealt with in T. A. Carroll, "Conciliation and Arbitration in the Boot and Shoe Industry," Bulletin of the U. S. Bureau of Labor, Vol. 2, No. 8 (Jan. 1897), 1-38. Early "arbitration" in the same industry in Philadelphia was described by Thos. Phillips in the Shoe and Leather Reporter, Oct. 10, 1907, pp. 28, 63.

[13]

appear to have been but few cases in this early period when such neutral arbitrators actually functioned. Two such cases during the eighteen-eighties occurred in the coal mining industry of Western Pennsylvania in connection with the functioning of the coal trade board, whose registration under the Pennsylvania law as a local board of arbitration has been noted. In 1883 an umpire, called in when the board could not agree, fixed the wage scale. In 1885 a complete sliding scale of wages was established by an umpire's decision. Both decisions are reported as having been unsatisfactory to the parties, and after the last decision the board ceased functioning. Better results apparently derived from a decision rendered by Superior Court Judge Marvin F. Tuley when he was called upon to serve as the eleventh member of the board of arbitration set up by the Master Masons' Association and the Bricklayers' Union in Chicago in 1887. But that board did not again have to bring in a neutral to settle a dispute. It may also be noted that other similar joint boards of arbitration established in the later eighties in the building trades in New York, Chicago, and Boston, whose agreements and functioning are set forth in Mrs. Josephine S. Lowell's Industrial Conciliation and Arbitration (Putnam, 1893) did not, up to 1893, resort to bringing in a neutral to settle a dispute. That is the story of nearly all of the boards of arbitration in other industries. They were really conference committees to determine wages and other conditions of employment through what would now be called collective agreements. Some of these plans had no provision at all for the settlement of disputes not resolved by the conference committees. As an illustration, the famous agreement entered into between the Stove Founders' National Defense Association and the Iron Molders' Union of North America in 1891, which began a harmonious relationship which has continued to this day, recited in its first clause that the parties in this agreement were adopting "the principle of arbitration in the settlement of any dispute" between them, but the machinery they established was one of settlement through joint conference com[14]

mittees, without participation by or reference to any outsider. Settlements of labor disputes by arbitration under ad hoc agreements to arbitrate were even fewer. One such instance occurred in 1896 incident to a strike in the job rooms of J. J. Little & Co., New York. Seth Low, soon to become the first mayor of Greater New York, was agreed upon as arbitrator. He settled both the closed shop and the wage issues involved in that dispute. Of greater consequence was an arbitration in the face of a threatened street car strike in Detroit in 1891. This arbitration was virtually compelled by Mayor Pingree. One of the results was the inclusion in the agreement between the street car company and the union of a provision to submit any future unsettled dispute to arbitration. Beyond that, it led W. D. Mahon, the leader of the Detroit union (and soon to become the President of the Amalgamated Association of Street Railway Employees, a position he held for more than fifty years) to champion the settlement of all disputes affecting his union by voluntary arbitration. Under his leadership, a majority of all agreements entered into by this union as early as 1905 had provisions for arbitration covering not only disputes over the interpretation of the agreements but also issues not settled through negotiation over the renewal of contracts.5 The eighteen-nineties appear to have been a decade in which labor arbitration made but slow progress in actual use but in which a growing public interest in the institution and a beginning of an appreciation of its essential nature became manifest. Outstanding in this respect was the Congress on Industrial Conciliation and Arbitration held at Chicago in November 1894, under the sponsorship of the Industrial Committee of the Civic Federation of Chicago. This conference was an aftermath of the Pullman Strike, during which the Civic Federation of Chicago appointed a Provisional Board of Conciliation, headed by Lyman G. Gage, 5 On arbitration in the street railway industry, the best account is Emerson P. Schmidt, Industrial Relations in Urban Transportation, Minneapolis, University of Minnesota Press, 1935, 1 9 3 - 2 0 7 .

[15]

President of the First National Bank and later Secretary of the Treasury in the McKinley Administration. This committee seems to have accomplished little during the strike. Upon conclusion of the strike, and at the suggestion of Mrs. Potter Palmer, it set plans in motion for a national conference to discuss the prevention and settlement of labor disputes. This Congress on Industrial Conciliation and Arbitration, whose secretary was Jane Addams, brought together an outstanding group of leaders from industry, labor, and government. All of them endorsed arbitration in some form or other. The proceedings of the Congress were published and widely distributed. The only action taken, however, was for the appointment of "a larger national commission . . . for the purpose of procuring the wide application of the principles discussed at this congress." Such a commission was subsequently appointed, but does not seem to have been very active. The National Civic Federation sponsored a national conference on conciliation and arbitration, in 1901, which was referred to as the second in a series. The Chicago Congress was regarded as the first.

EARLY TWENTIETH-CENTURY PROGRESS

During the first years of the twentieth century a very considerable progress in labor arbitration occurred. This progress was manifested in increased interest in and better understanding of the institution, especially among industrialists, and a considerable growth in the actual practice of arbitration as a method of settling and preventing strikes. These were the years of the heyday of the National Civic Federation, of the establishment of several of what turned out to be the longest enduring arbitration boards, and of the Anthracite Coal Strike Commission, which more than any other happening made the public aware of labor arbitration. In the background of these developments were rapid industrial progress, a gradual but considerable growth in union

[16]

membership, a more favorable public attitude toward unionism, and a rising tide of progressivism in politics. For academic people, the outstanding occurrence in labor relations during the first year of the century was the report of the Industrial Commission. This study commission, established by law, had among its members or on its staff many of the ablest students of labor of that time. Its voluminous reports dealt informatively with many major labor problems. But only slight attention was given to conciliation and arbitration. In a final report the Commission, however, did recommend that the Erdman Act, providing machinery for the adjustment of railway labor disputes through mediation at the instance of one of the parties or through voluntary arbitration on joint agreement, be amended so that "whoever inaugurates a lockout or strike without first petitioning for arbitration, or assenting to it if offered, should be subjected to an appropriate penalty." At the same time, it recommended that neither side should be compelled to abide by the decision of an arbitration board. These recommendations were completely disregarded by Congress. The Erdman Act remained in effect without any major change until 1913, although it was not utilized until 1906. T H E NATIONAL CIVIC FEDERATION

Far more important was the establishment of the National Civic Federation 1 and its promotion of conciliation and arbitration—still only vaguely distinguished. The promoter of this organization and its executive head for forty years was Ralph M. Easley, who had been connected with the Civic Federation of Chicago. Mark Hanna, then United States Senator and Chairman of the Republican National Committee, was the outstanding public figure who served as president of the National Civic Federation until his death in 1904. He seems to have been mainly responsible for making 1 The information presented in this chapter about the National Civic Federation comes from the proceedings of its annual meetings, its organ, The National Civic Federation Review, which was published at irregular intervals from 1903 until the nineteen forties, its numerous pamphlet publications, and general magazine articles by its officials of the early years.

[17]

the promotion of industrial peace an early major objective of the Federation. The National Civic Federation began operations with a National Conference on Industrial Conciliation held in New York in December 1900. At this conference the advantages of conciliation and arbitration were extolled by leaders of industry, labor, the church, and the general public. A Committee on Conciliation and Arbitration was set up to prepare an "Appeal to the American People recommending the adoption of annual or semi-annual joint agreements and the creation of joint boards of conciliation." This appeal when issued included among its signers Mark Hanna, Samuel Gompers, and John Mitchell. The committee was then enlarged to forty members, and held two meetings in New York at which a "Plan and Scope" for its organization and functioning was developed. This centered around "full and frank conferences between employers and workmen" and "a board or commission to be available for council in any difficulty." Even before this "Plan" was completed, the temporary committee, through subcommittees, made attempts to prevent or settle the Albany Street Car Strike, the Steel Strike of 1901, and a controversy between the International Association of Machinists and the National Metal Trades Association. The final plan of organization was adopted at another National Conference on Industrial Conciliation which was held in New York in December 1901. An Industrial Department of the National Civic Federation, directed by an Executive Committee of twelve members each from industry, labor, and the public, was provided. Mark Hanna became the chairman of this Executive Committee, and Samuel Gompers the Vice-Chairman. Among other members were Grover Cleveland, ex-President of the United States, Charles W. Eliot, President of Harvard, Archbishop Ireland, August Belmont, and Charles M. Schwab. Subordinate to this central committee was a tri-party Committee on Conciliation and an employer-employee Committee on Arbitration, which was to function only on joint request of both parties to any [18]

labor dispute. Provision was also made for "auxiliary committees to deal with local disturbances." Such local committees were organized during the next two years in New York, Chicago, St. Louis, Cleveland, and Boston. The National Civic Federation and its plan for promoting industrial peace received a vast amount of favorable publicity—far greater than its subsequent actual accomplishments warranted. The greatest accomplishment of the Federation was to bring together top industrialists and the principal labor leaders on a friendly basis, and to make collective bargaining acceptable to many employers. Between 1901 and 1904 the Federation also participated successfully in mediated settlements of about ten major strikes, either through its industrial department or its local affiliates. In only two disputes reported in its convention proceedings or in the National Civic Federation Review were arbitrators supplied. One of these was the strike on the San Francisco street railway system in 1903 in which Oscar S. Straus, named by the Civic Federation, served as chairman of the arbitration board whose decision both sides agreed to accept. The other instance in which the Civic Federation figured directly in arbitration did not occur until 1911, when Marcus M. Marks was named to serve as the single arbitrator to settle a wage dispute in the hat industry at Danbury, Connecticut. After 1904, the National Civic Federation was far less influential than previously in the industrial relations field. There were many reasons for this development. One reason was the death of Mark Hanna and his replacement by August Belmont as President of the Federation. During Belmont's first year in that office a bitter strike occurred on the New York rapid transit system, of which Belmont was the president. This strike was undertaken by the local union in violation of a contract and over the strong opposition of the international union. It proved a complete failure, and the company refused to re-hire any of the strikers. Samuel Gompers and Wm. D. Mahon backed up Belmont. Such drastic treatment of the strikers, however, afforded ammunition

[19]

for the Socialists in the labor ranks, who from the outset had been very critical of "collaboration" with the industrialists. But more important than any of these in the declining influence of the Federation was the development of strong anti-union sentiment among employers. This was exemplified and promoted by the organization of the Citizens' Industrial Alliance and the assumption of control by the same group of the National Manufacturers' Association in 1903. The National Civic Federation, at least during the next quarter century, never became anti-union. Samuel Gompers remained an officer of the Federation until his death in 1925. In the late twenties Mathew Woll, then as now a prominent member of the Executive Committee of the American Federation of Labor, was the President of the Civic Federation. In the National Civic Federation Review, Ralph Easley constantly attacked the diehard anti-unionists, classifying them along with the Socialists as the great enemies of industrial peace. But beginning in 1905, the National Civic Federation devoted its major efforts to matters other than the promotion of collective bargaining and the peaceful adjustment of industrial disputes. It fostered employer welfare activities, opposed public ownership, and kept up a constant attack upon socialism and the Socialists. Later it took a dubious position on workmen's compensation, and strongly opposed unemployment compensation and health insurance. Still later it was mainly active in fighting "subversives" among educators, preachers, and other intellectuals. Continued support was given to the conservative leadership in thg unions, and conciliation for the settlement of labor disputes was urged. In 1908 a Trade Agreements Department of the Federation was organized with John Mitchell as chairman. The annual meeting in Washington in 1912 featured "Industrial Peace and Progress" as the subject for discussion. President Taft was the principal speaker, and delegates were appointed by the governors from nearly all the states. But the Civic Federation never regained much importance in industrial relations, having become definitely a "silk stocking" organization, with little labor participation.

