Mr. KELLAR. No, for other reasons.

Mr. FORD. Then the point is that although you have taken a position in opposition to a good many proposals in the 89th Congress, the only one that you feel as an association strongly enough about to characterize it as un-American is this particular piece of legislation?

Mr. KELLAR. That is correct, sir.

Mr. FORD. You mentioned that you represent manufacturers of all sizes. Do you represent any of the automobile manufacturers in my home State of Michigan?

Mr. KELLAR. Pardon?

Mr. FORD. Are you speaking here today on behalf of the National Association of Manufacturers for any of the automobile companies in my home State of Michigan?

Mr. KELLAR. I assume that we are, sir, because the automobile companies are members

Mr. FORD. Are you

Mr. KELLAR. May I answer your question?

There are automobile companies that are members of the National Association of Manufacturers of course.

Mr. FORD. All right. Does the Ford Motor Co. belong?

Mr. KELLER. I would have to refer to Mr. Miller.

Mr. MILLER. No, they don't, sir.

Mr. FORD. Does the Chrysler Corp. belong to your organization? Mr. MILLER. Yes, they do.

Mr. KELLER. Yes, they do.

Mr. FORD. Does the General Motors?

Mr. KELLER. Yes, they do.
Mr. FORD. American Motors?

Mr. KELLER. I don't know.

Mr. MILLER. They used to. I am not sure whether they do now or not.

Mr. FORD. Has anyone at General Motors endorsed your position that this legislation is un-American?

Mr. THOMPSON. I hope the answer is no. I just bought a car from them.

Mr. KELLAR. In answer to that question, I thought I had answered that, that this statement has not gone out to these various organizations listed nor did it go to General Motors.

Mr. FORD. You are familiar with the fact I take it that General Motors because of its size would be one of your substantial members, would it not?

Mr. KELLAR. Oh, undoubtedly.

Mr. FORD. And really what is good for General Motors is good for General Motors stockholders. Isn't that really the test of whether something is good for the corporation and what is good for General Motors is good for the shareholders?

Mr. KELLAR. As a generalization, yes, sir.

Mr. FORD. Isn't the management of that company responsible to the membership to do everything they possibly can to protect the best interests of the share holders?

Mr. KELLAR. They certainly are.

Mr. FORD. In the early part of your statement you talked about the fact that in non-right-to-work States people have to be protected

against the consequences of an agreement entered into "by an aggressive union," and I use your language, "and an acquiescent employer." General Motors has union shop contracts throughout the United States. Do you characterize the management of General Motors now or at the time that these contracts were very recently entered into as an acquiescent employer who has acquiesced in a contract that is harmful to the best interests of its stockholders?

Mr. KELLAR. I wouldn't characterize that contract as being harmful to the stockholders necessarily, but I would characterize the action of General Motors as that of being acquiescent on their part, because the term "acquiescence" implies agreement, and we are talking about agreement here between the unions and employers.

Mr. FORD. But you don't suggest that in entering into such an agreement the management of General Motors has been less diligent than it ought in protection of the specific interests of the shareholders? Let's forget the employees now, even those who happen to be shareholders, but let's think of them only in terms of the people who own the company.

Has the management of General Motors, in the opinion of your organization, been acquiescent on the point of not doing its proper duty to the owners of that company by entering into union shop agreements?

Mr. KELLAR. No, but the mere fact that General Motors entered into such agreement

Mr. FORD. In what way are the owners of General Motors harmed by the union shop agreement in your opinion, the stockholders?

Mr. KELLAR. They may not necessarily be harmed other thanMr. FORD. Then you would say it is not necessarily bad for the stockholders of General Motors and other corporations to have their management enter into union shop agreements?

Mr. KELLAR. If you are speaking of a profit position of General Motors or some other company it might well be that you get back to the question of whether, in accepting a union shop proviso, the union becomes less onerous in its economic demands.

Mr. FORD. That is not the question. The question is whether it is necessarily bad for the stockholders of a company to permit the management of that company to enter into a union shop agreement. Mr. KELLAR. It may or it may not be.

