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arated within the Board. We are confident that an examination of the Board's procedure will show that that is not the fact. In that connection, it is significant that in some cases the Board has called one of its own employees as an expert witness to testify in support of complaints which the Board had issued and was then hearing.
But whether or not it be correct that, in practice, the prosecuting and adjudicating functions of the Board have been divorced and separated within the Board, the fact remains that the ultimate responsibility for the prosecuting and adjudicating of cases arising under the act rests with the Board. That being so, it is entirely natural that doubts should arise in the public mind as to whether a person accused before the Board will have that fair trial by an impartial and unbiased judge which, as I have said, is one of the essentials of our democratic system of government.
Those who are opposed to the proposal to separate the functions of the Board under the act also assert that the combination of investigating, prosecuting, and adjudicating functions in the Board conforms to a well-established principle of administrative law pursuant to which the Interstate Commerce Commission, the Federal Trade Commission, the Securities and Exchange Commission, and other administrative agencies have been endowed with a similar combination of powers. They further assert that the necessity for such a combination of powers in administrative agencies has been recognized and affirmed by experts in the field of administrative law, and that neither the validity nor the propriety thereof has ever been questioned by the courts.
The practice of delegating to administrative agencies powers which combine to a more or less limited extent those of the legislative, executive, and judicial branches of government is a comparatively modern development. With the increasing complexities of economic and social relations in the modern world the belief has arisen that it may no longer be possible-or at any rate, that it is very difficultto prescribe by statute alone regulations adequate to meet the many and varied problems that constantly arise, and that the ordinary judicial processes are no longer adequate for the effective enforcement of the statutory policy. In consequence of that belief efforts were made to devise governmental machinery more elastic and more adaptable to carry out that policy both in the field of legislation and in the field of judicial enforcement and the genius of democratic government was not found wanting in inventiveness for the purpose.
The body of law, commonly known as administrative law, which has grown up about this new governmental machinery is distinctly a new body of legal principles. Those principles are being elaborated and applied by the courts to novel situations almost daily. Indeed, the question as to what are the requisites of a fair hearing before an administrative agency has only recently been the subject of a decision by the United States Supreme Court in the much-discussed Morgan case, which is recognized as a new landmark in the field of administrative law.
As is only natural and proper in the development of a new field of legislation, Congress and the courts are only gradually marking out the boundaries within which, and the limitations subject to which, the new governmental machinery may legally and effectively function. In the present stage of development of administrative law it is unreasonable to assert that Congress by any prior legislation has established
a precedent from which it cannot now wisely depart, or, indeed, from which it should not now depart.
Of necessity the powers that may properly be entrusted to an administrative agency and the procedure by which it shall exercise those powers must differ widely according to the purposes for which the particular agency is established, the character of the problems which it is called upon to meet and the economic and social relations with which it must deal. From the viewpoint of Congress the fundamental test must be the effectiveness of the particular statute and of the procedure established under it to accomplish its purposes.
We believe that the conclusion is too clear to need elaboration here, that what may be a desirable and constitutional form of procedure for one administrative agency operating under one statute may and often will be both undesirable and unconstitutional when applied to another administrative agency operating under another statute. Differences in the character of the economic and social relations that are the subject of regulation and differences in the nature of the individual rights that are affected by the regulation will of necessity call for differences in the procedure to be established to accomplish it.
I shall not unnecessarily take the time of this committee to analyze in detail the fundamental differences between the character of the economic and social relations that are the subject of regulation by the Interstate Commerce Commission, the Federal Trade Commission and the Securities and Exchange Commission and those that are the subject of regulation under the National Labor Relations Act or the fundamental differences in the nature of the individual rights that are affected by such regulation. Those differences are too clear and too well known to this committee to need elaboration here.
The fact remains that the National Labor Relations Act intervenes in a field of economic and social relations that has in the past been the scene of conflict, distrust, and suspicion. Even today two great national labor organizations are engaged in bitter conflict on that field. The very purpose of the act itself is to prevent obstructions to the free flow of commerce occurring by reason of such conflicts. There is nothing more essential to the accomplishment of such purpose than that the procedure established by the act shall be such that all interested parties and the public at large shall have full faith and confidence in the fairness and impartiality of the tribunal which shall determine controversies arising under the act.
It is, therefore, no answer to the proposal that the prosecuting and judicial functions of the National Labor Relations Board should be separated to say that analogous functions have been combined in other administrative agencies operating in wholly different fields and under wholly different statutes. The question must be dealt with on a practical basis; it should not be dealt with on the basis of generalizations concerning the powers conferred upon other administrative agencies in fields where fundamental considerations are entirely different.
Whether or not the charges of bias, prejudice, and unfairness that have been made against the Board are well founded, the fact that they have been made, not only by employers but also by one of the largest national labor organizations, shows that public confidence in the procedure under the act has been impaired, whatever may be said regarding the procedure under other statutes.
We believe, therefore, that, if the administration of the act is to command the confidence and respect of employees and employers generally, which it must do, if the act is to be effective in accomplishing its purposes, provision must be made therein whereby the functions of investigating and prosecuting charges under the act and the functions of hearing evidence and making decisions upon such charges shall be reposed in separate and entirely independent agencies or bodies.
Principle No. 7: The body which shall adjudicate cases arising under the act should be sufficiently large to insure full consideration by one or more of its members of all cases which shall be presented to it for decision.