[20]

Partially a result of the early activities of the National Civic Federation, but still more as a result of the growth of unionism, the number of trade agreements (now usually called "collective agreements" or "union contracts") 2 increased markedly in the years 1897 to 1904. The most important of these trade agreements provided for continuing conference committees on the model of the English and earlier American boards of arbitration. Most of these agreements, but not all of them, included provisions for the decision of unresolved disputes by a neutral selected by the parties, usually after a deadlock had occurred. These conference committees or boards of arbitration were mainlv concerned with the negotiation of wage rates and other contract terms. The bringing in of outsiders to settle disputes was rare, but did happen in some cases, particularly in the street railway and newspaper industries.3 T H E ANTHRACITE C O A L STRIKE ARBITRATION

It was at this time, however, that there occurred the most famous of all arbitration cases in this country. This was the settlement by arbitration of the anthracite coal strike of 1902. This strike of more than five months' duration aroused a vast amount of public concern and led to intervention by 2 Although the history of collective bargaining in this country remains to be written, it appears clear that there were few trade agreements resembling those of the present day until near the turn of the century. It was not until the first decade of the twentieth century that trade agreements became at all common. 3 Among the widely publicized agreements providing for bringing in outsiders to decide disputes not settled by the bipartisan conference committees were the national agreements between the American Newspaper Publishers' Association and the International Typographical Union in 1901, between the same Association and the Printing Pressmen's Union in 1902, between the Employing Lithographers and the Lithographers and Allied Unions in 1904, and between the United Typothetae and the Printing Pressmen also in 1904. All these agreements endured for many years, that of the American Newspaper Publishers' Association and the Printing Pressmen being still in effect. At least equally important in the development of arbitration of disputes arising over contract terms were clauses for such arbitration which were at this time included in many of the contracts between the Amalgamated Association of Street Railway Employees and street railway companies, noted on page 15. Many contracts in this industry still include such provisions for arbitration.

[21]

President Theodore Roosevelt. The operators absolutely refused to deal with the union. After conferring with the President, however, J. Pierpont Morgan finally acceded to the suggestion that all issues be submitted for settlement to a board to be appointed by the President, all of whose members should represent the public. The Anthracite Coal Strike Commission, after months of hearings, came up with an award in which the union failed to win recognition but did secure its major economic demand, namely, a basic ninehour day at the same pay as for the prior ten-hour day. The award also provided for the establishment of grievance machinery and for a permanent bipartisan Anthracite Conciliation Board to interpret the award in cases of dispute. Employee members were elected by vote of the miners, but were in fact representatives of the union from the beginning, although it was not until later that formal recognition was given to this form of representation. The plan also provided for the appointment of an umpire by one of the United States Circuit Judges of the Third Judicial Circuit to serve in cases over which the board disagreed. Significantly, this award of the Anthracite Coal Strike Commision is still the basic agreement between the Anthracite Operators and the United Mine Workers, to which all subsequent agreements are amendments. The Anthracite Conciliation Board was faced with many disputes over application of the award which were not settled in the mines in which they arose. Most of the anthracite miners worked at piece rates. Many disputes eventually arose over the application of the principle of ten hours' pay for nine hours of work under the varying and changing conditions existing in different mines. The board was able to settle most of the disputes without calling in an umpire. In twenty-five cases in the first nine years of the functioning of the board, however, a decision had to be made by an umpire. In all but one of these cases the umpire was the United States Commissioner of Labor. The Anthracite Conciliation Board was the first permanent machinery ever established in this country for the interpretation and application of [22]

what amounted to a trade agreement, and the umpire's decisions in its functioning the real beginning of this type of arbitration.4 ARBITRATION IN THE CLOTHING INDUSTRIES

At least equally important for the future of labor arbitration was the widespread experimentation with arbitration machinery in the clothing industries in the second decade of the century.5 These experiments were provided for in strike settlements, and accompanied the growth of unionism and of union recognition in these industries. Efforts to develop arbitration were directed primarily towards the adjustment of employee grievances without work stoppages. Continually functioning adjustment machinery became peculiarly necessary in view of the piecework systems of payment, frequent style changes, the widespread prevalence of subcontracting, and the evil of runaway shops. Under these conditions the early adjustment machinery understandably did not always function smoothly. But the successful operation of some of these experiments, notably under the Hart, Schaffner & Marx agreement, was an effective demonstration of the value of labor arbitration as a strike preventive and for the improvement of industrial morale. The first of the strike settlements providing for labor arbitration in the clothing industries was the Protocol of Peace. The Protocol ended a great strike in the New York cloak and suit industry in 1910, and was brought about very 4 On the functioning of the Anthracite Conciliation Board are the published proceedings of the Board. The best secondary account is Shelby M. Harrison, "Nine Years of the Anthracite Conciliation Board," in the Survey, Vol. 28, 143-51 ( 1 9 1 2 ) ; another, T. D. Nicholls, "The Anthracite Board of Conciliation," in Annals of the American Academy of Political and Social Science, Vol. 36, 366-72. The best accounts on the early history of arbitration in the clothing industry are Julius Henry Cohen, Law and, Order in Industry: Five Years' Experience, New York, Macmillan, 1916; James H. Tufts, "Judicial Law Making Exemplified in Industrial Arbitration," 21 Columbia Law Review, 405-15 ( 1 9 2 1 ) ; Joel Seidman, The Needle Trades, New York, Farrar & Rinehart, 1942; Louis Levine, The Women Garment Workers, New York, B. W. Huebsch, 1924; and Bulletin 144, U. S. Bureau of Labor Statistics, Industrial Court of the Cloak, Suit and Skirt Industry of New York City.

[23]

largely through the efforts of Louis D. Brandeis of Boston. For four years he served as the unpaid, part-time chairman of the arbitration board under this agreement, and later became one of the most distinguished justices of the Supreme Court of the United States. The Hart, Schaffner & Marx agreement in Chicago was consummated in 1911, and the protocol in the New York dress and waist industry in 1912. Similar protocols were entered upon in 1912 or 1913 in New York covering the misses' and children's wear, wrappers and kimonos, and muslin underwear industries. Arbitration agreements were made in the cloak, dress and waist industries of Philadelphia and in Boston in 1914; and in the men's clothing industries in Chicago and New York in 1915. The adjustment machinery provided for under all these agreements was changed after brief trials. In most cases the machinery collapsed altogether after but a few years. The Hart, Schaffner & Marx agreement proved enduring, however, even though it was modified several times in its early years. In nearly all the other cases mentioned, new arbitration machinery was created after some lapse. All the New York agreements were continuing ones and contained no time limits. The arbitration boards thus became involved in disputes over contract terms, as well as over the interpretation of the contracts. By far the largest number of cases with which these arbitration boards had to deal, however, related to new or to changed piece rates. These were so numerous that all the plans included provisions for the joint settlement of grievances on the shop level before reference to the industry boards. The industry boards generally functioned on two levels. There was a board of grievances or a trial board, which was bipartisan in composition, without any neutral members, and an appellate board of arbitration, which had an outsider as chairman. As this plan worked out in the cloak and suit industry, of 7,656 "complaints" filled between April 15, 1911, and Oct. 31, 1913, 7,477 were adjusted by the clerks (really managers) of the contracting organizations, 179 went to the board of grievances, and only twenty had to be decided by the board of arbitration.

[24]

The difficulties which developed seem primarily not to have been due to defects in the plan or to unpopular decisions. They resulted from opposition of left-wing unionists, resort to wildcat strikes in lieu of utilizing the prescribed machinery, and the desire of many employers to get rid of the union. The Protocol of Peace all but broke down in 1913 and was saved only by a change in chief clerks and by substituting a "committee on immediate action" with an impartial chairman for the board of grievances, whose decisions were made final except on matters involving "Protocol law." Two years later, the employers repudiated the Protocol in its entirety, because the union would not discipline wildcat strikers. A Committee on Conciliation appointed by Mayor Hyland and headed by Felix Adler patched up another agreement promptly. The Committee itself acted for a time as the board of arbitration for the industry. In 1916, however, the employers again broke away and not until after World War I was the arbitration machinery revived in this industry. This story of the early years of arbitration in the cloak and suit industry was repeated with but minor variations in all of the other agreements in the clothing industries in New York. The story of the Hart, Schaffner & Marx agreement, in contrast, was one of outstanding success from the beginning. Like the New York agreements, this agreement resulted from a serious strike, and the machinery for the adjustment of disputes was substantially the same. But it was an agreement of limited duration, and the arbitration board never had anything to do with the determination of contract terms. Instead of small manufacturers and subcontractors as in New York, the employer involved was the largest firm in the men's clothing industry. It was financially successful, with progressive leadership. Beyond question much of the credit for the success of the plan should go to the employer and the union and its able representatives. Some credit belongs also to the men who served on the trade board (the equivalent of the board of grievances in the New York contracts) and the arbitration board. Particular credit belongs to James Mullenbach, for several decades the chairman of

[25]

the trade board; to John Williams, the first chairman of the board of arbitration; and to his successors, James H. Tufts and Harry E. Millis. The agreement with the Chicago Wholesale Clothing Manufacturers, concluded in 1915, was closely modeled upon the Hart, Schaffner & Marx plan and had the same chairman of the arbitration board. Like its model, it also worked satisfactorily from the very outset. Besides the industries which have been mentioned, there were several others in which some provision was made in trade agreements for the settlement by arbitration of unresolved labor disputes. But only in one other industry, the railroads, were there a considerable number of arbitration cases prior to World War I.6 SETTLEMENT OF RAILWAY LABOR DISPUTES

As noted in the first chapter, two laws for settlement of railway labor disputes through mediation and voluntary arbitration were enacted prior to 1900. They were the Arbitration Act of 1888 and the Erdman Act of 1898. They remained practically dead letters until 1906. In the next six years, however, the machinery of the Erdman Act was utilized in forty-eight cases in which the settlement was by arbitration in twelve cases. In all these arbitration cases the chairman of the board was some well-known public figure (and with one exception always a different man) selected by the U. S. Commissioner of Labor and the Chairman of the Interstate Commerce Commission. Of these arbitrations, the one that attracted the greatest attention was the Engineers case of 1912. In that case, the arbitration board, headed by President Charles R. Van Hise of the University of Wisconsin, by wav of dicta in its decision strongly advocated compulsory arbitration. A great outcry from the railroad union men was thereby aroused. The position taken by the Engineers arbitration board was in accordance with fairly strong public sentiment in support of compulsory arbitration. Compulsory arbitration as it functioned in New Zealand and under the Canadian In6 On arbitration in the railway industry, consult the references given in Note 3, p. 8.