Mr. FORD. We are talking here about a law that prohibits the management of General Motors from entering into an agreement even if it believes it would be in the best interests of its shareholders regardless of whether this is good or bad legislation.

We ought to have an answer to the question. Is it necessarily bad for the shareholders of General Motors to permit its management the liberty to enter into such an agreement? That is a simple question. You ought to be able to answer yes or no.

Mr. KELLAR. It is not necessarily bad, but in General Motors' case the analogous cases

Mr. FORD. In circumstances where it could be bad it would depend on acquiescent management that, in effect, sold out its owners to the interest of the union isn't; that correct?

48 225-65-pt. 2--3

Mr. KELLAR. Yes. More or less what you are saying is it would involve a situation where an employer has yielded on the union shop clause very readily in order to gain some headway on economic demands which might have been bad for the stockholders.

Mr. FORD. You are suggesting that the only motivation for an employer to enter into a union shop is to, in effect, bribe or buy the union for concessions on some other part of the contract?

Mr. KELLAR. No; not necessarily.

Mr. FORD. Do you suggest that there are no circumstances under which management or the employer can benefit from a union shop agreement?

Mr. KELLAR. You asked a question just prior to that that I haven't had a chance to answer. There are other situations other than the one I mentioned where an employer may enter into a union shop agreement and that is in the face of the threat of a strike which he may not feel he is in an economic position to take.

Mr. FORD. Then I take it that what you are really saying is that the only reason for an employer entering into a union shop agreement is to avoid something that might appear from your point of view to be less palatable than the union shop.

Mr. KELLAR. In many cases.

Mr. FORD. But never for the benefit of the operation of that business?

Mr. KELLAR. Oh, I wouldn't go that far, sir, but if you want to get to the genesis of union shops, they became very accelerated, as you probably know, in the World War II period, when many employers agreed to union shops and prior to that the maintenance of membership, all to expedite war production. That is when this pattern of the union shop evolved with great acceleration.

Mr. FORD. That may be true in South Dakota, but as one who lived in Michigan when I, as a boy, saw machineguns on the top of factory roofs and know of men being sprayed with hoses in the middle of the winter, I am a little bit surprised when you characterize some of our automobile companies as being acquiescent employers on the question of union shop.

I am really searching for what kind of definition you are putting on this kind of acquiescent employer and I take it that you are suggesting here that those employers who have found it beneficial to the industry and to their business to enter into union shop agreement have done so not because of any voluntary decisions on their part, but for some other reason which might in some instances be contrary to the best interests of their stockholders.

Mr. KELLAR. I am sure all those decisions were voluntary by the management or they wouldn't have entered into the agreement, but certainly the corporation which you mention and other corporations

Mr. FORD. Let me ask you the question in this fashion.

You talked all through your statement here in glowing terms about freedom of choice, about the ability of the employer and the employee to be completely free to choose. What we are really talking about here are laws enacted by States that deprive an employer of the freedom to contract with an employee representative group, to wit, a union, for whatever reasons, at least so long as it covers the question of a union security agreement or a union shop.

In other words, a so-called right-to-work law is really a law that deprives the employer of the right to contract with a particular organization as the exclusive bargaining unit for the employees and for a union security agreement or the union shop.

Now, how do you square depriving an employer of that kind of liberty to make his own decision with your pronouncements here of concern for the rights of the individual. Isn't a corporative employer like General Motors, Ford, and the others just as much an individual within the terms of the right to be protected here as these nameless, faceless individuals that you have been talking for this morning?

Mr. KELLAR. In these right-to-work States to which you have reference there is complete freedom on the part of an employer to bargain collectively with a union in all phases of the labor management relationship except the one of compulsory unionism.

The employer isn't limited in the scope of his negotiations with the union.

Mr. FORD. How long do you think, sir, that a company the size of General Motors would remain in business if 10 percent of the employees were bound by the contract that they entered into and the other 90 percent could go off in all the directions that they might choose?