Another reason why the administration of the act fails to command the confidence of employees and employers alike is the fact that the volume of cases which the Board is called upon to determine has become so large that obviously very few, if any, of such cases can receive adequate consideration by the Board or any of its members. It is obvious from the Board's own reports that the number of cases which the Board has been called upon to handle under the act is so large that it could not have been possible for the Board or any member thereof to give adequate consideration to all or even a substantial part of such cases. It seems clear, therefore, that in acting upon such cases the Board must rely almost entirely on the reports and advice of its examiners and other employees, and that neither the Board as a whole nor any member of the Board can exercise any considered judgment with regard to the merits of most of the cases upon which it acts.
Moreover, the large number of cases with which the Board is required to deal results in delays in the determination of many cases with resulting dissatisfaction among both employees and employers. As I have said before, if the act is to be effective in accomplishing its purposes, the remedies provided in the act must be prompt and adequate and there must not be any cause for suspicion that cases are being unnecessarily delayed or are not receiving adequate consideration by the members of the body that decides them. Furthermore, the mere pressure of time due to the attempt to handle such a large volume of cases must eventually result in hasty and ill-considered decisions and consequently more frequent reversal of those decisions by the courts. That will impair the prestige and effectiveness of the Board in its administration of the act. Whether or not the functions of the Board as prosecutor and as judge and jury shall be reposed in separate and independent bodies, it is obvious that, in order to remedy the conditions to which I have just referred, the number of members of the Board or of the other body to which the judicial functions of the Board shall be assigned should be sufficiently large to enable the members of the Board or such other body, by divisions as in the case of the Interstate Commerce Commission or otherwise, themselves to consider the evidence and in reality make the decisions.
In closing, I should again say that the steel industry stands wholeheartedly behind the purposes of the National Labor Relations Act; that it does not desire to see the act emasculated or its efficacy to accomplish those purposes impaired in any way; but rather to see it amended in such respects as experience under the act has shown to be in order that its purposes shall be effectively realized.
The CHAIRMAN. Mr. Tower, in the beginning of your statement I asked you just how broadly we can accept such an impression as you have made here of the steel industry, and you said that it would show in your statement how broad the institute is.
Mr. TOWER. In the paragraph beginning at the top of page 1, Mr. Chairman, where it is stated that the institute comprises among its members about 100 companies engaged in the production and sale of iron and steel products.
The CHAIRMAN. How close to the steel industry does the 100 companies come?
Mr. TowER. They have about 90 percent of the employees in the industry.
The CHAIRMAN. Ninety percent of the employees or employers? Mr. TOWER. Employees. There are about 130 other companies which we would consider to be members of the steel industry which in the aggregate have about 10 percent of the employees in the industry.
The CHAIRMAN. Your institute represents all of the big steel companies then, does it?
Mr. TOWER. And a much larger number of small companies.
The CHAIRMAN. Would you say that as far as the number of companies is concerned, the 10 percent that are not included run up as high as 130 companies?
Mr. TOWER. The 130 companies that are not members of the institute which we consider to be members of the industry have about 10 percent of the total employees in the industry.
The CHAIRMAN. Are these 130 companies scattered throughout the whole country or are they far away from steel centers?
Mr. TOWER. I doubt if one could generalize either way on that, Mr. Chairman. They are small companies which in the main have a limited range of products. They commonly engage in the production of only one or two classes of products like drawers of wire or manufacturers of nails or rerollers of strip-specialty lines to a considerable extent. Some of them are in the steel centers, some of them would be in steel centers like Chicago and Pittsburgh, others of them are in very small communities remote from such centers.
The CHAIRMAN. Have the companies that are affiliated with your institute, have they signified their approval of this statement which you have made, or is this the institute's statement?
Mr. TOWER. This statement was presented to the board of directors and it was approved by them.
The CHAIRMAN. The board of directors of the institute or of the companies?
Mr. TOWER. Of the institute.
The CHAIRMAN. And the board of directors is made up of representatives from about how many of the 90 percent?
Mr. TOWER. There are 28 members on the board as presently constituted, and they have been drawn from among the executives of 22 domestic companies and one Canadian company.
The CHAIRMAN. Mr. Tower, Senator Ellender has not finished so that he will have some more questions when he comes back this afternoon. Senator Burke, have you any questions?
Senator BURKE. I have none.
Senator LAFOLLETTE. I would like the record to show that I have been presiding at another subcommittee of this committee and have not been able to be present during Mr. Tower's testimony. I would like to ask you, Mr. Tower, has the board of directors of the Iron and Steel Institute taken any position so far as you know with regard to the use of private detectives for labor espionage use and work?
Mr. TowER. I have never heard the matter discussed by the board of directors at any time in any connection.
Senator LAFOLLETTE. Have you ever heard any discussion pro or con on the use of offensive weapons of chemical warfare?
Mr. TowER. That would not be an appropriate subject for discussion in connection with the affairs of the institute.
Senator LA FOLLETTE. Mr. Chairman, I should like to offer for the record a brief tabulation showing the use of detective-agency services and the purchase of tear gas made by the companies represented on the board of directors of the Iron and Steel Institute in 1938 and 1939. This exhibit was compiled from the data appearing in the report and public hearings of the subcommittee of this committee under Senate Resolution 266. This exhibit also shows the payments made by the companies represented on the board of the American Iron and Steel Institute to the National Association of Manufacturers. The summary shows there are 23 corporations on the board of directors, 193839, and I should mention that this data, so far as the positions in the companies represented are concerned, is taken from the 1937 Directory of Directors, and therefore there may be some change in the positions of these men in their respective companies. It shows the total munitions purchased by these companies of $234,016.99, 1933 to 1937, or over one-third of the total sales in this country to private persons in that period. It shows total payments to the National Association of Manufacturers of $221,640, and it shows 10 of the companies, from the records of the subcommittee, as having employed one or another of the detective-agency services during the period 1933–37.
The CHAIRMAN. It will be included in the record at its proper place. (The matter referred to is as follows:)