[26]

dustrial Disputes Investigation Act were widely acclaimed at the time and were believed to be very effective in preventing strikes. As early as in his annual message of 1907, President Theodore Roosevelt advocated legislation for investigation, with public reports and recommendations, in all major labor disputes. Sentiment for restrictions upon the right to strike, at least on the railroads, was fanned by the fact that several times during these years great railroad strikes were narrowly averted at the last minute through agreements to arbitrate. In 1912, after the Engineers Award, Congress tackled the problem of further railway labor legislation. Through the National Civic Federation, representatives of the carriers and the railroad unions were brought together. They agreed upon a new law—the first of several agreed-upon railroad labor laws. This became the Newlands Act of 1913, which preserved voluntarism in the settlement of railway labor disputes but established an independent permanent government agency for the administration of the law, the Board of Mediation and Conciliation. This Board continued in existence until 1926. It was instrumental in bringing about settlements through arbitration in twenty-one cases and through mediation in an even larger number of cases. But the prestige of the agency waned after it had to appeal twice in the first three years of its existence to the President to prevent threatened strikes. The second appeal to the President was made in the late summer of 1916. The railroad brotherhoods had demanded a basic eight hour day. On the eve of a nationwide strike over this issue, the President called in representatives of the parties and recommended the establishment of a basic eight hour day for train service employees, with the question of overtime pay being left to a governmental commission. When the carriers refused to go along, the President recommended that Congress pass a law to carry out his recommendations. He added the suggestion that strikes on railroads should be outlawed prior to investigation by a government commission. Congress promptly passed the Adamson Act, which served to avert the threatened nation-wide strike. This law gave effect to President Wilson's ideas for the

[27]

settlement of the eight hour day controversy, but did not include his recommendation for outlawing strikes prior to investigation. To many people the Congressional action seemed to be a surrender to the unions and the law was fought in the courts by the carriers. A district court held the law unconstitutional. On the eve of our entrance into World War I, however, the railroads were persuaded, by a committee representing the Council of National Defense, to withdraw their opposition. The Supreme Court subsequently reversed the district court and upheld the Adamson Act. Before that decision, the operation of the railroads was taken over by the government and they were not returned to private management until 1920. By World War I, arbitration for the settlement of strikes or threatened strikes was very popular with the general public. There was also a strong feeling that arbitration would not be voluntarily accepted in most cases and that some sort of compulsory legislation was needed. Compulsory investigation by a tribunal representing the government and making public its findings of fact and recommendations before strikes could legally be undertaken, had especially strong general public support. 7 On the other hand, organized labor by this time was unanimously opposed to compulsory arbitration, and viewed any element of compulsion with suspicion. Employers took much the same position, being if anything more distrustful of government. Many employers still opposed the idea of recognizing unions in any manner. 8 Although specialists appreciated the distinction between arbitration over contract terms and arbitration involving only the interpretation and application of contract provisions, the public still thought of arbitration solely in terms of pre7 Colorado in 1915 passed a compulsory investigation act modeled after the Canadian law. As this law was not vigorously enforced until after World War I, it is dealt with in the next chapter of this study. 8 The problem of the prevention and settlement of labor disputes received considerable attention from the United States Commission on Industrial Relations of 1914-15. An extended report on the subject was prepared by Professors George E. Barnett and David A. McCabe, which was subsequently published privately by Appleton in 1916 under the title Mediation, Arbitration and Investigation in Industrial Disputes. They advocated the

[28]

venting or settling strikes. Almost the only arbitration not involving disputes over contract terms that had as yet developed related to the establishment of piece rates in industries with incentive systems of payment. No standards for determining the piece rates were agreed upon by the parties. Arbitration in such cases, therefore, was really in the nature of the determination of conditions of employment by an outsider. In a real sense, however, the arbitration of piece rates was the beginning of the type of arbitration now most prevalent, which is concerned with the interpretation and application of contract provisions that the parties have agreed upon in collective bargaining.

WORLD WAR I AND THE TWENTIES L A B O R D I S P U T E S A D J U S T M E N T IN W O R L D W A R I

World War I brought important changes in the status of American labor and also in methods of dealing with labor disputes. For the first time, organized labor was given definite recognition by the Government. Samuel Gompers was named establishment of an independent tripartite National Mediation Commission, flanked by an Advisory Committee from industry and labor and similar agencies in all of the states. These commissions were not only to try to settle labor disputes by mediation and voluntary arbitration, but were to be vested with broad investigatory and fact-finding powers which they might exercise on their own initiative. But the right to strike was not to b e restricted, and there was to be no obligation upon the parties to accept the commission's recommendations for the settlement of any dispute. This plan was endorsed in the final report of Basil M. Manly, Director of Research and Investigation. But it was unacceptable to Chairman Walsh and the three labor members of the Industrial Relations Commission, who made Manly's report their own, with only a few dissents. In the report of Commissioners Commons and Harriman, with which the three industry members agreed in the main, an inclusive Industrial Commission for the administration of all labor laws was recommended, with powers in relation to the adjustment of labor disputes substantially the same as those in the Barnett-McCabe proposal. Nothing at all was done by Congress with any of these recommendations; but they reflect the then prevailing attitudes on methods of settlement of labor disputes. Interestingly, nothing in any of these reports reflects any appreciation of the need for arbitration in the settlement of disputes over the interpretation and application of contract provisions, as distinguished from arbitration of issues arising in contract negotiations.

[29]

a member of the top civilian war agency, the Advisory Commission of the Council of National Defense, and one union man was placed on nearly every other wartime board. Labor union membership increased greatly. Its peak membership of five million in 1919 was twice as large as the total membership at any time prior to the outbreak of the European War. Unions were recognized for the first time in many industries. Many strikes occurred. Relative to the number of industrial workers, the number of strikes and the man-days lost through strikes from 1916 to 1919 were the greatest in all our history. To be sure, in 1919, the year following the close of World War I, a somewhat smaller number of workers were involved in strikes than in 1946, the year following the close of World War II. If allowance is made for the increase in the number of industrial workers, however, there is no question but that 1919 stands out as the worst year for strikes we have ever had, although statistics on the percentage of working time lost through strikes were not then published. The year 1917 was the worst year in the total number of strikes we had up to 1937, although there were fewer great strikes than in 1919. In World War I a "No-Strike" pledge or something resembling such a pledge was not entered upon until eight months before the end of hostilities. The large number of strikes in the early months of World War I led to a strong demand for legislation to prohibit all strikes for the duration of the emergency. Such legislation had the support of the Chamber of Commerce of the United States and of many employers' associations. New Hampshire enacted a law in 1917 prohibiting strikes, and the Minnesota Public Safety Commission promulgated an order to the same effect. Other states enacted compulsory work laws (or rather so-called "work or fight" laws) which in some cases were construed to prohibit strikes. Some injunctions enjoining strikes were likewise issued on the theory that all strikes in wartime are unlawful. The National Administration took the position that labor disputes in war industries should be arbitrated and never sought legislation to make arbitration compulsory or strikes [30]

unlawful. More than a dozen new labor dispute adjustment agencies were established,1 supplementing the United States Conciliation Service, which had its beginnings when the Department of Labor came into existence, with Cabinet status, in 1913. All the new adjustment agencies were tripartite in composition. Often the chairman was the only public representative among a larger number of industry and labor members. Mediation was mainly relied upon for settlement, except in Government-operated industries and establishments, in which there was direct wage fixing. In other industries, when mediation failed to bring about a settlement, the adjustment boards passed on the merits of the dispute and entered awards. When necessary, indirect methods of compulsion were resorted to by the Government to secure compliance. Some of the new adjustment agencies functioned in industries operated by the Government. Among them were three separate Railway Labor Adjustment Boards. Other agencies functioned in particular industries heavily involved in the war effort.2 The most important of these were the Shipbuilding Labor Adjustment Board, the National Adjustment Commission (for longshore work), the Harness and Saddlery Commission, and the Bureau of Labor of the Fuel Administration. A different plan was established in the Chicago meat-packing industry. Early in 1918, after the Government had sought to secure the employers' assent to arbitration, President Wilson appointed Judge Samuel Alschuler, "with the title of 'Administrator,' to pass on the demands of the packing house workers." Not only did Judge Alschuler decide 1 On the adjustment agencies of World War I, the best account is A. M. Bing, Wartime Strikes and Their Adjustment, New York, E. P. Dutton & Co., 1921. Brief summaries of our wartime experience are given in the author's The Government in Labor Disputes, New York, McGraw-Hill, 1932, 246-51, and in his article "Strikes in Wartime: Experience with Controls," in Annals of the American Academy of Political and Social Science, November 1942, 128-34 and 130-32. 2 Some work in the settlement of labor disputes during World War I was also done by the industrial service sections of the Emergency Fleet Corporation and the Ordinance, Aircraft, and Quartermasters' Departments and the Board of Control for Labor Standards in Army Clothing, which were not primarily adjustment agencies.