Mr. KELLAR. Even in right-to-work States, sir, where you have a union and a union agreement all employees, as you well know, are bound by the contract because the union is the exclusive representative of all the employees.

Mr. FORD. That is because of the statute that imposes that regulation, but I take it that you would prefer that we had no such statute imposing the union's will, at least to the extent that it enters into a contract, upon all of the employees of a particular business.

Mr. KELLAR. We have taken no position on this majority rule question which you mention in representation matters.

Mr. FORD. You have no objection to the employees getting the benefit. You do object, however, to the employees supporting a labor union. Mr. KELLAR. It is a question of what you mean by benefits. I think many employees in union companies have some question about the dubious benefits.

Mr. FORD. I don't want to free the individual employee from the responsibilities of a contract entered into on his behalf by a union to which he doesn't even belong. You don't want to free him from that kind of obligation. You just want to free him from paying dues. Isn't that what it boils down to?

Mr. KELLAR. No; I don't think so at all.

Mr. FORD. You want him to be bound by the contract even if he doesn't belong to the union.

Mr. KELLAR. The law now provides that he is subject to the contract of course in a case where

Mr. FORD. You don't object to that. Even though he has chosen not to become a member of the union in your right-to-work State, you don't object to him being bound by the contract entered into for the people who do so choose.

Mr. KELLAR. I say we have taken no position on the majority rule question. We don't have a policy on that.

Mr. FORD. Thank you.

Mr. THOMPSON. The Chair has just one or two brief questions.

Do you or does your association have a position with respect to the national policy to encourage collective bargaining as reflected in the Wagner Act and as repeated in 1947 and 1959 acts?

Mr. KELLAR. Do we have a policy to encourage collective bargaining? Mr. THOMPSON. Do you believe in the national policy of the encouragement of collective bargaining?

Mr. KELLAR. True collective bargaining by responsible unions. Certainly the law recognizes the right to collective bargaining between the employer and the union.

Mr. THOMPSON. I know the law does. The law encourages it. I wondered whether you approve of that encouragement.

Mr. KELLAR. We always take a position that a responsible union is desirable and we think that responsible unionism is more apt to result from a position of voluntarism than one of compulsion.

Mr. THOMPSON. Thank you. Thank you very much for your testimony this morning.

Mr. KELLAR. Thank you.

Mr. THOMPSON. The gentleman representing Mr. Schmidt, Mr. Cutler.

STATEMENT OF GODFRED P. SCHMIDT, AS READ BY BEN CUTLER; ACCOMPANIED BY CHARLES PETERSON, PRESIDENT, REPRESENTING NATIONAL ASSOCIATION OF ORCHESTRA LEADERS

Mr. CUTLER. Yes, sir.

Mr. THOMPSON. I have discussed this prospective testimony with Mr. Griffin and we will invite you to testify to the extent of reading Mr. Schmidt's statement. There is attached to the statement a copy of a letter from Mr. Schmidt written sometime in May to the senior Senator from Illinois. I see nothing in the letter which perhaps might not be put in the record if we had the Senator's consent.

I question myself the propriety of including it in the record without his consent, so if you will proceed and read Mr. Schmidt's statement we would appreciate it.

Mr. GRIFFIN. Mr. Chairman.

Mr. THOMPSON. Yes, Mr. Griffin.

Mr. GRIFFIN. In view of the chairman's concern concerning the letter to Senator Dirksen, I note that the letter was written to him as a member of the Labor and Public Welfare Committee of the Senate, or at least written to him in connection with the request that Mr. Schmidt be permitted to appear and testify on the proposal to repeal section 14(b).

Mr. THOMPSON. To the Labor and Public Welfare Committee of the other body.

Mr. GRIFFIN. Of the other body, that is correct. I just want to point out that the letter is relevant to the subject that we are considering. In view of the concern about the fact that the letter was written to Senator Dirksen, I suppose in the absence of some agreement by Senator Dirksen it would be left perhaps to Mr. Schmidt to write a similar letter to a member of this committee, in which case the substance or the same material could be inserted in the record.

Would that be a fair statement?