[31]

the current dispute, but he continued to serve as the virtual "czar" of labor relations in the industry until the union was just about wiped out in Chicago after a disastrous strike in 1922. As early as August 1917, the Advisory Commission of the National Council of Defense recommended the establishment of an over-all adjustment agency to settle labor disputes. The President, a month later, created the President's Mediation Commission, headed by the Secretary of Labor, but whose most active member was Felix Frankfurter. This commission proceeded to the West Coast to investigate the Mooney Case (believed to be a source of much labor discontent) and some of the strikes of that region. Some settlements were effected. When the Mediation Commission went out of existence in January 1918 it recommended that all war labor agencies be consolidated. That was not done. Late in January, however, the Secretary of Labor organized the War Labor Conference Board, constituted of five labor members named by the American Federation of Labor, five industry members named by the National Industrial Conference Board, and two co-chairmen: ex-President Taft and Frank P. Walsh. This Board was created to advise the Government on a national labor policy and represented an attempt to get industry and labor to agree on principles to govern labor relations for the remainder of the war period. This attempt proved successful. On March 29, 1918, the War Labor Conference Board made a unanimous report to the President, in which its principal recommendation was "There should be no strikes or lockouts during the war." To this end it recommended the creation of a National War Labor Board, which was to have authority to intervene in any labor dispute affecting war production and not within the jurisdiction of a special adjustment agency. Adjustment of such disputes was to be sought through mediation or by getting the parties to agree to arbitration or, failing in such efforts, to render a decision outlining a basis for settlement. The President promptly accepted this recommendation and asked the members of the War Labor Conference Board to

[32]

serve as the National War Labor Board. They did so,3 and the War Labor Board functioned until August 1919, although after the Armistice it accepted new cases only upon joint agreement of the parties. Up to the Armistice, the National War Labor Board rendered eighty-three decisions, which resembled arbitration awards. These were generally complied with promptly since the President took vigorous action against recalcitrants, including plant seizure and the cancellation of the occupational deferments of strikers. After the Armistice, while the Board insisted that its authority was continuing until a formal peace was concluded, no real effort was made to enforce its awards and they were flouted right and left, particularly by employers. Thereafter, as earlier recounted, the strike situation became the worst we have ever had in this country. POSTWAR LABOR DIFFICULTIES AND ARBITRATION CASES

The Administration made an effort to get agreement by industry and labor upon a peacetime national labor policy, corresponding to the agreement reached through the War Labor Conference Board while the war in progress. A National Industrial Conference was convened in October 1919, with Secretary of the Interior Lane as chairman. 4 The Conference was constituted of public, employer, and labor representatives. Public members were selected by the President, employer members by the Chamber of Commerce of the United States and the National Industrial Conference Board, and the labor members by the American Federation of Labor. The public members proposed the establishment in all industries of bipartisan adjustment boards to which all threatened labor disputes should be referred, but which could make decisions only by a unanimous vote. If no settlement resulted and a strike appeared imminent, the dispute would then be referred to a national board appointed by the President and consisting of an equal number of employers, em3 Near the end of the war, Basil Manly replaced Frank P. Wash as co-chairman. 4 A good summary of the proceedings of the National Industrial Conference was published in the Monthly Labor Review, IX, 1342-51 (Nov. 1 9 1 9 ) .

[33]

ployees, and the public. Should this board find itself unable to agree on any issue involved, "the question or questions shall be submitted to an umpire for determination," who, if not selected by unanimous vote of the board, should be drawn by lot from a panel of twenty members appointed in advance by the President. All decisions rendered, whether by the boards or the umpire, were to have "the force and effect of trade agreements, which employers and employees shall be morally bound to accept and abide by." This proposal was never acted upon by the Conference, which split hopelessly over the issue of the closed shop and the question whether employer dealings with company unions and industrial representation plans should be recognized as a legitimate form of collective bargaining. The failure of the National Industrial Conference was followed by the calling of another conference in November 1919 by President Wilson and designated as the President's Industrial Conference.5 This had the same purpose as its predecessor but was constituted exclusively of eminent people. Although several members of the Industrial Conference were important industrialists, all members were appointed as public representatives. Secretary of Labor William Wilson was the chairman, Herbert Hoover the vice-chairman of the of the November conference. This conference made a preliminary report in December 1919, and a final report to the President in March 1920. In these reports the position was taken that the question of the open or the closed shop should be settled in each plant "as local conditions may determine." A plan was recommended for the prevention and settlement of strikes. This plan was quite similar to the one proposed by the public members of the National Industrial Conference, but included provisions for the appointment by the President of regional boards as well as a national board. The possibilities for doing anything along the lines of these recommendations had become slight by March 1920. President Wilson had suffered a breakdown and Congress was 3

The reports of the President's Industrial Conference were summarized in the Monthly Labor Review, X, 863-70.

[34]

controlled by the opposition party. The high tide of postwar conservatism was sweeping the country, and the unions were losing ground. Public concern was high over the many serious strikes, and compulsory arbitration received more support than ever before. Organized labor was unanimously opposed to compulsory arbitration. Employers were divided as respects the matter, but there was strong support within their ranks for the legal prohibition of strikes. Among the "neutral" public, however, compulsory arbitration had its strongest following. In the existing situation, the Government necessarily had to bring great pressure upon the parties to settle by arbitration strikes seriously alarming to the public. Commissions named by President Wilson arbitrated the nationwide bituminous coal strike of 1919 and the threatened anthracite strike of 1920. In both cases the awards were very disappointing to the union people. The commission's decision in the anthracite dispute was not accepted by the miners until after a prolonged insurgent strike. The final consequence was that the United Mine Workers thereafter refused to arbitrate. In the anthracite difficulties of 1922 and 1923 the operators proposed arbitration by commissions to be appointed by President Harding, but the miners would have none of arbitration. Even worse from labor's point of view were the results of arbitrations during 1921 in the building trades in Chicago and San Francisco. In Chicago, after a six weeks' strike, most of the building trades unions agreed to arbitration by Judge Landis. When the award went against them their strike was resumed. Chicago businessmen organized the Citizens' Committee to Enforce the Landis Award, and after a bitter struggle the Chicago Building Trades Council was forced to accept the award under open-shop conditions. The powerful Carpenters' and Painters' Unions, however, withdrew from the Building Trades Council, and almost constant turmoil typified the next six years. By 1927 the Landis Award had been scrapped and the Chicago building trades were once more strictly closed shop. [35]

In San Francisco the 1921 arbitration board, headed bv Archbishop Hanna, decreased wages in a case where the unions had sought an increase. When the unions refused to abide to the award, the contractors locked out the workers. The final outcome was a complete defeat for the unions and the establishment of the open shop in the San Francisco building trades, which had long been the closed-shop bastion of P. H. McCarthy. Very different was the union's record in another famous arbitration of this period, which also "went against" the union. That was the award of Federal Judge Manton in the contract dispute between the New York Newspaper Publishers' Association and the Printing Pressman in 1922. The local union first accepted the award but then went on strike in violation of the contract. The International Union thereupon broke the strike by bringing in pressmen from outside of New York. In an earlier case in 1919, Governor A1 Smith got the parties to end their long strike in the New York ladies' garment industries by accepting arbitration through a commission named by him. After an award granted a wage increase, the employers refused to apply its terms to new workers and also refused to resubmit this particular issue to the Governor's commission. They also scrapped, for a considerable time thereafter, the adjustment machinery, which was over ten years old in the industry. GRIEVANCE ARBITRATION

These widely publicized arbitrations in strike cases tended to destroy faith in voluntary arbitration. The demand for compulsory legislation was strengthened. At the same time, real progress was being made in arbitrating disputes over the interpretation and application of contracts. This progress was greatest in the men's clothing industry. Arbitration plans developed before World War I under the Hart, Schaffner & Marx and Chicago Men's Clothing agreements continued uninterruptedly. Almost equally successful, though somewhat different, arbitration plans were at this time developed in all other important men's clothing markets. In [36]

New York a market-wide strike following the Armistice was privately arbitrated by Professor William Z. Ripley of Harvard. Besides settling the strike, Professor Ripley recommended the employment of a salaried, full-time impartial chairman of the arbitration board. This recommendation was accepted. In short order, impartial chairmen also made their appearance in the Chicago, Rochester, and Cleveland markets. Later in the twenties, essentially the same system was adopted in some other garment industries, including the unionized part of the full-fashioned hosiery industry throughout the country, under which there has been an impartial chairman continuously since 1929.6 The successful experience with the arbitration of disputes over the interpretation and application of contract provisions resulted in considerable enthusiasm on the part of lawyers and college professors, in the years immediately following World War I, about the possibilities for the development of "industrial law."7 Enthusiasts discovered the emergence of principles in the decisions of labor arbitrators and in their practice of following precedents. They believed that an industrial law was emerging, similar to the development of the common law and the principles of equity. So, for the first time, arbitration decisions were reported, compiled, and eagerly studied. The process of arbitration was looked upon not merely as an expedient for the settlement of labor disputes but as involving the substitution of the rule of law in industrial relations for the prior settlement of disputes through the ordeal of combat. Such a development was seen especially in the functioning of arbitration under the Hart, Schaffner & Marx agreement and, indeed, under other agreements in the 6 Arbitration in full-fashioned hosiery is dealt with in Thomas Kennedy, Effective Labor Arbitration, University of Pennsylvania Press, 1948. T Among articles reflecting this interpretation of labor arbitration were J. H. Wigmore, "A New Field for Systematic Justice," 10 Illinois Law Review, pp. 592-95 ( 1 9 1 5 ) , and J. A. Tufts, "Judicial Law Making Exemplified in Industrial Arbitration," 21 Columbia Law Review, pp. 405-15 ( 1 9 2 1 ) . George Soule, Wage Arbitration, New York, Workers' Education Bureau of America, 1928, was the first compilation of arbitration decisions published in this country.

[37]

men's clothing industry. Before the end of the twenties, however, arbitration in this industry had become much less formal. The arbitrators generally looked upon what they were doing as the finding of workable solutions for specific disagreements rather than of promulgating principles to be observed in the future relations of the parties. To this day, under many of the agreements in the clothing industries, the impartial chairman presides at bargaining sessions and is consulted over contract terms. But in these industries, as in all others, it is regarded as the function of the parties, rather than of the arbitrators, to determine the basic principles which are to govern the labor relationship. Discussion of labor arbitration as representing the development of industrial law practically ended after the early twenties. Instead, there have been controversies, continuing until the present, over such questions as the extent to which arbitrators should follow precedents, whether they should attempt to mediate, and whether arbitration is an extension of the process of collective bargaining or a judicial function. Although the entire discussion of the development of industrial law now appears to have been based upon incorrect analogies, it served the useful purpose of interesting lawyers in labor arbitration, where up to this time they had taken but little note of the institution. Paralleling and surpassing the increased use and interest in labor arbitration was the development at this time of commercial arbitration.8 Commercial arbitration was an institution brought over to this country by the settlers from England. But from England we also got Coke's rule under which a contract to arbitrate a dispute outside of the courts is not enforceable, and the parties agreeing to arbitrate are not bound to accept the result. There were, nevertheless, instances of the arbitration of commercial disputes from earliest days. Not until after World War I did commercial 8 The best account of the development of commercial arbitration in book form is Frances A. Kellor, Arbitration in the New Industrial Society, New York, McGraw-Hill Book Company, 1934. See also P. G. Phillips, "Paradox of Arbitration Law: Compulsion as Applied to a Voluntary Proceeding," 46 Harvard Law Review, pp. 1256-80 ( 1 9 3 3 ) .

[38]

arbitration become at all common, and it was in the East, especially in New York, where this process had its greatest development. In 1920 New York passed the first statute which changed Coke's rule and made agreements to arbitrate enforceable in the courts. By 1933 ten other states, as well as the national government also passed such laws applicable within their respective jurisdictions. Further landmarks in the history of commercial arbitration were the organization of the Arbitration Society of America in 1922 and of the American Arbitration Association in 1926. The development of commercial arbitration had no direct bearing on labor arbitration, and many of the arbitration laws expressly provided that their provisions did not apply to the arbitration of labor disputes. But the great progress in commercial arbitration was helpful to labor arbitration in further popularizing arbitration in the settlement of disputes, particularly with lawyers and businessmen. E X P E R I M E N T S W I T H COMPULSION

Probably the most important, and certainly the most widely discussed, of all the developments affecting labor arbitration in this period were experiments with compulsion in the settlement of labor disputes. The mildest of these was the Colorado Disputes Investigation Act. 9 This was modeled after the Canadian law. It was enacted in 1915, but had little force or wide notice until after World War I. The Colorado law rendered unlawful strikes in enumerated public service, and some other industries, prior to investigation and reports by the state industrial commission. This legal restriction was often violated, and from 1919 to 1922 several prosecutions were started against violators. The law became a leading issue in the state election of 1922. This put into office Governor Sweet, who, on the advice of Professor 9 The best account of the operation of the Colorado Industrial Disputes Investigation Act is Colston E . Warne and Merrill E . Gaddis, "Eleven Years of Compulsory Investigation of Industrial Disputes in Colorado," Journal of Political Economy, Vol. 35, 6 5 7 - 8 3 ( 1 9 2 7 ) . A brief summary is given in the author's The Government in Labor Disputes, McGraw-Hill ( 1 9 3 2 ) , pp. 253-55.

[39]

John R. Commons, recommended repeal of the penal sections of the law. The legislature would not follow his recommendation, and the law is still on the statute books, substantially as originally enacted. It is not a complete dead letter, but has been disregarded in numerous cases without any resulting prosecutions. Much more drastic was the Kansas Industrial Relations Court Act of 1920. 10 This was put through by Governor Henry Allen, in the wake of the distress occasioned by the coal strike of 1919. Strikes were outlawed under criminal penalties and made subject to prohibition by injunction. Compulsory arbitration was provided for all labor disputes in the public utility, coal, food, and clothing industries. Enforcement of the law and the settlement by binding decisions of all labor disputes in the specified industries was the function of the Court of Industrial Relations, of which William L. Huggins, the author of the law, was the first chairman. The compulsory arbitration statute was in actual operation in Kansas for a little more than three very stormy years. The Act was strongly opposed by organized labor and openly defied by many unions, particularly the Kansas district of the United Mine Workers, under their colorful leader Alexander Howat. Howat refused to honor the processes of the court, and called strikes in direct violation of the law. He was sentenced to jail for contempt, and after long litigation the sentence was sustained by both the Kansas and United States Supreme Courts. A long protest strike of the Kansas coal miners followed. The strike was finally broken when strike-breakers were supplied by the international union, not because John L. Lewis approved of the Court of Industrial Relations any more than did Alexander Howat, but because they quarreled personally. Threatened local strikes in some other industries seem to have been prevented, but Kansas was not immune from any of the great national strikes of the period, despite attempts by the Court of Indus3 0 A brief account of the Kansas Court of Industrial Relations and its functioning is given in the author's The Government in Labor Disputes, pp. 255-60, and numerous references to longer accounts on page 264.

[40]

trial Relations to enforce the law. Some employers also refused to abide by the decisions of the Court, and it was out of one of these cases that there came decisions in 1923 and 1924 by the United States Supreme Court holding the Kansas act to be unconstitutional.11 In reaching this conclusion, the Court took the position that wage-fixing by public authority is permissible only in industries peculiarly affected with a public interest. Meat packing, the industry involved in the case before it, was held to be outside that class of industries. The Court did not pass on the constitutionality of the law as applied to public utilities, but its decision doomed the entire experiment. Kansas did not repeal its law, but ceased to enforce it. Somewhat later the Court of Industrial Relations was abolished. This entire experiment was generally regarded as a failure. It did not bring industrial peace to Kansas, and it culminated in Supreme Court decisions which held compulsory arbitration to be unconstitutional, at least in most industries. The Transportation Act of 192012 did not go quite as far as the Kansas Court of Industrial Relations Act of the same year. With the return of the railroads to private ownership, the Transportation Act of 1920 provided for a tripartite Railroad Labor Board, to serve as a final tribunal for the settlement of labor disputes on the railroads. This board had not only powers of mediation and investigation, but of rendering 11 Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522, 4 3 Sup. Ct. 6 3 0 ( 1 9 2 3 ) ; 267 U.S. 522, 4 5 Sup. Ct. 4 4 1 ( 1 9 2 4 ) . The doctrine on which this decision rested was abandoned by the Supreme Court in Nebbia v. New York, 291 U.S. 502, 54 Sup. Ct. 5 0 5 ( 1 9 3 4 ) and is not now the law. 1 2 The author briefly summarized the operation of the labor provisions of the Transportation Act of 1920 in his The Government in Labor Disputes, pp. 241-43. Longer accounts are Harry D. Wolf, The Railroad Labor Board, University of Chicago Press, 1927, and Frank B. Ward, The United States Railroad Labor Board and Railway Labor Disputes, University of Pennsylvania Press, 1929. The early history of the Railroad Board is dealt with in Clyde O. Fisher, Use of Federal Tower in Settlement of Railway Labor Disputes, U.S. Bureau of Labor Statistics Bulletin No. 303 ( 1 9 2 2 ) , and in the Symposium on the "Labor Provisions of the Transportation Act" in Proceedings of the Academy of Political Science (New York), X, 15-62 (July 1 9 2 2 ) . The story of the replacement of this act by the Railway Labor Act of 1926 is told in Donald R. Richberg, Tents of the Mighty, Chicago, Willett, Clark, and Colby, 1930, pp. 179-203.

[41]

awards. But it had no specific authority to enforce its awards, and there were no criminal penalties for striking. The railroad unions unanimously opposed the law from the beginning, and by 1925 the carriers also had enough of it. Direct negotiations between representatives of the Class I carriers and the railroad unions ensued, and the Railway Labor Act of 1926 was developed in the meetings. Amended in material respects in 1934, this Act is still in effect. For the near approach to compulsory arbitration in the 1920 Act, the present machinery for the prevention and settlement of labor disputes was substituted. The legislation was designed to bring about settlements directly between the parties. This legislation, particularly its relation to arbitration, will be further discussed in the next chapter. In the early twenties, many other proposals involving at least a measure of compulsion in the settlement of labor disputes were made. President Harding, in his annual message of January 1922, expressed the view that "the strike, the lockout, and the boycott are as much out of place and as disastrous in their results as is war or armed revolution in the domain of politics." Continuing, he expressed the view that we should look to the settlement of controversies between labor and capital through "plans of conference, of common counsel, of mediation, and of arbitration" and "the development of a thorough code of practice in dealing with such affairs." The President made no definite recommendations, however, and no legislation resulted. Senator Kenyon introduced a bill for the creation of a National Coal Mining Board with powers in coal mine disputes paralleling those of the Railroad Labor Board.13 Bills looking toward compulsory arbitration were introduced in many state legislatures, but none of them became law. The way the Kansas Court of Industrial Relations and the Railroad Labor Board worked out made organized labor more bitterly opposed to compulsory arbitration than it had 1 3 S. 3147, introduced February 13, 1922. For a discussion of this bill see Basil M. Manly, "Arbitration and Industrial Justice," Survey, Vol. 48, 44-46 (April 8, 1 9 2 2 ) .

[42]

previously been. The same experiments were also very disillusioning to employers and to many prior supporters of compulsory arbitration in the ranks of the general public. The Supreme Court decisions in the Wolff Packing Company case put a quietus for many years to come on all agitation for compulsory arbitration. Before the end of the twenties, there was also a diminished enthusiasm for the settlement of disputes over the terms of agreements by voluntary arbitration, even though the number of such cases actually seems to have been greater than at any prior time except during World War I and the immediately following period of many strikes. At the same time, the use of arbitration for the settlement of disputes over the interpretation and application of agreements concluded between the parties was becoming an established practice in a few organized industries, and was working well. Agreements to arbitrate and arbitration awards were as yet enforceable in only a few states.14 Labor arbitration at the end of the period was regarded as of only minor importance in industrial relations, as is clearly indicated by the fact that, except in connection with the governmental adjustment agencies, it was hardly mentioned in the many-volume Encyclopedia of the Social Sciences, sponsored by the national organizations of the social scientists (American Economic Association, etc.), issued in 1930-34.

THE LAST T W O DECADES

There had been more than sixty years' experience with labor arbitration in this country by the onset of the great depression in 1929. The total number of labor arbitration cases in this entire period, however, was far less than the number of such cases in any recent year. In 1929 the United 1 4 The Committee on Industrial Arbitration of the American Bar Association in 1927 recommended the enactment of legislation to make agreements to arbitrate legally enforceable, both in the commercial and labor fields. This appears to have been the first note taken by the American Bar Association of labor arbitration, although a few articles on the subject were published in legal journals much earlier.

[43]

States Bureau of Labor Statistics published a study of all labor arbitration cases involving wages and hours of which it could find any record anywhere in the country up to that time.1 It found 423 arbitration cases exclusive of decisions rendered by governmental agencies during World War I, the Kansas Court of Industrial Relations, and the Colorado Industrial Commission. Of the total of 423 cases, 54 occurred prior to 1915, and 271 in the years 1921 to 1929. Included in the 423 labor arbitrations dealt with in this study were some early cases which did not involve any participation by outsiders, but only agreements reached through direct negotiations. (As noted in Chapter I, direct negotiations were at times not distinguished from arbitration, as that term is now understood.) On the other hand, there were some arbitration cases before 1929 which dealt with matters other than wages and hours. Some labor arbitration cases were doubtless missed in the 1929 study. Very certainly, the number of decisions in labor disputes cases by governmental tribunals during World War I, resembling arbitrations, exceeded the total number of the arbitration cases dealt with in the 1929 study. The several agencies concerned with labor disputes during World War I rendered approximately 2,000 decisions, while the Kansas Court of Industrial Relations considered 55 cases during the slightly more than three years of its active functioning. INCREASE IN LABOR ARBITRATION CASES

No even approximately complete statistics are available on the number of labor arbitration cases in recent years. There can be no question, however, that they greatly exceed the number of cases antedating the depression. During World War II, the National War Labor Board and its subordinate agencies decided nearly twenty thousand labor disputes cases. In each of the last three years of World War II the United States Conciliation Service appointed arbitrators in more than 1,000 cases; and in the first complete 1 "Results of Arbitration Cases Involving Wages and Hours, 1865-1929," Monthly Labor Review, Vol. 29, 1052-58.

[44]

post war year, 1946, made appointments in 893 arbitration cases. The New York State Board of Mediation also had above a thousand arbitration cases in each of the war years and even larger numbers since then until a peak of 1,818 cases was reached in 1949. In the period 1935 to 1945, the impartial chairman in the full-fashioned hosiery industry, not one of our larger industries and by no means completely organized, disposed of above 1,500 arbitration cases. Nearly 2,000 unsettled grievances were referred to the umpire under the Ford Motors Company contract in 1949-50. In 1929 there were only a half dozen or so permanent impartial chairmen or umpires in the entire country; in 1947 there were thirty-one permanent impartial chairmen in fifty-six industry groups in the metropolitan New York area alone.2 Arbitration is more frequent in the industrial northeastern area than elsewhere, but has become common in all parts of the country. The most important reasons accounting for the remarkable growth of labor arbitration in the last two decades are the increase in the number of collective-bargaining agreements and the inclusion in the great majority of these contracts of provisions for arbitration as the last step in the settlement of grievances involving the interpretation and application of the contract. GROWTH OF COLLECTIVE BARGAINING

Throughout its history, labor arbitration has been associated with collective bargaining. In a few early cases, notably in the anthracite coal case of 1902-3, arbitration was employed to settle labor disputes when the employer refused to deal with the union. Nearly always, however, recognition of and dealing with the union precedes arbitration, even when the arbitration concerns the terms of the labormanagement agreement. Arbitration concerning the interpretation and application of contract provisions—by far the 2 New York State Department of Labor, Division of Research and Statistics, Industry Arbitrators in the New York Metropolitan Area (Publication No. B - 2 ) 1948.

[45]

most frequent type of arbitration in recent decades—can occur only when there is an agreement to interpret. Before the great depression, labor-management agreements existed in nearly all unionized industries. On the railroads, in the building trades, in clothing manufacture, in printing, and in a few smaller industries, union contracts were common. The mass-production industries, in fact nearly all manufacturing as well as substantially all service industries, distribution, retailing, and office employments, were almost completely unorganized. In coal and metal mining, unionism earlier had been very strong, but was greatly weakened in the nineteen-twenties. Street railway transportation was often unionized, but trucking and taxi and bus service were organized only in some of the larger cities. From above five million in 1919, union membership decreased to less than three million in 1933. A complete reversal in this downward trend occurred after the enactment of the National Industrial Recovery Act, which included in Section 7a, a guarantee of governmental protection of the right of workers to organize and bargain collectively with their employers. An alert union movement took advantage of this act to launch a great organizing campaign which within two years brought several million additional new members to existing unions and led to the first serious attempts in many years to organize the mass-production industries. The National Industrial Recovery Act was held unconstitutional after two years, but Congress reenacted its labor provisions in the National Labor Relations Act (the Wagner Act) of 1935, which, in addition to a declaration of the workers' right to organize and bargain collectively, implemented this right with reasonably effective procedures against interference by employers. The Wagner Act was flouted for two years while its constitutionality was under attack in the courts. In April 1937, however, the Supreme Court of the United States sustained the law and gave it broad application. By that time a strong drive to organize the mass-production industries was under way by the newly

[46]

organized CIO. The labor movement was split almost in the middle, but a major effect of the split was an intensification of organizing efforts in both camps. Fostered not only by union rivalry and by the missionary enthusiasm of the many new unionists, but also by favorable court decisions and a friendly national administration, union membership grew apace. It reached a total of 8,500,000 by January 1940. One by one the large corporations in the great mass-production industries of steel, automobiles, rubber, and meat packing recognized unions representing a majority of their employees and concluded their first labor-management agreements. Almost equally great gains were made in many smaller establishments. Unions won contracts literally by the thousands. When war came, collective bargaining was still new in most manufacturing plants. The war interrupted normal collective bargaining but did not check the growth of unionism and the spread of labor-management agreements. Union membership increased greatly during World War II. In large part the increase was occasioned by the increased employment in plants unionized before the War, but also through union recognition in many relatively small and previously non-union plants. By the end of the war there were fourteen million union members in this country, and an approximately equal number of workers under union contracts. Following the war there was further growth in union membership. This trend stopped after enactment of the Taft-Hartley Act and in the face of a downward trend of employment, in the winter of 1948-49. Unions have, nevertheless, rather well held their own. Today there are somewhere around fifteen million union members in good standing in the United States. The number of workers employed under labor-management agreements is at least as great and possibly slightly larger. Although some union members are employed in establishments not under contract, and not all unions even seek union contracts, these are probationers and non-union workers in most unionized plants. Union members and workers employed

[47]

under union contracts constitute only a fourth of the total labor force (which includes the employers, the self-employed, and even the men in the military forces). But union agreements cover nearly one-half of all production workers in industries other than agriculture and in which unions normally seek contracts. This percentage is well over onehalf in many groups of industries—about 70 per cent in manufacturing, and above that in mining, transportation, and building construction. ARBITRATION IN THE INTERPRETATION OF CONTRACTS

The increase in labor-management agreements is basic in explaining the great growth of labor arbitration since the great depression. Equally important has been the inclusion in these agreements of provisions making arbitration the last step in the grievance procedure in the settlement of disputes arising during the life of the contract and concerning its meaning. As was recited previously, early arbitration boards concerned themselves with trying to settle all labor disputes. These were sometimes disputes over the meaning of contract provisions, but such arbitration cases were very rare, even compared with arbitration in the settlement of disputes over the terms of contracts. This was a result not only of the fact that there were but few labor-management agreements, but also because the agreements were very simple, often dealing only with a flat-rate wage increase. As has also been recited, the first extensive, continuing use of arbitration was in connection with the fixing of piece rates in the clothing industries. Originally, negotiation over rates as to which there were no agreed-upon standards was involved. Outside arbitrators were called upon to make determinations when the negotiators could not agree. In the process, however, standards for rate fixing were developed and written into the contracts. Some arbitrations also occurred over discharges and other matters besides wages with which the agreements came to deal. By the onset of the great depression, arbitration in the clothing industries was largely arbitration over [48]

the interpretation and application of agreements. Some other labor-management agreements also provided for arbitration of this character. It was only in the nineteen-thirties that labor arbitration predominantly came to mean arbitration in grievance cases, and in the nineteen-forties when this type of arbitration was experiencing its most rapid growth. Grievance arbitration was extensively adopted as a corollary of the development of grievance procedures and of no-strike provisions in union contracts. To avoid interruption of work through strikes during the life of contracts, and the often equally bad effects upon morale resulting from unsettled grievances, provision was made in contracts for a grievance procedure. The last step in the standard grievance procedure was the reference of disputes not settled at earlier stages to an outside arbitrator or to an arbitration board on which an outsider had the decisive voice. This development was fostered by the practice of the War Labor Board of inserting such provisions in numerous contracts when disputes over grievances were referred to it for settlement during World War II. Then, after the close of the war, the Labor-Management Conference of November-December 1945, while failing to agree upon a program for the settlement of all labor disputes, unanimously recommended that all labor-management agreements should have a complete procedure for the settlement of all grievances arising over the interpretation and application of the agreements, culminating, if necessary, in arbitration of unresolved disputes of this nature, but with the condition that the arbitration may not add to or modify the terms of the contract. The United States Bureau of Labor Statistics in 1944 found, upon examination of contracts in fourteen selected manufacturing industries, that 73 per cent of all these contracts had provisions for the settlement of disputes over their meaning by arbitration as a last resort after other prescribed procedures had been exhausted. The National Industrial Conference Board in 1945 found such provisions in 75 per cent of the union contracts it surveyed. By 1949, as

[49]

revealed in another survey of the United States Bureau of Labor Statistics, covering nearly 1,500 current collective-bargaining agreements, grievance arbitration was provided for in 83 per cent of the agreements.3 In contrast, only 2 per cent of these agreements provided for the settlement of unresolved disputes over the renewal or modification of the agreements. Despite contract provisions to that effect, not all unresolved disputes over the interpretation and application of labor-management agreements are actually settled by arbitration. Quite a few agreements expressly provide that specified parts of the contract shall not be subject to arbitration. In other cases, arbitration does not materialize because a third of all such agreements make no provision for the selection of an outsider if the parties cannot agree upon such selection. In two-thirds of the current agreements, however, this contingency is provided for through the designation of some outside agency or official to select the arbitrator when the parties disagree. This is most commonly the Federal Mediation and Conciliation Service, with the American Arbitration Association ranking second. More than offsetting the situations in which provisions for arbitration of disputes over the application of contracts are not carried out are the cases in which grievance arbitration is resorted to despite the absence of contract provisions to that effect. This is done by ad hoc agreements to refer particular disputes to arbitration. Some employers and some unions are unwilling to include provisions for arbitration in their agreements but enter frequently into ad hoc agreements for the settlement of specific disputes arising during the life of the contract. Arbitration of unresolved disputes over the meaning of contract provisions is by no means universal, but is very common in substantially all organized industries and in all parts of the country. Coincident with the increase in grievance arbitration, and 3 "Arbitration Provisions in Union Agreements in 1949," Monthly Labor Review, February 1950, and United States Bureau of Labor Statistics, Serial No. R. 1895.

[50]

in part responsible for the increase, a sizable number of experienced labor arbitrators have been developed. At the time of the great depression there were only about a halfdozen permanent labor arbitrators or chairmen of arbitration boards. All of them were in clothing industries and none of them devoted all of their time to arbitration. Probably not more than a dozen, and certainly not above twentyfive men in the entire country had had any considerable experience in labor arbitration. There was also as yet little appreciation that a good labor arbitrator must have broader qualifications than honesty, intelligence, and impartialityall manifestly very important. T H E AMERICAN ARBITRATION ASSOCIATION

It was quite natural that the above-stated premise should be adopted by the American Arbitration Association in launching its Industrial Arbitration tribunal in 1937. This was an important forward step in the development of labor arbitration, and to this day the American Arbitration Association plays a large role in this field. By 1937 the American Arbitration Association had had more than ten years of successful experience with commercial arbitration. It understandably proceeded on the assumption that procedures successful in commercial arbitration should work equally well in labor arbitration. Voluntarism in the submission of disputes to arbitration was championed, as well as the inclusion of provisions in collective-bargaining agreements for the settlement of all unresolved disputes over the meaning of the agreement, with legal enforcement of such provisions and of decisions rendered thereunder, if necessarv. The Association and its Industrial Arbitration Tribunal (now the Labor-Management Division) have always operated from headquarters in New York, but with branch offices in all sections of the country. The A. A. A. maintains a panel of men and women whom it believes qualified to act as labor arbitrators, selected on the basis of repute, character, and willingness to serve. At the end of 1949, the American Arbitration Associa-

[51]

tion panel of labor arbitrators numbered 12,353 persons in 1,568 communities. Included were nearly all the experienced arbitrators of the country, but the great majority of panel members have never had even a single labor arbitration case. When asked to suggest an arbitrator, the American Arbitration Association submits the names of five persons, none of whom is in any manner connected with the case. The parties select their arbitrator from the list submitted to them. Besides promoting labor arbitration and suggesting arbitrators, the American Arbitration Association has promulgated rules of procedure and a code of ethics for labor arbitrators. Its suggested procedure calls for formality resembling trials in court and for complete abstention on part of the arbitrators from trying to settle arbitration cases by mediation or compromise. The Association also recommends that arbitrators serve without pay as a public service. The concepts of labor arbitration held by the American Arbitration Association came in for a good deal of criticism in the nineteen-forties, particularly from experienced labor arbitrators. Few of them rigidly follow the formal rules of procedure suggested by the Association. Dissatisfaction with the policies of the American Arbitration Association toward labor arbitration was one of the factors leading to the organization in 1947 of the National Academy of Arbitrators. The Academy is an organization of the professional and quasiprofessional labor arbitrators of the country, embracing the great majority of all those who have had extensive experience in labor arbitration. Its total membership is comprised of only a few hundred persons, of whom only about one hundred devote all of their time, or most of it, to labor arbitration. While organized because the labor arbitrators felt the need for a professional organization, it is not hostile to the American Arbitration Association. Its members almost without exception are also on the national panel of labor arbitrators of the Association and frequently are suggested as arbitrators in the cases in which the Association functions. The two organizations have cooperated in a number of undertakings, the most noteworthy of which is the promulga-

[52]

tion of a new code of ethics for labor arbitrators in 1950, which is in line with the practices and procedures which have been developed in labor arbitration as distinguished from commercial arbitration. Each of the two organizations performs distinct functions: the American Arbitration Association is a promotional and service organization in all fields of arbitration; the National Academy of Arbitrators, a professional association of labor arbitrators. Beyond question the entrance of the American Arbitration Association into the field of labor arbitration in the late thirties was very helpful in popularizing arbitration and particularly grievance arbitration. Its formal, legalistic approach to labor arbitration appealed to lawyers and to many employers. Labor arbitration long antedated the American Arbitration Association, however, and that organization has not been the most important factor accounting for the very great growth of arbitration of disputes over the interpretation and application of labor-management agreements. But its promotion of labor arbitration induced many employers to give the institution a trial, and its service facilities in this field have enjoyed ever increasing use. A R B I T R A T I O N ON T H E R A I L R O A D S AND A I R L I N E S

The activities of government agencies have also been important in the development of labor arbitration in the last decades. When this period began there was no compulsory arbitration in this country, but a majority of the states had laws designed to encourage voluntary arbitration. This was also the policy of the federal government under the Railway Labor Act of 1926 and in the functioning of the United States Conciliation Service. Other than in Massachusetts and in railway labor disputes, however, arbitration under government auspices was rare and less common than earlier. Important supplemental legislation relating to railway labor disputes was enacted in 1934.4 As far as arbitration is 4 T h e most extensive writer on the operation of the Railway L a b o r Act is H. R. Northrup. His studies are summarized in Gordon F. Bloom and Herbert R. Northrup, Economics of Labor and Industrial Relations, Philadelphia, Blakiston Company, 1950, 615-30. More favorable, but older, accounts are

[53]

concerned, the most important change made was the creation of the National Railroad Adjustment Board as an agency to decide all unresolved disputes over the interpretation and application of labor-management agreements which either party brings to the board. This board is a bipartisan agency functioning in four divisions. In any case when a division finds itself evenly divided the decision is left to a neutral referee, selected by the division or, in case of disagreement there, appointed by the National Mediation Board. Determinations of the adjustment boards may be enforced through legal proceedings, but these have been infrequent. The parties usually prefer further negotiations when either is unwilling to put a decision into effect. Strikes over the interpretation of agreements are prohibited, but the Supreme Court has held that individual workers aggrieved by violations of agreements may seek redress through the courts in preference to utilizing the machinery for the adjustment of grievances under the Railroad Labor Act.5 This machinery has been used in over twenty-five thousand cases since 1934. Its functioning, however, has not been entirely satisfactory to either side. The carriers have complained because most of the adjustment-board decisions have been won by labor; the unions complain because of long delays in the disposition of cases. These complaints have been most frequent in relation to the functioning of Division No. 1 of the National Railroad Adjustment Board, which deals with grievance disputes in engine, train, and yard service, and has had about 80 per cent of all cases. For several years during the war period, this division was unable to function at all because the carriers withdrew their representatives. At this writing the Adjustment Board is said to be five years behind in its work. This seems to be largely due to the Howard S. Kaltenborn, Governmental Adjustment of Labor Disputes, Chicago, Foundation Press, 1943, 51-72; and W. H. Spencer, The National Railroad Adjustment Board, University of Chicago Press, 1938. Source material exists in the Annual Reports of the National Mediation Board (beginning in 1935), and in its The Railway Labor Act and the National Mediation Board. (1940). 5 Brotherhood of Railroad Trainmen v. Elgin, Joliet and Eastern Railway, 325 U. S. 711 (1945).

[54]

failure of the parties to develop satisfactorily functioning grievance procedure of their own, which itself may be a result of the existence of the governmental machinery. In contract disputes, resort to arbitration on the railroads and the airlines (which were brought under the Railway Labor Act in 1936) has been far less common. From 1934 to 1937 there were eighty-eight such arbitration cases, of which the most important were those involving the nationwide wage demands of the operating railroad unions in 1946, and of the nonoperating unions in 1947. The emergency board machinery also provided for in the Railway Labor Act is not technically arbitration. After emergency boards have made their recommendations, either side can disregard them and legal strikes become possible. Until World War II, emergency board recommendations were generally accepted. Since then recommendations have often been disregarded, most commonly by the unions. Several serious railroad strikes have occurred or have been narrowly avoided through injunctions or seizures. Public opinion, which formerly regarded the Railway Labor Act as a model statute, has become very doubtful about it, and there is again considerable public sentiment for compulsory arbitration of railroad labor disputes. Whether the real trouble lies in defective legislation, however, is far from clear, since the explanation may lie in the difficult economic position of the railroads. T H E CONCILIATION SERVICE AND ARBITRATION

In addition to arbitration under the Railway Labor Act, there is also arbitration under national government auspices in connection with the functioning of the Federal Mediation and Conciliation Service (prior to 1947, the United States Conciliation Service). The Conciliation Service, while principally a mediation agency, regularly suggests arbitration to the parties if mediation does not result in an agreement. Names of persons qualified to serve as arbitrators are also submitted to parties requesting such service, and arbitrators are named where labor-management agreements so pro-

[55]

vide. A distinct arbitration unit was established in the Conciliation Service while John Steelman was the Director of Conciliation during Miss Perkins' tenure as Secretary of Labor. A small staff of full-time arbitrators was employed and some professional arbitrators were assigned by the Service in particular cases. Much of this arbitration service was rendered free of charge. In 1946, while Edgar L. Warren was Director of Conciliation, and on the unanimous advice of the labor-management advisory committee to the Service, the full-time arbitrators were discontinued as well as all arbitration by members of the staff. Instead, panels of outside arbitrators were set up in seven regions of the country, with the advice of local labor-management committees. Free arbitration at the expense of the Service was discontinued. The Federal Mediation and Conciliation Service has pursued much the same policies, except for the selection of panels of arbitrators by regional labor-management committees. During the fiscal year 1949, the Service's Arbitration Unit suggested several names of arbitrators on request in 713 cases, and directly named arbitrators in 620 cases. In one-third of all labor-management agreements in 1949 analyzed by the United States Bureau of Labor Statistics, the Federal Mediation and Conciliation Service was designated as the agency to name the arbitrators when the parties failed to agree on the selection, the Service being utilized more frequently for this purpose than all other agencies combined. PREVENTION AND SETTLEMENT OF LABOR DISPUTES IN WORLD WAR

II

The final federal agency whose role in the development of labor arbitration must not be overlooked is the National War Labor Board of World War II.6 It is often said that we 6 The author has discussed the functioning of the War Labor Board in "Wartime Prevention and Adjustment of Labor Disputes," in Harvard Business Review, Vol. 25, No. 2, Winter 1947, pp. 169-89. See, also, The Termination Report of the National War Labor Board, published in three volumes by the U. S. Department of Labor in 1947-48.

[56]

had compulsory arbitration in World War II. This is not correct. Strikes were not prohibited by law, although restricted (but impliedly also sanctioned, after compliance with delaying procedures) by the War Labor Disputes Act (the Smith-Connally Act) of 1943. Collective bargaining was not replaced by governmental determination of conditions of labor. There was, in fact, a great increase in labormanagement agreements during the War, and most of these were arrived at without participation by the War Labor Board. But collective bargaining and all other aspects of labor-management relations were fundamentally altered by the "no-strike" pledge and the functioning of the War Labor Board. The "no-strike" pledge was an informal promise by unions and employers' associations and their leaders, not only that they would refrain from strikes and lockouts for the duration, but that they would abide by decisions of the National War Labor Board in settlement of all unresolved labor disputes. These decisions were held by the Supreme Court to be advisory only, but they had behind them the "no-strike" pledge, strongly supported by public opinion, and the war powers of the President which could be exercised to seize and operate any plant in which decisions of the board were defied.7 A total of twenty-one thousand labor disputes cases were decided by the War Labor Board and its decisions were complied with in all but less than three hundred cases, most of the latter after hostilities ended. Plant seizures occurred in some fifty cases. No strikes were authorized by any AFL or CIO unions. There were some critical strikes engaged in by independent unions (particularly the United Mine Workers, the Foremen's Association, and the Mechanics Educational Society) and many short unauthorized ("wild cat") strikes occurred. Despite these stoppages, strike losses were much smaller than in peace time or during World War I, and they were less in relation to the number of industrial workers than in other Allied countries. 7 Plants could be, and in a few cases were, seized by the President also for other reasons not involving labor-management relations.

[57]

Promptly after hostilities and at the urging of all important groups, the War Labor Board was terminated. During the following post-war period of great strikes there were some suggestions for legislation to revive something like the War Labor Board, and even for compulsory arbitration. But Congress enacted none of these. Instead it passed the Labor-Management Relations (Taft-Hartley) Act, which, whatever may be its merits or defects, certainly has no resemblance whatsoever to compulsory arbitration. Besides exercising functions during the War akin to, although not technically arbitration, the National War Labor Board did a great deal to foster voluntary arbitration. Where labor-management agreements included a full grievance procedure for the settlement of disputes over the interpretation or application of contract provisions, the War Labor Board always insisted that this procedure be followed. Many cases were sent back to the parties where the labor agreement provided the means for final settlement. Where contracts lacked provisions for the arbitration of such disputes as the final step in the grievance procedure, the War Labor Board often sent a case to arbitration, and in literally hundreds of disputes directed the insertion of complete grievance procedure, culminating in arbitration, in the labor-management agreements. To several large employers and their unions, the Board informally suggested the employment of permanent umpires to settle all unresolved disputes over the meaning of contracts. At least equally important was the training the War Labor Board afforded to a great many people in the ranks of the public, labor, and industry, in the settlement of unresolved labor disputes. The great majority of the labor arbitrators of the present day gained their first direct experience in service on the staff of the War Labor Board or on its disputes panels. As has been noted, the War Labor Board and the following Labor-Management Conference undoubtedly were major factors accounting for the great spread of grievance arbitration in the nineteen-forties.

[58]

S T A T E G O V E R N M E N T AGENCIES FOR A R B I T R A T I O N

State agencies also have engaged in labor arbitration quite extensively in the most recent period. In the first three decades of the century, quite a few states abolished their mediation and arbitration services because they were not functioning. In the later thirties, when unionism was spreading rapidly and there was an alarming increase in strikes, several new agencies of this kind were established. Among them was the service which is by far the most important of the present state adjustment agencies—the New York State Board of Mediation organized in 1937. Local adjustment boards, either official or under private sponsorship, were also organized in some industrial centers. Most of these were of short duration, but all the state boards have survived, although many are inactive. In 1943 all but four states had some provision in their laws for arbitration of labor disputes.8 In many states, more than one agency is concerned with labor arbitration, but in only twenty states was there a record of activity by these state agencies in the years 1940-42. A detailed study made by the New York State Board of Mediation reported active mediation services in eighteen states and inactive agencies in seventeen more states, in 1947.9 All the laws also made it the duty of these state agencies to promote voluntary arbitration. Most of them authorized these agencies to serve as arbitrators on agreement of the parties. Collectively the state services, however, had less than half the staff of the Federal Mediation and Conciliation Service. Like that Service, most of the state agencies gave major attention to mediation. Arbitration cases handled by the state agencies totaled 1,939 in 1947, of which 1,203 were in New York, 432 in Massachusetts, and 105 in New Jersey. In 1949 the New 8 Howard S. Kaltenborn, Governmental Adjustment of Labor Disputes, Chicago, Foundation Press, 1943, pp. 171-201. 9 New York State Board of Mediation, State Mediation and Conciliation Agencies, 1947.

[59]

York Board disposed of 1,818 arbitration cases. That board and several others functioned mainly through outside arbitrators selected from panels it certifies. Of the local adjustment agencies, that of New York City is the most important, but Toledo, Louisville, Portland (Oregon), Newark, and Stamford, Connecticut, have had publicized local boards in recent years. Such local boards function almost exclusively as mediation agencies or as forums for the exchange of views on labor relations situations or problems by top representatives of labor, industry, and the public of the community. Only rarely have local boards had any part in labor arbitration. Finally, the last years have brought new experimentation with compulsory arbitration in the states. This has occurred under laws enacted in thirteen states, principally in 1946-47, designed to prevent strikes on public utilities.10 Most of these laws prohibit strikes under criminal penalties, and some provide for seizure of the utility properties in strikes or threatened strikes and their operation by the state. The New Jersey law has been very extensively utilized and quite a few cases also have arisen under the Missouri, Virginia, and Wisconsin laws.11 Judgments as to the success of these laws differ widely. A decided setback was given to this type of legislation by a decision of the United States Supreme Court in 1951 holding the Wisconsin law invalid on the ground that it conflicts with the Taft-Hartley Act. This can be remedied 1 0 Nine states only, technically provide for compulsory arbitration; three only, for state seizure in strikes or threatened strikes; and three for both seizure and arbitration. The best brief account of these laws occurs in the article by Harold S. Roberts, "Compulsory Arbitration of Labor Disputes in Public Utilities," in Labor Law Journal, Vol. 1, No. 9, June 1950, 694-704, which is a condensation of a longer report to the Hawaii Legislature. 1 1 Two good studies have appeared on the operation of the New Jersey law: Thomas Kennedy, "The Handling of Emergency Disputes," in Industrial Relations Research Association, Proceedings, Second Annual Meeting, 1949, 14-27; and Lois MacDonald, "Compulsory Arbitration in New Jersey," in Proceedings, New York University Second Annual Conference on Labor Trends in Collective Bargaining and Labor Law, 1949, 625-706. The Wisconsin law was held unconstitutional in Motor Coach Employees v. Wisconsin Board 71 Sup. Ct. 313.

[60]

by Congressional action, but at the moment the future of compulsory arbitration on public utilities is uncertain. PROFESSIONALIZED LABOR ARBITRATION

Probably even more numerous than all the arbitration cases under government auspices are arbitrations under agreements between employers and unions without any direct participation by government. In absolute numbers the most numerous arbitration decisions in construction of contracts are rendered by permanent arbitrators, variously designated as "umpires," "referees," "arbitrators," or, where arbitration boards rather than single arbitrators are used, "chairmen." Only 10 per cent of the union agreements in 1949 analyzed by the United States Bureau of Labor Statistics provided for a single permanent arbitrator, and 4 per cent more for a permanent arbitration board. But these were in the main the largest contracts. The first permanent arbitrators, as previously noted, were in the men's and women's clothing industries, in the leading manufacturing centers of the country. Notable among early permanent arbitrators of long service in these industries were Justice Brandeis, William M. Leiserson, Harry E. Millis, James Mullenbach, and N. I. Stone. Judge Alschuler was to all intents and purposes the permanent arbitrator in the meat-packing industry in Chicago during World War I and for some years thereafter. On a national basis the first permanent arbitrator in an important industry was George W. Taylor, functioning under the still existent arbitration agreement between the hosiery workers and the association of full-fashioned hosiery manufacturers, entered into in 1929. In the last two decades the first new permanent arbitration agreement which attracted wide attention was that entered into between the Pacific Coast Longshoremen and the Waterfront Employers' Association in 1934, in settlement of a bitter strike. Dean (now United States Senator) Wayne Morse was the first permanent arbitrator under this

[61]

contract, assisted by local arbitrators in the four principal Pacific Coast ports. Giving a much greater boost to the system of having permanent arbitrators to settle disputes over the meaning of contract provisions was in the institution in 1938 of a permanent, full-time umpire under the contract between the General Motors Corporation and the United Automobile Workers, CIO. Harry E. Millis was the first umpire under this contract, but he served only a very short time before he had to resign when named Chairman of the National Labor Relations Board. George W. Taylor was his successor, and it was due to him more than anyone else that the institution of a permanent umpire became so popular with both sides that it has survived all vicissitudes in the relations between these parties and changes in the umpires. Other large corporations, among them Ford, U. S. Steel, and several aircraft and shipbuilding companies, selected permanent arbitrators during World War II. But the greatest increase in their numbers came in the first two years following the War. Today the permanent arbitrator is a feature of the contracts in substantially all the major plants of the steel, rubber, aluminum, meat packing, and other basic industries, and quite often also in associational contracts and in smaller plants. By no means all permanent arbitrators are full time, serving but one company. Many professionals are named the permanent arbitrators under several contracts, and also arbitrate still other cases under ad hoc arrangements or designations. Others serve under case-by-case appointments only, but devote all or substantially all of their time to labor arbitration. Contrasted with but 10 per cent of the agreements which provide for a single permanent arbitrator, there are 27 per cent providing for a single arbitrator to be named at the time cases arise; and compared with 4 per cent providing for a permanent arbitration board, 52 per cent provide for an arbitration board to be constituted on an ad hoc basis. Significant in all this is the fact that we have developed a goodly number of experienced professional labor arbitra-

[62]

tors, who decide most of the important labor arbitration cases. The turnover among permanent arbitrators has been great, but still greater in the designation of ad hoc arbitrators under contracts in which many such arbitrations occur. Even permanent arbitrators hold their positions under conditions in which they are subject to dismissal at any time at the instance of but one of the parties. But it speaks a lot for arbitration that even then, almost always, both parties are anxious to continue the system and select a new arbitrator, most commonly another professional. PRESENT STATUS AND PROSPECTS

Labor arbitration has not been free from criticisms and controversies. A recent outburst of criticism came in 1947 and 1948 and centered around public utility wage cases. Spokesmen for the utilities loudly complained because arbitrators, according to them, were inclined always to give labor at least part of its demands. Arbitrators were quick to point out that this resulted from the attitude of public utility representatives on the arbitration boards who refused to consider any concessions and thus compelled the neutral arbitrators to find a basis of agreement with the labor representatives. A controversy providing a considerable difference of opinion followed George W. Taylor's address on the nature of grievance arbitration at the 1949 meeting of the National Academy of Arbitrators. But in all recent years labor arbitration has been making good progress. Arbitration over the interpretation and application of labor-management agreements has become almost routine. Arbitration over contract terms is far less common, but is often preferred to the alternative of a strike. New fields for labor arbitration also have been developing. Among these are arbitration for the settlement of jurisdictional disputes and of disputes arising under collectively bargained pension, health, and welfare plans. Plans for the settlement of jurisdictional disputes have quite often been adopted in the building trades. The most recent is that entered into in the winter of 1948 and renewed in 1949 between the major

[63]

contractors' associations and the building trades unions, creating a bipartisan panel for the settlement of all jurisdictional disputes in the industry, with Professor John T. Dunlop as the neutral member, with a decisive vote in cases of disagreement. Arbitration under pension, health, and welfare contracts has recently been provided under the Ford Motors Company contract with the United Automobile Workers, CIO. Labor arbitration has already attained an important and secure position in labor-management relations in the United States, and further progress seems certain.

[64]